The proposed Euronav-Frontline mega-deal raises questions over the direction of Tankers International, with the potential loss of 24 VLCCs from its pooling operation.
The deal to end the 18-month merger saga between the two tanker giants includes an agreement for Belgium’s Euronav to sell the VLCCs, with an average of 5.3 years, to John Fredriksen’s Frontline for $2.35bn. It would be the biggest tanker sale-and-purchase transaction ever.
The 24 ships represent a big proportion of the 66-VLCC fleet operated by London-based Tankers International and it remains unclear if the ships will stay with the pool if the deal goes through.
“I wouldn’t assume anything, to be honest,” said Frontline chief executive Lars Barstad. “This is because these are ongoing discussions. For obvious reasons, this is something that comes after [any deal goes through].”
Fredriksen’s two market targets of the past 18 months — Euronav and International Seaways — are members of the Tankers International VLCC pool, but Frontline is not. It was one of the pool’s founding partners in 2000 but pulled out a couple of years later for unspecified reasons.
“Mr John Fredriksen was the founding partner of the pool, so this a very friendly [arrangement], we know these guys very, very well,” said Barstad.
He said that Frontline had continued commercial relationships with Tankers International while outside of the pool, including a chartering partnership in 2014. That arrangement ended four years later.
Barstad declined to say if any decisions have been made on potential pooling arrangements: “It’s early on, early days.”
The new uncertainty for Tankers International follows a strong 2022, when its numbers grew to 66 vessels from eight different owners on the back of a recovery for the sector.
It is understood that the pool operator sees the deal as a purely Frontline-Euronav matter and is continuing with business as usual.
If the decision is made to withdraw the vessels, there is likely to be a notice period before they leave the pool.
Brokers mooted the possible return of Frontline to the pool when news broke of the potential merger with Euronav in April last year.
The $4.2bn merger was halted by the Saverys family and its CMB shipping company, the other main shareholder in Euronav, and the deadlock was broken only this week.
The terms of the transaction revealed on Monday will make Frontline the world’s biggest listed pure-play tanker company by deadweight tonnage and second in the overall VLCC ranks behind China Merchants Group, according to Clarksons data.
Read more
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- Euronav to retain dual listings and could buy part or all of CMB’s eco fleet
- Frontline becomes biggest pure-play listed tanker owner as Fredriksen signs off Euronav VLCC deal
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- Could Frontline grab Euronav’s youngest VLCCs in multibillion-dollar swoop?
