Shandong Shipping is set to sign charters with Shell this week to build and own a series of up to 16 medium range tankers as part of a larger project for the oil company.
Brokers say the order, believed to span 10 firm ships and options for up to six more, will cost $36m and $37m per ship.
Shell will charter the tankers for seven years with options to extend at a rate of $16,500 per day, brokers say.
The deal saves the largest tranche of Shell's Project Solar, under which ICBC Leasing and Tristar's Eships were set to split 30 products tanker newbuildings worth $1.2bn.
ICBC's unexpected withdrawal had sent the project back to the drawing board.
An ICBC Leasing official declined to discuss the Shell project and a Shandong Shipping did not immediately respond to requests for information.
Shandong Shipping's IPO groundwork
Sources well informed on the deal say Shandong is keen on using the publicity generated by the signing to fuel its drive to expand and eventually mount IPO spinoffs.
Under the revised deal with Shell, the ambitious Shandong province-controlled shipowner takes on alone what was originally packaged as a three-way partnership among Shandong Shipping, ICBC Leasing, and Bernhard Schulte Shipmanagement.
ICBC Leasing will now participate as a financier only, with no equity in the ships, and the management contract will go out for bids.
The new role for the Qingdao-based Shandong Shpping comes after the leasing arm of the world's largest bank rejected the deal at the board level.
TradeWinds reported in January that financier and shipowner ICBC Leasing was in talks with New Times Shipbuilding to build the ships as part of the Project Solar initiative.
But during February and March, TradeWinds understands that ICBC's shipping team twice failed to gain board approval.
Despite the blue-chip financial quality of the charterer, the board found the newbuilding price too high and the charter term too short, and directed the leasing giant's shipping team to seek improved terms.
Shipbrokers familiar with the earlier form of the deal say the newbuilding price was reasonable, taking into account the specifications attached to the Shell charters.
But they acknowledge that the price could seem high to a non-specialist in comparison of other MR tankers of similar size.
The deal is a boost for Shandong Shipping in its long-held ambition to become a major tanker owner.
The company is already well established in dry bulk and also controls stocklisted VLGC player Pacific Gas.
Its Shandong Offshore Engineering subsidiary is at work on a project to build an innovative semisubmersible fleet for rig decommissioning.
TradeWinds recently reported on several expansive initiatives by Shandong Shipping, including it new joint venture with Taiwan's Eddie Steamship, believed to be aimed at the capesize sector.
Last year it made news with a bid to acquire the five VLCCs of troubled Brightoil Shipping.
