An arm of China’s Cosco Shipping Energy Transportation (CSET) has agreed to take a 50% stake in three LNG carrier newbuildings contracted by Mitsui OSK Lines last year for a Russian export project.
In an exchange filing, CSET said its Cosco Shipping LNG Investment (Shanghai) subsidiary, known as CSLNG, will join up with MOL on the ice-breaking trio.
This will take place through under three special purpose companies — Arctic Gold LNG Shipping, Arctic Silver LNG Shipping and Arctic Bronze LNG Shipping.
CSLNG is a wholly owned LNG shipping subsidiary of CSET, which in turn is controlled by the listed tanker arm of state conglomerate China Cosco Shipping.
CSET said the three ships cost $923.3m, which pegs them at close to $304m for each vessel.
“The project economics works for the vessels. They can help us operate better during a down cycle and enhance our overall profitability,” the company added.
In October 2020, TradeWinds reported that MOL and Sovcomflot each ordered three 172,410-cbm Arc7 LNG carriers from South Korean yard Daewoo Shipbuilding & Marine Engineering. The yard quoted the price of the ships at about $280m each.
Later that month, the Japanese and Russian shipowners secured 30-year charters for the vessels from gas producer Novatek, which is developing Arctic LNG 2.
The ships are due for delivery in 2023 to dovetail with the start up of the 19.8-million-tonnes-per-annum LNG export project.
Long-standing partners
MOL and CSLNG have worked closely on LNG carriers previously and had been expected to ink these newbuildings together last year.
In the earlier event, MOL signed the newbuilding and time-charter contracts alone, but CSLNG has now come aboard.
CSLNG and MOL also jointly owns three Arc7 vessels and four conventional LNG carriers on long-term charters to Novatek’s first Arctic-based liquefaction project, Yamal LNG.
Chinese state-owned enterprises have been heavily involved in Russia's Arctic LNG projects as Beijing seeks to secure energy supply and strengthen ties with Moscow.
Together, China National Petroleum Corp (CNPC) and Silk Road Fund own almost 30% of Yamal LNG. CNPC and China National Offshore Oil are both partners in Arctic LNG 2, along with French energy major Total and Japan Arctic LNG, a consortium of Mitsui and JOGMEC.
Novatek is already exporting significant volumes of LNG eastwards to Asian buyers, including China.
This year, the Russian gas producer and its associates have been trialling winter shipments along the Northern Sea Route to shorten shipment times on voyages via the Suez Canal.
Russia wants to see the Arctic sea lane opened up to shipping on a year-round basis from 2024.
