John Fredriksen-backed SFL Corp has secured a long-term car carrier charter from a European automobile manufacturer, for which it will build a pair of LNG-fuelled ships.
The New York-listed company has entered into an agreement with the undisclosed charterer for two 7,000-car equivalent unit (ceu) vessels.
“The transaction is estimated to add more than $200 million in fixed-rate charter backlog, and we are adding state-of-the-art vessels designed to use LNG to our fleet,” Oslo-based SFL said.
The charters will stretch over 10 years, with delivery of the newbuildings scheduled for 2023.
Elaborating on the details, SFL said the contract is on a time-charter basis, and until the new vessels are delivered the charterer will charter two SFL's existing conventionally-fuelled car carriers.
The temporary vessels were named as the 6,500-ceu SFL Composer (built 2005) and SFL Conductor (built 2006).
Chinese shipbuilder
While SFL did not disclose the name of the shipyard that will be building the new car carriers, it said it “has agreed to construct the two newbuild vessels at a leading shipyard in China, subject to final documentation”.
Shipbuilding sources said SFL has shortlisted a few shipyards for the project and it should soon reach a decision on who will build them.
State-owned Xiamen Shipbuilding Industry and Guangzhou Shipyard International (GSI) are said to be strong contenders on SFL’s list.
SFL will be cooperating with its customer to use eco-friendly biofuel for propelling the two vessels that will perform the charter until the newbuildings are delivered.
“This transaction shows our commitment to invest in assets with lower carbon footprint and also how we can improve performance of existing vessels through the use of alternative fuels, in line with our ESG strategy,” SFL chief executive Ole Hjertaker said.
“Over the last 10 years, SFL’s fleet has transitioned from predominately oil production and transportation assets, to mainly consisting of containerships and dry bulk vessels today. Including this new transaction, our fixed-rate charter backlog from shipping assets will be more than $2.4bn.”
