Cosco Shipping Energy Transportation (CSET) has revealed a lower-than-expected price tag for its LNG-fuelled VLCC while unveiling new tanker scrapping and gas shipmanagement projects.
In November, TradeWinds reported CSET became the first company to construct an LNG-fuelled VLCC by upgrading one of the four conventional 319,000-dwt vessels it had ordered in 2017.
Back then, the Shanghai- and Hong Kong-listed company had agreed to pay Dalian Shipbuilding Industry Co a total of CNY 3.67bn ($553m) for the four VLCCs plus another three suezmax tankers.
In a recent exchange filing, CSET confirmed the upgraded order and said it had to pay an extra $6m to the yard.
The vessel will be delivered by the end of 2021.
The revelation suggests the costs for LNG-fuelled VLCC newbuildings may have been falling, with shipbuilding players earlier expecting CSET to pay additionally $12m for the project.
Yards had quoted the premium of an LNG-fuelled newbuilding to a conventional one at $20m at the beginning of 2019.
According to CSET, the tanker arm of state giant China Cosco Shipping, this upgrade is in preparation for the IMO’s tightening regulations for vessels’ sulphur and greenhouse gas emissions.
“The 2020 global sulphur limit…will take effect from 1 January 2020 onwards,” the company said.
“Further, phase 3 of the implementation of the Energy Efficiency Design Index standards imposed by the IMO on new vessels will take place from 2025 onward.”
“The inclusion of dual fuel technology in the construction of the relevant VLCC, which allows it to utilise LNG as fuel, will enable the company to prepare for the more stringent carbon dioxide emission standards under phase 3 of the implementation of the EEDI in advance, and provide the company with a new solution to the imposition of the global sulphur limit.”
“LNG has a low carbon content, higher calorific value per unit and lower power consumption per unit as compared to traditional fuels such as diesel fuel and heavy fuel oil. LNG is also expected to be more economical than low sulphur fuel oil.”
New projects
In a separate filing, CSET said its board had approved a plan to establish a wholly owned shipmanagement venture in Hong Kong that focuses on LNG carriers and very large ethane carriers (VLECs).
No further details on the venture are available. The company had 32 LNG carriers in operation and six under construction as of 30 September, but it is not known to own any VLEC.
CSET also stated it would sell two small tankers — namely, the Liao You 601 (built 2003) and the Liao You 801 (built 2004) — for scrapping.
