COSCO unveils massive supertanker fleet push

Chinese tanker giant COSCO Shipping Energy Transportation has unveiled a sweeping fleet expansion involving 24 VLCC newbuildings, signing contracts worth RMB9.48bn ($1.42bn) for ten supertankers and lining up another 14 through long-term bareboat charters.

The Shanghai- and Hong Kong-listed owner disclosed the deals on November 9, with its wholly owned subsidiary Hainan Cosco Shipping Energy Transportation placing orders at two Chinese shipyards.

Six VLCCs have been contracted at Yangzhou COSCO Shipping Heavy Industry for RMB5.69bn ($853m), while Dalian Shipbuilding Industry Corporation (DSIC) has secured four vessels worth RMB3.79bn ($569m).

The contracts are priced at approximately RMB948m ($142m) per ship, with the Yangzhou series scheduled for delivery between August 2029 and November 2030. The four DSIC vessels are due between September 2029 and May 2030.

The Yangzhou newbuildings will feature LNG-ready fuel systems, while the DSIC quartet will be designed for future conversion to LNG or methanol dual-fuel propulsion.

The Yangzhou deal is classified as a related-party transaction because the shipyard belongs to the COSCO group and still requires shareholder approval. The DSIC contract has received board approval without requiring a further shareholder vote.

Alongside the direct newbuilding investment, COSCO Shipping Energy has approved plans to take another 14 VLCC newbuildings on bareboat charter from six Chinese financial leasing companies.

The programme, handled through subsidiary Huanyu Shipowning, carries maximum rental commitments of RMB17.4bn ($2.61bn) over charter periods of up to 20 years.

Bank of Communications Financial Leasing will provide four LNG dual-fuel VLCCs, while ICBC Financial Leasing will supply three. Agricultural Bank of China Financial Leasing is lined up for three conventionally powered vessels, with Bank of China Financial Leasing providing another one.CITIC Financial Leasing will contribute two LNG dual-fuel vessels, while Minsheng Financial Leasing will provide the remaining ship.

The charter programme comprises ten LNG dual-fuel and four conventionally powered VLCCs, with all 14 vessels expected to enter service during 2030.

The leasing arrangements still require shareholder approval, with the company opting for the bareboat structure to expand its operating fleet while limiting upfront capital expenditure.

Taken together, the announcements cover ten directly ordered VLCCs and another 14 planned chartered newbuildings, marking a major expansion of Cosco Shipping Energy’s crude tanker fleet heading into the next decade.

Separately, the company’s board has approved another proposal involving long-term leasing and financing arrangements for 16 VLCC newbuildings. The related-party proposal, which also requires shareholder approval, has yet to be accompanied by details of financing partners, shipyards, contract values or delivery schedules. The company said further information would be disclosed once specific agreements are signed, leaving it unclear whether the 16 vessels represent additional fleet expansion or overlap with other newbuilding plans.

The proposed charters will run for up to 20 years, with the ships scheduled to enter the fleet during 2030.The largest allocation is four LNG dual-fuel VLCCs from Bank of Communications Financial Leasing, carrying a maximum combined rental commitment of RMB5.2bn ($779m).

ICBC Financial Leasing will provide three LNG dual-fuel vessels, Agricultural Bank of China Financial Leasing three conventionally powered VLCCs, and Bank of China Financial Leasing one conventional vessel. CITIC Financial Leasing is lined up for two LNG dual-fuel ships, with Minsheng Financial Leasing providing another one.

The arrangement covers ten LNG dual-fuel vessels and four conventionally powered VLCCs, although the broader specifications also refer to fuel-ready technologies.

Cosco Shipping Energy said the bareboat structure would allow it to expand its fleet without the same level of upfront capital expenditure required for direct ship ownership.

The programme was approved by the company’s board on November 9 but still requires shareholder approval because its cumulative leasing transactions over the previous 12 months exceed 50% of audited net assets.

The announcement came alongside the company’s separate RMB9.48bn investment in ten owned VLCC newbuildings at Yangzhou Cosco Shipping Heavy Industry and Dalian Shipbuilding Industry, taking the group’s newly announced potential fleet additions to 24 supertankers.

Source: Splash247

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