The volume of tanker contracting has fallen to just 10% of that in 2021, although S&P activity remains at historically high levels
Any announcement or even rumour of a tanker newbuilding order is headline news in 2022, such is the lack of activity in this area. Conversely, newbuilding prices continue to climb, despite the lack of contracts against which to peg values – the driving force being the lost opportunity cost to the shipyard in taking a tanker order, versus a highly lucrative container ship contract.
The number of tanker newbuilding contracts placed in the first four months of 2022 was 11, compared to 110 tanker contracts in the same period of 2021 and 149 contracts in 2020. In terms of value, the 11 tanker contracts amounted to US$156M, versus US$4.2Bn in the same period in 2021 (VesselsValue data).
One cause for the fall in tanker orders is that owners are unsure of which fuel technology to choose, but the same dilemma faces container ship owners, which have collectively ordered over US$15Bn worth of tonnage (largely LNG dual-fuel powered) in the same period that tankers owners ordered US$156M.
The price of a standard eco VLCC newbuilding is now in the US$115M region before dual-fuel technology, compared to the rule-of-thumb of US$100M, and a last done of around US$93M by Euronav, reported in June 2021.
The largest size of tanker ordered so far in 2022 is the contract placed by Navios Maritime Partners which has agreed to purchase four 115,000 dwt LR2 newbuilding vessels, for a purchase price of US$58.5M each (plus US$4.2M in additional features/improvements). The vessels have been designed with the latest technology to optimise efficiency. They are expected to be delivered into Navios Partners’ fleet during 2024 and Q1 2025.
“Erik Thun AB has embraced the dual-fuel, high-tech tanker concept”
In other news, Asiatic Lloyd Shipping of Singapore is reported to have placed an order for four units at Hyundai Vietnam for an en bloc price of US$38.88M. MOL is also reported to have ordered one MR tanker at CSSC OME for an undisclosed price.
Erik Thun AB has embraced the dual-fuel high-tech tanker concept and in March 2022 signed a contract for the 10th in the Vinga series of sister vessels. All the vessels in the series have dual-fuel capability, use LNG/LBG as fuel, are equipped with a battery-hybrid solution and have several innovative features that reduce fuel and energy consumption, resulting in extensively lower emissions of CO2, sulphur, nitrogen oxide and hazardous particles.
The 17,999-dwt tanker will be built by China Merchants Jinling Shipyard in Yangzhou and will be the latest contribution to the Vinga series of nine previous sister vessels, all trading within the Gothia Tanker Alliance.
Erik Thun’s close partner, Furetank, will technically and commercially manage the new vessel and upon delivery in 2024, the vessel will enter the Gothia Tanker Alliance network. Furetank also made the news in the April 2022, when it was granted a green credit guarantee by the Swedish Export Credit Agency. The guarantee applies to the prefinancing of Furetank’s next product and chemical tanker. It covers 80% of the risk for the lender, Tjörns Sparbank, and marks a milestone for Furetank and Swedish shipping.
This is the first time a green credit guarantee has been granted to the shipping industry and only the second time the Swedish Export Credit Agency has granted this guarantee overall. Swedish Export Credit Agency director-general Anna-Karin Jatko said: “For the world to succeed in the green transformation, it is vital that businesses like Furetank can finance their ambitious climate initiatives. We are very proud to have the opportunity to support Furetank’s investment in this new vessel.”
The green credit guarantee is granted based on the EU taxonomy, the assessment tool that will guide international capital towards green investments. To reach EU climate goals and realise the European Green Deal, capital needs to be directed towards a sustainable business sector.
“The transactions have reduced the average age of Euronav’s fully-owned VLCC fleet from 7.3 to 6.6 years”
On the completions side, 141 tankers were delivered in the first four months of 2022, including 14 VLCCs, and 18 Suezmax tankers. This contrast with the expected deliveries in the whole of 2023 – 23 VLCCs and eight Suezmax tankers. Given that the major charterers impose an age limit of 15 years old, the pool of available less-than-15-years-old tankers is going to shrink. The law of supply and demand means that prices and values for the diminishing pool of available modern VLCCs and Suezmax is going to soar.
The demand for modern tonnage was illustrated by Euronav’s sale of older VLCCs and the purchase of younger vessels. The public listed company, which is in the middle of a combination/takeover with Frontline, purchased two eco-VLCCs from Hartree Partners. The 2020-built, 299,995 dwt Chelsea and the 2019-built, 297,750 dwt Ghillie were acquired for a total of US$179M.
These VLCCs are sister ships to Euronav’s D-class vessels (2021-built Delos, 2021-built Diodorus, 2021-built Doris and the 2021-built Dickens). These vessels were all built in Korea at DSME, are fitted with scrubbers and are the latest generation of eco-type VLCC.
In parallel to this transaction, Euronav sold four older S-class VLCCs for an en-bloc price of US$198M and Euronav will record a capital gain of US$1.2M on the transactions. The four sold vessels are the 2011-built Sandra, the 2011-built Sara, the 2012 Simone, and the 2012-built Sonia. According to Euronav, all four vessels are non-eco VLCCs with significantly higher consumptions and carbon footprints than modern eco-VLCC. The transactions have reduced the average age of Euronav’s fully-owned VLCC fleet from 7.3 years to 6.6 years, making it amongst the youngest VLCC fleets globally.
© 2023 Riviera Maritime Media Ltd.