Two publicly quoted John Fredriksen shipping companies, Frontline Ltd and Golden Ocean Group Limited have entered into a non-binding term sheet agreement with oil trader Trafigura Group to establish a leading global supplier of marine fuels
Under the term sheet (a nonbinding agreement setting forth the basic terms and conditions under which an investment will be made) Frontline and Golden Ocean will acquire 15% and 10% interests in the joint venture respectively and Trafigura will contribute its existing physical bunkering activities.
Subject to agreement on final terms, the joint venture is expected to commence operations in Q3 2019 and will act as the exclusive purchaser of marine fuels for Trafigura, Frontline and Golden Ocean, as well as certain entities affiliated with John Fredriksen’s private company Hemen Holding Ltd, Frontline and Golden Ocean’s largest shareholder.
Frontline Management AS’ chief executive Robert Hvide Macleod, and Golden Ocean Management’s chief executive Birgitte Ringstad Vartdal jointly commented “It is anticipated that IMO 2020 will create logistical marine fuel supply issues for shipowners globally. In addition to presenting a compelling economic opportunity, our participation in the JV will ensure our ability to source and acquire marine fuels at competitive prices on a continuous basis. This transaction represents yet another instance where we have been able to leverage our relationship with other entities of Hemen Holding Ltd to create significant economies of scale and a real competitive advantage. We look forward to working with Trafigura, our joint venture partner, to create one of the world’s leading suppliers of marine fuels.”
Trafigura’s executive chairman and chief executive Jeremy Weir commented “Today’s announcement represents a further progression in the development of Trafigura’s response to the challenges and opportunities the impending IMO 2020 regulation will present. We look forward to providing an essential service to our clients and working closely with Frontline and Golden Ocean to grow this venture into one of the world’s leading suppliers of marine fuels in the coming years.”
Trafigura’s co-head of bunkering Kenneth Dam added “Over the past 24 months, Trafigura has been growing its physical bunkering business worldwide. We believe that marine fuel market disruptions will be brought on by the implementation of IMO 2020 regulations and that the joint venture’s increased base volumes and greater access to both infrastructure and credit will provide increasingly competitive bunkering supply services to our customers. We are confident in our ability to supply quality products at competitive prices to the fleets controlled by the joint venture partners as well as to third-party shipowners and operators.”
Is your company as prepared as Frontline and Golden Ocean for IMO 2020? Hear the latest developments at the Asian Sulphur Cap 2020 Conference in Singapore, 15-16 October, 2019.