Any announcement or even rumor of an order to build new tankers makes headlines in 2022, such is the lack of activity in this area. Conversely, newbuild prices continue to climb, despite the lack of contracts to peg values to – the driving force being the opportunity cost lost to the shipyard in taking an order for a tanker, versus a contract very lucrative container ship.
The number of new construction tanker contracts awarded 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 construction contracts tankers were $156 million, compared to $4.2 billion over the same period in 2021 (VesselsValue data).
One of the causes of the drop in tanker orders is that shipowners do not know which fuel technology to choose, but the same dilemma arises for container shipowners, who have collectively ordered more than $15 billion of tonnage (largely powered by dual-fuel LNG) in the same period tanker owners ordered US$156 million.
The price of a standard green new-build VLCC is now in the region of US$115 million before dual-fuel technology, compared to the rule of thumb of US$100 million, and a latest fact of around 93 million US dollars by Euronav, reported in June 2021.
The largest tanker size ordered so far in 2022 is the contract awarded by Navios Maritime Partners which agreed to purchase four new 115,000 dwt LR2 vessels, for a purchase price of $58.5m each (plus $4.2 million in additional features/enhancements). The vessels have been designed with the latest technology to optimize efficiency. They are expected to be delivered to the Navios Partners fleet in 2024 and in the first quarter of 2025.
“Erik Thun AB has embraced the concept of a dual-fuel, high-tech tanker”
In other news, Asiatic Lloyd Shipping of Singapore has reportedly placed an order for four units with Hyundai Vietnam for a in block price of 38.88 million US dollars. MOL also reportedly ordered an MR tank truck from CSSC OME for an undisclosed price.
Erik Thun AB embraced the high-tech dual-fuel tanker concept and in March 2022 signed a contract for the 10th in the Vinga sister ship series. All vessels in the series are dual-fuel capable, use LNG/LBG as fuel, are equipped with a battery-hybrid solution, and have several innovative features that reduce fuel and power consumption, reducing significantly reduce CO emissions2sulphur, 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 ships, 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 headlines in April 2022, when it obtained a green credit guarantee from the Swedish Export Credit Agency. The guarantee applies to the pre-financing 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 that a green credit guarantee has been issued to the shipping industry and only the second time that the Swedish Export Credit Agency has issued this comprehensive guarantee. Managing Director of the Swedish Export Credit Agency, Anna-Karin Jatko, said: “For the world to succeed in green transformation, it is vital that companies 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 achieve EU climate goals and make the European Green Deal a reality, capital needs to be channeled into a sustainable business sector.
“The transactions have reduced the average age of the VLCC fleet 100% owned by Euronav from 7.3 to 6.6 years”
On the delivery side, 141 tankers were delivered in the first four months of 2022, including 14 VLCCs and 18 Suezmax tankers. This contrasts with deliveries scheduled for the whole of 2023 – 23 VLCCs and eight Suezmax tankers. Given that the major charterers impose an age limit of 15 years, the pool of available tankers under 15 years old will be reduced. The law of supply and demand means that the prices and values of the decreasing number of available modern VLCCs and Suezmax will skyrocket.
The demand for modern tonnage was illustrated by the sale by Euronav of older VLCCs and the purchase of younger vessels. The listed company, which is in the midst of a merger/takeover with Frontline, has purchased two eco-VLCCs from Hartree Partners. Le built in 2020, 299,995 dwt chelsea and built in 2019, 297,750 dwt Ghillies were acquired for a total of US$179 million.
These VLCCs are sister ships to Euronav’s D-class ships (built in 2021 Delosbuilt in 2021 Diodorusbuilt in 2021 Dory and build it in 2021 Devil). These vessels were all built in Korea at DSME, are equipped with scrubbers and are the latest generation of eco-type VLCCs.
Alongside this transaction, Euronav sold four former S-class VLCCs for a in block price of US$198 million and Euronav will record a capital gain of US$1.2 million on the transactions. The four ships sold are those built in 2011 Sandrabuilt it in 2011 Sarahthe 2012 simoneand built it in 2012 Sonia. According to Euronav, the four vessels are non-ecological VLCCs with significantly higher fuel consumption and carbon footprints than modern eco-VLCCs. The transactions reduced the average age of Euronav’s wholly-owned VLCC fleet from 7.3 years to 6.6 years, making it one of the youngest VLCC fleets in the world.