COSCO Shipping Development advances major VLCC newbuilding programme
COSCO Shipping Development has approved plans to commission 16 very large crude carriers (VLCCs) at Dalian Shipbuilding Industry, in a newbuilding transaction valued at approximately RMB 13.43 billion, excluding tax.
The proposed investment will be carried out through its wholly owned subsidiary Oriental Fleet International and covers 16 crude oil tankers of 307,000 dwt each. The vessels will be constructed by Dalian Shipbuilding Industry, part of China State Shipbuilding Corporation, with the first delivery scheduled for October 2029 and the remaining ships expected by the end of December 2030.
According to the company’s November 11 disclosure, the agreed construction price is RMB 839.07 million per vessel, excluding tax. The transaction has received unanimous board approval but remains subject to shareholder approval under the applicable Shanghai and Hong Kong stock exchange listing rules.
Long-term leasing arrangements with COSCO Shipping Energy
Following delivery, all 16 VLCCs are intended to be placed on long-term bareboat charters with a subsidiary of COSCO Shipping Energy Transportation. The charter arrangements provide for periods of 240 months, with an additional 90-day flexibility provision at the charterer’s option.
The leasing structure combines fixed-rate arrangements for eight vessels with a minimum-rent and revenue-sharing mechanism for the remaining eight. The variable component will be linked to tanker market performance through the Baltic Exchange’s TD3C time-charter equivalent benchmark, with provisions for adjustments under specified conditions.
The newbuildings will feature designs prepared for potential future use of LNG and methanol as marine fuels. This fuel-ready specification does not mean that the tankers will initially operate with dual-fuel propulsion systems.
The programme forms part of a broader shipbuilding arrangement at Dalian involving 20 VLCCs, comprising the 16 vessels commissioned through COSCO Shipping Development and four vessels ordered directly by COSCO Shipping Energy. The latter form part of COSCO Shipping Energy’s separately announced programme of 10 VLCCs across Dalian and Yangzhou shipyards.
COSCO Shipping Development expects to finance the construction through internal funds and bank borrowing, with payments linked to construction milestones. Approximately 25% of the funding is expected to come from the company’s own resources.
Although shipbuilding agreements have been signed, the contracts remain subject to the required approvals before becoming effective. Their implementation will also depend on construction schedules and market conditions over the delivery period.
