COSCO Shipping Energy Plans 24-Vessel VLCC Fleet Expansion

Source: COSCO Shipping

COSCO Shipping Energy has announced a fleet expansion plan involving 24 VLCCs, combining direct orders for 10 newbuildings valued at RMB 9.48 billion (around $1.42 billion) with long-term bareboat charters for an additional 14 units.

Direct Newbuilding Orders for 10 VLCCs Valued at $1.42 Billion

On November 9, COSCO Shipping Energy disclosed the terms of the shipbuilding contracts executed via its wholly owned subsidiary, Hainan COSCO Shipping Energy Transportation. Under the agreements, the carrier placed orders for 10 VLCCs across two premier Chinese state-owned shipyards.

Yangzhou COSCO Shipping Heavy Industry secured orders for six VLCCs at an aggregate contract value of RMB 5.69 billion (approximately $853 million). Meanwhile, Dalian Shipbuilding Industry Corporation (DSIC) was awarded four units valued at RMB 3.79 billion (roughly $569 million). This pegs the average price per vessel at approximately RMB 948 million ($142 million).

The newbuildings have been engineered to accommodate future alternative marine fuels:

●    Six vessels at Yangzhou: Configured with LNG-ready specifications, with deliveries slated between August 2029 and November 2030.

●    Four vessels at DSIC: Designed with future retrofit optionality for dual-fuel propulsion systems running on either LNG or methanol. Scheduled delivery dates span from September 2029 to May 2030.

The contract with Yangzhou Heavy Industry constitutes a related-party transaction, given that the shipyard operates under the common corporate umbrella of China COSCO Shipping Corporation. Consequently, that deal remains subject to independent shareholder approval. Conversely, the contract with DSIC has secured direct board approval and requires no further voting procedures, according to stock exchange disclosures.

Bareboat Charters for 14 VLCCs to Scale Operating Capacity

Parallel to its direct capital expenditure commitments, COSCO Shipping Energy’s board approved an asset-light chartering framework to take delivery of 14 newly built VLCCs under long-term bareboat arrangements backed by six Chinese financial leasing houses.

The transaction will be executed through subsidiary Huanyu Shipowning, with aggregate maximum charter hire exposure capped at RMB 17.4 billion (roughly $2.61 billion) across charter tenors extending up to 20 years. All 14 chartered vessels are scheduled to enter commercial service during 2030.

The chartered fleet features an alternative-fuel-heavy profile comprising 10 LNG dual-fuel units and four conventionally fueled vessels, arranged across six leasing counterparties:

●    Bank of Communications Financial Leasing (Bocomm Leasing): Four LNG dual-fuel VLCCs, with a maximum aggregate charter commitment of RMB 5.2 billion (roughly $779 million).

●    ICBC Financial Leasing: Three LNG dual-fuel VLCCs.

●    CITIC Financial Leasing: Two LNG dual-fuel VLCCs.

●    Minsheng Financial Leasing: One LNG dual-fuel VLCC.

●    Agricultural Bank of China Financial Leasing (ABC Leasing): Three conventional-fuel VLCCs.

●    Bank of China Financial Leasing (BOC Leasing): One conventional-fuel VLCC.

According to COSCO Shipping Energy, the bareboat charter structure allows the operator to inject massive ton-mile capacity without front-loading total upfront equity and debt financing, as required under direct asset ownership. This financing structure preserves the carrier’s capital flexibility for ongoing operations and broader strategic investments.

While approved by the board of directors on November 9, the bareboat chartering framework still requires shareholder sign-off. Under listing regulations, the cumulative value of finance-leasing commitments incurred over the trailing 12-month period exceeds 50% of the company's latest audited net asset value.

Proposed Chartering and Financing for 16 Additional VLCCs

COSCO Shipping Energy’s board also granted preliminary approval for a separate proposal covering long-term lease and financing arrangements for an additional 16 newly built VLCCs. Classified as related-party transactions, these prospective contracts will likewise require shareholder approval.

The company has yet to release specific parameters regarding leasing partners, shipyard allocations, aggregate contract value, or construction delivery windows. COSCO stated that full commercial terms will be announced once definitive agreements are executed. Given the limited disclosure, it remains unclear whether these 16 units represent a further supplemental fleet expansion or are structurally tied to the newbuilding and chartering programs already detailed.

With 24 VLCCs firmly outlined and a further 16 units under active board review, COSCO Shipping Energy is setting the stage for a sweeping renewal and expansion of its crude tanker fleet toward the close of the decade. The final footprint of this fleet buildup, however, remains contingent on upcoming shareholder votes and the formal execution of binding commercial contracts.

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Source: Phaata.com (According to Splash247)

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