Gulf Navigation Signs 10 Year Charter Worth AED 1 Billion for 2 VLCC New Buildings

The company delivers the 2 vessels to Grand China Logistics Holding (Group) Co. LTD  upon delivery from Zhoushan Jinhaiwan Shipyard in Dec 2012 and May 2013

Gulf Navigation Holding, PJSC (DFM: GULFNAV) one of the leading ship-owners and maritime services company in the region, announced today the signing of a contract with Zhoushan Jinhaiwan Shipyard Co. LTD of Shanghai to build 2 Very Large Crude Carriers (VLCC) for delivery in December 2012 and May 2013.  The sister ships are 320,000 in deadweight and have a carrying capacity of more than 2 million crude oil barrels each. 

Simultaneously, Gulf Navigation Holding signed two agreements with Grand China Logistics Holding (Group) Co. LTD to time charter the vessels for 10-years each upon delivery.  The charter agreement has a profit-sharing mechanism once a ceiling is reached, and is worth approximately AED 1.05 Billion (US$ 284.7 million).

The new vessels will join the “Gulf Eyadah” which was delivered in January 2011, and “Gulf Sheba” to increase Gulf Navigation’s VLCC fleet to 4 and its carrying capacity to 8 Million barrels.   The Company plans to expand the VLCC fleet to 9 (18 million barrels) by 2015, as part of the 5-year shareholder-value improvement strategy which started this year.  The plan also calls for expansion of the chemical fleet, entry into the Aframax and offshore markets and listing of subsidiaries in international stock exchanges.  Company results are expected to reflect such key achievements in profitability as they occur.

The signing of the VLCC building and charter contracts with major Chinese groups mark a strong entry of Gulf Navigation Holding into the Chinese market, which is witnessing a huge surge in oil consumption.  China’s crude oil demand is forecast to increase to 10.5 Million barrels per day in 2015 from 8.1 Million barrels a day in 2009.