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Euronav Orders VLCC Signaling “Business as Usual” After Breakup

Euronav
Euronav moved forward lifting the construction option for a second ammonia-ready VLCC

Published Oct 12, 2023 8:45 AM by The Maritime Executive

Euronav is signaling to the market that it will be “business as usual” with its focus remaining on the long-term strategy just days after its two large shareholders settled their deadlock by agreeing to carve up the company. Euronav reported today it has taken up the construction option for a second VLCC due for delivery in 2026.

The tanker company has lifted an option for a second 319,000 VLCC to be built by Qingdao Beihai Shipbuilding Co., a subsidiary of China National Shipbuilding Corporation. Euronav will pay $112.2 million for each of the two tankers and is highlighting that it received “highly favorable payment terms,” as well as a quick schedule with both vessels due for delivery in the third quarter of 2026. This comes as orders for VLCCs remain low and the market is seeking new capacity to meet growing demand. The VLCC orderbook is currently at its lowest point since the 1980s.

Beihai highlighted the order that it received in August as its successful entry into the very large tanker market. They reported that it was also Euronav’s first VLCC order for a tanker to be built in China. Beihai had given Euronav a two-month option in the contract signed in August for the second VLCC order.

News of the lifting of the option comes just days after Frontline and CMB agreed to carve up Euronav selling 24 of the company’s modern VLCCs to Frontline. The two large shareholders, which had been in a deadlock over the strategic direction and management of Euronav, are ending this battle with CMB buying out Frontline’s investment in Euronav.

The new tankers are in keeping with the revised strategic direction that CMB has announced for Euronav. The Saverys family that controls CMB highlights the need to accelerate decarbonization efforts moving shipping and operations to alternative fuels. However, they had also said they would seek to diversify Euronav away from being a pure tanker operator.

The new vessels are being built ammonia-ready with two 6,000 cubic meter storage tanks for the future alternative fuel. The design also anticipates a future configuration to achieve zero carbon operation. Beihai reported that the design for the VLCCs will meet the IMO’s TIER III emission standards and the third stage of the Ship Energy Efficiency Design Index (EEDI) indicator.

Each of the VLCCs will be 1,113 feet in length with a molded width of over 196 feet. The ships will have an operating speed of 14.5 knots.

After the closing of the agreed sale to Frontline, Euronav will still have a fleet of approximately 17 VLCCs, plus the two now on order, as well as 22 Suezmax tankers with an additional four also on order. CMB has said it will look to accelerate the diversification of the fleet including possibly having Euronav acquire some or all of CMB’s fleet.