Rumors are mounting of a mammoth VLCC newbuilding order spree of up to 80 vessels to be inked by Chinese oil companies at compatriot shipyards.
A subsidiary of Chinese state-owned oil group Sinopec is looking to place an order for 30-40 VLCCs at domestic shipyards with delivery scheduled between 2013 and 2016.
In addition, another major VLCC charterer and oil company PetroChina could be set to follow the Sinopec order with a similar-sized contract, which together would potentially add 80 new VLCCs to the overtonnaged fleet over the next two to five years.
Although some tanker industry participants are unsure whether the number of vessels has been exaggerated due to “Chinese whispers”, there seems little doubt from the market that Chinese oil companies will be placing orders for a considerable number of VLCCs.
At present, the Chinese VLCC fleet stands at 39 vessels from the global total of 585, with an orderbook of just 13 ships, according to data from London-headquartered shipbroker Gibson.
It is understood that if placed, the VLCC orders would be heavily subsidised at $80m, 20% below the current $100m newbuilding price many brokers estimate shipyards need to break even.