COSCO Shipping Energy Transportation Co., Ltd. (COSCO Shipping Energy) announced that its wholly owned subsidiary Pan Cosmos Shipping & Enterprises has executed a 20-year bareboat charter with Oriental Fleet International on 11 November 2026 for sixteen 307,000-dwt very large crude carriers (VLCCs) equipped for dual-fuel methanol and LNG operations.
Key Transaction Terms • Lease profile: 240 months ± 90 days per vessel, commencing on individual delivery dates between October 2029 and December 2030. • Fleet mix: Eight VLCCs on a fixed bareboat rate; eight on a floor-plus profit-sharing formula linked to the Baltic Exchange TD3C time-charter equivalent (TCE), with a switch option to TD15-TCE if predefined thresholds are met. • Fixed component: Average fixed rent of RMB 116,520 per vessel per day. • Variable component: Annual variable lease payments for the profit-sharing tranche capped at RMB 320.00 million; payable quarterly. • Total annual charter cost (all 16 vessels): projected between RMB 680.00 million and RMB 1.00 billion, exclusive of taxes and fees, once the full fleet is on hire. • Funding: Entirely from internal resources; no external financing disclosed. • Accounting impact: Each VLCC will be recognised as a right-of-use asset at an estimated RMB 651.00 million on commencement, while variable rents will be expensed as incurred under HKFRS 16.
Related-Party and Regulatory Implications Oriental Fleet is a wholly owned subsidiary of COSCO SHIPPING Development, which is controlled by China COSCO SHIPPING Corporation (COSCO SHIPPING). COSCO SHIPPING and its affiliates own 46.85% of COSCO Shipping Energy, classifying the lessor as a connected person. Consequently: • Fixed lease payments constitute a discloseable and connected transaction (applicable percentage ratios >5% but <25%); subject to announcement, circular and independent shareholders’ approval at an extraordinary general meeting (EGM). • Variable lease payments constitute a continuing connected transaction (ratios >0.1% but <5%); subject to reporting and announcement only. • Directors affiliated with COSCO SHIPPING abstained from voting. An Independent Board Committee and TC Capital International have been engaged to opine on fairness; the adviser concludes the 20-year term aligns with normal industry practice.
Strategic Rationale 1. Capacity expansion: Enhances COSCO Shipping Energy’s VLCC fleet, underpinning its tanker market position and supporting global crude transportation demand. 2. Capital efficiency: Operating lease structure substitutes upfront vessel purchase costs with predictable long-term rentals, improving cash-flow flexibility. 3. Market-responsive pricing: Hybrid fixed and profit-sharing rents balance earnings stability with upside participation in freight-rate cycles. 4. Green readiness: Dual-fuel (methanol + LNG) design and intelligent systems strengthen the company’s sustainability and operational efficiency credentials.
Next Steps A shareholder circular will be dispatched by 4 December 2026, and an EGM will be convened to seek independent shareholder approval for the charter and related right-of-use asset acquisition. COSCO SHIPPING and its associates will abstain from voting.
Comments