The National Shipping Company of Saudi Arabia (Bahri) has announced that contracts have been signed with Hyundai Samho Heavy Industries (HSHI) for the building of 5 very large crude carriers (VLCCs) with an option for an additional 5 vessels.
The first five carriers will be delivered during 2017, Bahri indicated in a statement, adding that the financial impact of the contracts will appear after the delivery of the vessels.
The VLCCs orderes are reportedly designed to the latest international technical specifications and are fitted with environmentally-friendly specifications and high efficiency in fuel consumption, with a capacity of 300,000 DWT per carrier.
“The signing of these contracts is for continuous renewal of the current fleet to meet the needs of the local and global markets. The Company will announce the financing details at a later time,” read a statement from Bahri.
It was reported by Trade Winds earlier this year that Bahri were considering a major newbuilding programme and the deal is rumoured to be worth US $1-billion.
The order comes just weeks after Nabeel M. Al Binhassan, vice president, commercial, Bahri, told the Gulf Ship Finance Forum in Dubai that the carrier planned to add19-29 VLCCs to its fleet in the coming years, bringing the total number of VLCCs it operates to 50-60 vessels.
Binhassan’s comments underscored the fragmented nature of the VLCC sector, with the top five carriers controlling only 25% of fleet capacity, and the top ten only 41%.
Binhassan told delegates that the despite the recent uptick in VLCC day rates, earnings in the four years to 2014 Q4 had left operators largely unable to cover their average costs of between $25,000 and $30,000 a day, which would in time drive smaller players out of the market.
