Shell today signed agreements to charter 10 new crude tankers powered by dual-fuel liquefied natural gas (LNG) engines.
Four of the very large crude carriers (VLCCs) have been chartered from Switzerland based Advantage Tankers, three from Singapore based AET and three from New York City headquartered International Seaways Inc.
All 10 ships will be built in South Korea by shipbuilder DSME, the first will be operational from 2022 and be on charter to Shell for seven years.
Shell says that the main engines and vessel design chosen for the ships will mean these tankers have the lowest possible methane slip and highest fuel efficiency including on average 20% less fuel consumption compared to eco VLCC vessels on the water.
Shell says that it continues to significantly invest in LNG for its long-term charter fleet with 14 in service by the end of 2021.
Announcing its agreement with DSME to build three of the vessels, International Seaways said that the three are expected to be delivered in 2023.
On delivery, they will commence seven-year time charters with Shell. The company expects to fund the construction costs with cash and long-term financing.
“We are pleased to partner with market leading counterparty Shell on these three dual-fuel LNG VLCCs,” said Lois Zabrocky, International Seaways’ president and CEO. “In addition to generating strong, stable cash flows for seven years, with added upside due to profit sharing above the base rate, we are once again renewing our fleet at very attractive levels.
“Importantly, we expect these tankers to be well suited to adhere to future environmental regulation throughout their life, as they meet both today’s IMO Energy Efficiency Design Index (“EEDI”) and also exceed the 2025 Phase III EEDI targets by about eight percent. Their significant environmental benefits, including substantially reducing our carbon footprint, are in keeping with Seaways’ commitment to ESG-focused corporate citizenship, and we are proud to continue to be at the forefront of sustainability initiatives in the maritime sector.”
LNG THE CHOICE FOR NEWBUILDS
“It is imperative that the shipping sector immediately employs the cleanest fuels available,” said Grahaeme Henderson, Global Head of Shell Shipping & Maritime. “Today and for the foreseeable future, LNG is the choice for newbuilds to ensure we are not adding heavier emitters into the global fleet while we work hard at developing zero-emissions fuels.
“This significant commitment will see Shell hit a new milestone for our fleet decarbonization with an average of 50% of our crude tankers on time charter powered by dual-fuel LNG engines once in service. There is real urgency to tackle emissions from this sector and adopting LNG while developing zero-emissions fuels options, will make a significant difference to cumulative emissions.”
Sung Geun Lee, President and CEO of DSME, said: “The vessels have been designed with state-of-the-art technologies and not only achieve a huge reduction in greenhouse gas emissions but are also economically viable. They have a low fuel consumption with their dual-fuel LNG engines and will bring significant benefits to both the charterer and the ship owners over the long term.”