RUS

Sovcomflot gears up for its first LNG-fuelled aframaxes

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Tradewinds

Charterers showing ‘huge interest’ in tanker newbuildings, says executive

Russian shipowner Sovcomflot (SCF Group)’s first pioneering LNG-fuelled aframax tanker will be delivered by Hyundai Samho Heavy Industries in South Korea next month.

The 114,000-dwt Gagarin Prospect — named after the first Russian cosmonaut, Yuri Gagarin — will be handed over to Shell at the start of its multi-year time charter on 25 July.

A sistership, Samuel Prospect, named in a salute to the founder of Shell Transport & Trading Co, Sir Marcus Samuel, is scheduled for delivery to the oil major next year.

These “Green Funnel” vessels are the first and last in a six-ship order for a new breed of ice-class 1A, dual-fuelled ships.

Sovcomflot, which signed an LNG supply deal with Shell for all the ships in 2017, will take on two of its own vessels this year, with the remaining pair to follow in 2019.

Sovcomflot senior executive vice-president Evgeniy Ambrosov tells TradeWinds that at present all four of its vessels are charter-­free.

But he reveals that for its first newbuilding delivery in September, Sovcomflot is in discussions with Russian exporters about ­using the ship to transport crude oil from the floating storage facility at Murmansk in northwest Russia for onward shipment to Europe.

The ships’ ice spec allows them to transit the Northern Sea Route and trade in harsh winter conditions, and they are being kitted out with ice radar systems and spotlights to make them compliant with the new Polar Code.

Ambrosov says Sovcomflot plans to deploy the vessels on time charters or contracts of affreightment, with a preference for the ­latter ­option.

He says the company has received huge interest from charterers. “Everybody wants to raise the green flag over their ships and bring their oil to different European locations, especially those in environmentally controlled areas, to enjoy the discount which different ports offer.”

The potential port saving figures he quotes are compelling.

He highlights Rotterdam in the Netherlands — one of the key ports for bunkering operations with which Shell has been working particularly closely — as offering a 6% green award discount and a 20% environmental ship index discount, both of which Sovcomflot’s vessels are eligible for.

On a port charge of €75,000 (about $88,500) for an aframax tanker, the discounts in Rotterdam stack up at around €8,500, or a little over 11%, Ambrosov says.

In Antwerp in Belgium, the discount on harbour dues adds up to €7,000 from a €105,000 port call charge.

In Sweden, Gothenburg provides two discounts totalling nearly €8,000 on a charge of about €82,000, while at Brofjorden the discount is €9,600 on €68,000.

“The average discount in Euro­pean ports is about 9.2% from the gross port charges,” Ambrosov says.

Russian ports are also offering discounts on harbour dues, he adds, which amount to a €9,000 saving on a €105,000 port call charge.

Ambrosov expects the aframax sextet initially to bunker in Rotterdam using Shell’s specialised 6,500-cbm LNG bunker vessel (LNGBV) Cardissa (built 2017).

The Cardissa is not confined to port and can also supply the tankers elsewhere, and Shell has outlined plans to add other LNGBVs in the region.

On top of this, Ambrosov says Russian companies Gazprom Neft and Novatek are looking to offer LNG marine bunkering as a way to develop their gas businesses.

He says both companies will probably be able to provide bunkers in the north of the Finnish Gulf close to Primorsk and Ust-­Luga, where Sovcomflot’s ships will be operating, from around 2020.

Sovcomflot has had to pay a premium for these first-of-a-kind tankers, which were contracted at around $60m each in the first quarter of 2017, but it believes it caught the bottom of the market on price. Ambrosov says the time charter rate has some component to cover the additional capex.

For Sovcomflot’s quartet, he estimates the company will be able to pay back this in seven to eight years or less if alternative fuel prices rise prior to and post the introduction of tougher SOx emissions regulations in 2020.

It also hopes market rates will have risen by the time the ships are handed over, allowing it to ­capture improved charter rates on delivery.