Joining the list of scrubber converts, Belgium-based tanker operator Euronav has announced it has entered into an agreement for the acquisition through resale of three VLCC newbuilding contracts initially ordered by south Korean operator Sinokor in January 2019.
Euronav’s former CEO Paddy Rodgers was a leading opponent of scrubbers and had criticised the decision by the IMO to allow their use. He had appeared to be mellowing when in January 2019 he said “Our view remains the same on scrubbers. We remain sceptical and would like to see the technology more thoroughly tested in the tanker environment as we outlined in our last quarterly call in October. We will, however, remain vigilant during this dynamic period with regard to developments and update shareholders accordingly”. Shortly after making that statement Rodgers left Euronav and was replaced by company CFO Hugo De Stoop.
The three new VLCCs are currently completing construction at the DSME shipyard in South Korea and are being acquired for an aggregate purchase price of $280.5 million or $93.5 million per unit. All three vessels will be fitted with Exhaust Gas Scrubber technology and Ballast Water Treatment System. The vessels are due to be delivered early in the fourth quarter 2020 and in January and February 2021 respectively and will therefore have exposure to the key winter freight markets in 2020/2021.
Euronav’s CEO, Hugo De Stoop said, “The large tanker fundamentals remain constructive despite substantial headwinds surrounding economic activity linked to the Coronavirus that we believe and hope will be temporary. Current disruptions to the freight market have provided an opening for Euronav to be opportunistic and deliver what we believe will be long term value for our stakeholders. This transaction demonstrates our flexibility and our capacity to seize opportunities thanks to a strong balance sheet and a robust liquidity position.”
“This transaction is consistent with our core company goals. These vessels are ex-yard resales, which do not add to existing vessel supply. Euronav actively looks to regularly rejuvenate its fleet and enhance its operational strength on which this transaction delivers. Upon delivery these vessels will also reduce the average age of our VLCC fleet”.
Euronav will meet the financing of this acquisition with existing borrowing facilities and debt capacity. The payment profile for this transaction means that the largest portion of the instalments on each vessel will be made on delivery of each ship.