On November 6, COSCO Shipping Energy Transportation Co., Ltd. announced that its wholly-owned subsidiary, Cosworld Shipping Enterprises Co., Ltd., signed bareboat charter contracts for 6 VLCC vessels with Hainan COSCO Shipping Development on November 5.
According to a previous announcement, these 6 VLCCs were ordered by Hainan COSCO Shipping Development Co., Ltd., a subsidiary of COSCO Shipping Development, from Dalian Shipbuilding. The total transaction value is RMB 5.0858 billion (excluding tax), with the price per vessel being RMB 847.8 million (excluding tax). The first vessel is scheduled for delivery starting in April 2027, with subsequent vessels to be delivered successively before the end of November 2028.
Cosworld Shipping, under COSCO Shipping Energy, will charter these 6 VLCCs in the form of operating bareboat charters. The charter period is up to 240 months ± 90 days from the delivery date. The rental structure adopts a model combining a “Fixed Bareboat Hire” for 3 vessels and a “Floor + Sharing Hire” for the other 3 vessels.
The specific rental arrangements are as follows: The average fixed daily hire for the 6 vessels is RMB 134,871 per vessel (excluding tax); For the 3 vessels calculated under the “Floor + Sharing Hire”, the sharing portion (i.e., the floating hire) is linked to the Baltic Exchange’s published TCE for the Middle East to China route (TD3C). If the TD3C-TCE is below the benchmark agreed by both parties, the daily hire will be the floor daily hire; if the TD3C-TCE is above the agreed benchmark, the excess portion will be shared 50:50. The sharing hire is calculated daily, and if it falls on a holiday, the TD3C-TCE value from the previous working day is used.
COSCO Shipping Energy stated that this transaction is a key measure to implement the group’s tanker capacity development plan. Through the innovative model of internal industry-finance collaboration within the COSCO Shipping Group, it enhances the ability to acquire and control high-quality capacity via the bareboat charter method. This move not only helps consolidate the group’s leading market position in the tanker fleet but also strengthens the group’s autonomous management of the chartered vessels, effectively balances the capital structure for vessel investment, and further enhances the company’s sustainable development momentum.
This transaction adopts an operating lease model, which will effectively control the pace of vessel investment and balance the progress of large capital expenditures. This arrangement replaces a one-time ship purchase investment with long-term, stable rental payments, which will help optimize COSCO Shipping Energy’s cash flow structure, enhance financial flexibility, and improve the overall capital utilization efficiency of the group. Calculations show that after the execution of this bareboat charter, the impact on the company’s overall asset-liability ratio and operating cash flow is within a reasonable and controllable range, and the project has good operating returns.
The 6 VLCCs acquired through this operating bareboat charter possess advanced technical features such as being green, energy-efficient, intelligent, and methanol-fuel READY. They will directly enhance the operational capability and revenue potential of COSCO Shipping Energy’s core fleet. The rental structure combining “Fixed Hire and Floor + Sharing” helps the company lock in basic costs, smooth out cyclical fluctuations, and enhance operational resilience amidst market volatility. In the long run, the additional capacity will contribute stable operating income to the company and have a positive impact on improving the company’s overall profitability.
