Euronav Exercises Ammonia-Ready VLCC Option, Embracing Green Shipping Technologies

Euronav, a well-known Belgian tanker company, has opted to exercise its option to build a second very large crude carrier (VLCC) as part of a contract established in August with CSSC Qingdao Beihai Shipbuilding, a subsidiary of China State Shipbuilding Corporation (CSSC).

This VLCC is designed with an eye towards future environmental standards and in alignment with the IMO Tier III requirements that target the reduction of nitrogen oxide emissions. As part of its design, the vessel will be equipped with provisions to potentially incorporate two 6,000-cubic-meter ammonia fuel storage tanks. This readiness positions the vessel for a transition to ammonia-based propulsion, paving the way for future "zero-carbon" operations.

Data from VesselsValue also suggests that the first vessel in this series will come equipped with scrubbers. Euronav has committed to a payment of USD 112.2 million per vessel and has highlighted that the payment terms and schedule are particularly favorable. Both VLCCs are scheduled to be delivered by 2026.

The decision to procure an additional VLCC stems from a significant agreement between Euronav's majority shareholders, CMB and Frontline. This comprehensive deal includes Frontline's acquisition of twenty-four eco VLCCs from Euronav. Consequently, Frontline's fleet will consist of a total of 89 vessels, solidifying its position as the largest tanker owner in the public domain in terms of deadweight tonnage.

Furthermore, this strategic move will significantly reduce the average age of Frontline's fleet to just 6.1 years. The addition of 24 eco vessels is expected to bolster fuel efficiency and reduce overall fleet emissions.

Frontline is extremely satisfied with this strategic maneuver, especially considering the challenges posed by the acquisition of a substantial number of eco VLCCs in the current market dynamics. These challenges are further compounded by the historically low order book for VLCCs, primarily due to the extensive yard slot schedule extending as far as 2026. This congestion is primarily due to heightened ordering activity in other sectors, particularly the construction of containerships and liquefied natural gas (LNG) carriers.

In contrast, Euronav is poised to undergo fleet diversification and modernization with a firm focus on integrating alternative fuels and ensuring the long-term sustainability of its fleet. Once the finalization of the deal with Frontline is achieved, CMB, the majority shareholder of Euronav, plans to pursue an ambitious decarbonization strategy for the company. This strategy is aligned with the growing industry emphasis on environmental sustainability and the reduction of carbon emissions.