In February, John Frederiksen, through his private company Seatankers Management, signed an agreement with a shipyard in Dalian, China, to build up to eight very large crude carriers, or VLCCs, of 307,000 dwt.
The first ship is due to be delivered in two years, in September 2026, according to the yard. Six of the ships were firm contracts, while the last two were options that Frederiksen could choose to exercise. He has now done so, so the entire eight-ship series is now firm contracts.
The announcement of the option comes despite a significant drop in spot rates for large crude carriers since the agreement was signed.
At the beginning of February, such ships built after 2015 — so-called environmental tonnage — were making more than $53,000 a day on the spot market, according to Clarksons Securities, while earnings now hover around $32,000. Older ships have to make do with about $24,000 a day.
In its first-quarter accounts presentation, Frontline said the shipping company's 41 VLCCs had a cash balance of $31,200 per vessel per day.
Great investment
The price per vessel was previously estimated at around $120 million, meaning the total investment is around SEK10.4 billion at today's exchange rate. The price includes cleaning equipment in the form of scrubbers.
The construction of the VLCCs is shared between Dalian Shipbuilding Corporation and CSSC Tianjin Shipyard.
Including options, Frontline and Golden Ocean Group owner Fredriksen has a total newbuilding programme of up to 37 ships with a total value of around NOK 33 billion.
These are contracts and options entered into under the auspices of his own system at Seatankers Management and are an addition to the construction programme in the companies listed in the Frederiksen Group.
In addition to the eight VLCCs, the order book includes nine, two Suezmax VLCCs and three LR2/aframax tankers. In addition, there will be up to ten bulk carriers, four subsea vessels and the world’s largest living quarters vessel.
– Multi-year rise
In April, an agreement was signed that secures Frederiksen and Seetanker a seat on the board of New York-listed tanker company International Seaways, where he is the largest shareholder.
“We believe the industry is in the middle of a multi-year recovery,” said Jan-Erik Klipsland, investment director at Seatankers, regarding the agreement with International Seaways.
Frederiksen confirmed this in an interview with Finansavisen on the occasion of his 80th birthday in early May.
“This could be the beginning of a multi-year recovery cycle in the reservoirs,” he said, referring to the relationship between supply and demand in the sector.
Frederiksen noted in the interview that the order book for tanker shipping remains historically low, although a few newbuilds were ordered during the spring, and said the world still needs oil.
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