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CNOOC Seeks Replacements for Sanctioned COSCO LNG Tankers

AdobeStock / © Kasto

China National Offshore Oil and Gas Company (CNOOC) is on the hunt for liquefied natural gas (LNG) tankers to charter, several industry sources told Reuters, looking to replace ships it had previously hired that are linked to a Chinese company sanctioned by the United States for allegedly transporting Iranian oil.

The company, COSCO Shipping Tanker (Dalian), is one of four Chinese firms on which the Trump administration imposed sanctions on Sept. 25, in what it described as the biggest sanctions taken by the U.S. government since a crackdown on Iranian oil exports designed to put pressure on Tehran to abandon nuclear programmes.

That move had already pushed global crude oil tanker freight rates to multi-year highs. Now, prompt demand by Chinese state giant CNOOC for LNG ships has caused freight rates for such tankers to nearly double to $130,000-$150,000 a day from about $80,000 late last week, shipbrokers said.

"Vessel availability was already quite tight before this and now rates are all over the place," said one Singapore-based LNG shipbroker.

Speaking on condition of anonymity because of the sensitivity of the matter, the broker said he expects rates to keep rising amid limited availability as traders prepare to secure ships to meet peak winter heating demand for the fuel in the fourth quarter.

Several industry sources said CNOOC is seeking to replace some of six COSCO-linked LNG tankers - Dapeng Sun, Dapeng Moon, Dapeng Star, Min Rong, Min Lu and Shen Hai.

The tankers are owned and managed by China LNG Shipping (International) Co, according to Refinitiv Eikon and IHS Maritime shipping records.

That company is a joint venture between CNOOC and China LNG Shipping (Holdings). The joint venture itself is 50%-owned by the sanctions-hit firm, COSCO Shipping Tanker (Dalian), with the other 50% held by China Merchant Shipping, according to the latter's website.

CNOOC has already fixed the charter of at least two different LNG tankers, one shipbroker said, declining to be named as he was not authorised to speak with media.

CNOOC and COSCO Shipping Tanker (Dalian) parent COSCO Shipping Energy Transportation Co did not immediately respond to requests for comment.

China LNG Shipping (International) Co, China LNG Shipping (Holdings) and China Merchant Shipping could not immediately be reached for comment.

Reporting by Jessica Jaganathan

Oct 11, 2019



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