South Korea's largest crude oil transporter, SK Shipping, has placed a $250 million order for two supertankers with a domestic shipyard, in an attempt to tap into healthy global freight rates, an SK spokesman said on Monday.
The orders, placed with Hyundai Heavy Industries and come about five years after SK Shipping's last order to build three tankers, is part of the company's medium-term plan to take advantage of healthy dirty tanker freight earnings.
"Whether we continue to expand our fleet, is something we will have to decide in the future, but for now we see that with healthy freight rates, it is the right time to make investments for new tonnage," the spokesman said.
VLCC tanker rates have been holding above historical averages, with rates seen at about W130 levels on Monday or about $5.91 million ($2.92 a barrel) for the benchmark Middle East-Japan route.
The Seoul-based shipping company will take delivery of the new Very Large Crude Carriers (VLCCs), each costing $125 million and expected to be in the range of about 300,000 dead-weight tonnes, sometime in 2009.
"The tankers will be replacing three single-hulled tankers we have on a time-charter at the moment, of which the contracts are running out this year," the spokesman said.
SK Shipping, a unit of the SK Group, this year took delivery of three VLCC newbuilds, which it had ordered in 2001.
The North Asian shipping outfit is expected to go into the time-charter market to book at least two double-hulled tankers in the interim, until they take delivery of the new VLCCs in 2009.
The supertankers are currently servicing the popular crude oil transport route between the Middle East and South Korea.
Crude oil imports into South Korea, the world's fourth-biggest crude buyer, rose 2.9 percent to 67.88 million barrels in June versus year ago levels, data released from the state run Korea National Oil Corp (KNOC) showed recently.
SK Shipping currently has a total fleet size of about 46 vessels, including dry bulk carriers. It operates a total of 11 supertankers used primarily to transport crude oil and seven product tankers used to ship refined oil products.