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Business Last Updated: May 15, 2022 - 11:55:52 AM


Sovcomflot Proceeding with Vessel Sales
By Maritime Executive, May 13, 2022
May 14, 2022 - 10:05:31 AM

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Sovcomflot vessel sales ahead of sanction deadline Sovcomflot's LNG carriers are believed to be highlight sought after with several already sold

Sovcomflot and its banks are reportedly proceeding with the sale of vessels as this weekend’s deadline looms from the EU sanctions for financial institutions to end ties with the sanctioned Russian tanker company. Quoting unnamed brokers, The Wall Street Journal reported approximately a dozen vessels have already been sold including two block transactions with more negotiations ongoing. The full extent of the sales, however, may not be fully known as companies are seeking to keep the deals quiet and are using middlemen to avoid penalties under the sanctions.

Frontline Management CEO Lars Barstad predicted to The Wall Street Journal that Sovcomflot’s modern fleet of LNG carriers was likely to draw the most attention. He noted the long construction lead times and costs for the vessels while saying that Sovcomflot was working under a short time frame to complete the sales.

It is believed that there may have been some individual vessel sales, but the newspaper’s sources cited two block transactions. Eastern Pacific is reported to have won four of the sought-after gas carriers buying four of them for $700 million from one of the banks that controlled some of the ships. Koban Shipping based in Dubai is also reported to have purchased five tankers.

Sovcomflot previously, however, denied reports of a large-scale sell-off of vessels. The Russian operator said that it was planning to sell older vessels that were going unused. They said the sales were in response to the EU sanctions that made it more difficult to employ the “aging assets.” They however denied a report in Lloyd’s List that said up to a third of the company’s fleet was for sale. They called that report “exaggerated.”

Speculation on other sales continues. The Wall Street Journal’s sources said that negotiations were ongoing with China Merchants Group as a possible buyer. Questions have also been raised about Sovcomflot’s large orderbook for new tankers and LNG carriers including orders placed with South Korean shipbuilders.

The sanctions established a May 15 deadline for ending business dealings with Sovcomflot and others cited by the EU. The restrictions had already in April prevented the company from making interest payments on its Eurobonds. A payment of nearly $8.3 million was due at the end of April, but the company said it was not able to transfer the monies due to the sanctions while emphasizing that as of the end of 2021 it had approximately $600 million in cash on hand.

As of March, Sovcomflot reported that its fleet consisted of a total of 133 vessels, including those in joint ventures, with a total deadweight of 11.6 million tons. The majority of the fleet is crude and product tankers, with 10 gas carriers and 10 icebreakers.

In addition to the vessel sales, The Wall Street Journal reports Sovcomflot is also moving management of its fleet to Dubai. The Equasis database shows the transfer of flags to Dubai, which the newspaper says will permit Sovcomflot to access services for its fleet.


Source:Ocnus.net 2022

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