COSCO Commits $1.42bn to Ten VLCC Newbuilds, Lines Up 14 More

COSCO Shipping Energy Transportation has signed contracts worth RMB9.48bn ($1.42bn) for ten VLCC newbuildings and lined up another 14 supertankers through long-term bareboat charters — a 24-vessel expansion of its crude tanker fleet heading into the next decade.

The Shanghai- and Hong Kong-listed owner disclosed the deals on November 9, with its wholly owned subsidiary Hainan Cosco Shipping Energy Transportation placing orders at two Chinese shipyards. Six VLCCs go to Yangzhou COSCO Shipping Heavy Industry for RMB5.69bn ($853m), while Dalian Shipbuilding Industry Corporation (DSIC) secured four vessels worth RMB3.79bn ($569m).

That works out at roughly RMB948m ($142m) per ship. The Yangzhou series is scheduled for delivery between August 2029 and November 2030; the four DSIC vessels are due between September 2029 and May 2030.

What are the ships powered by?

The Yangzhou newbuildings will feature LNG-ready fuel systems. The DSIC quartet will be designed for future conversion to LNG or methanol dual-fuel propulsion — a hedge that keeps the tonnage compliant under tightening emissions rules without paying for full dual-fuel kit upfront.

The Yangzhou deal is classified as a related-party transaction because the shipyard belongs to the COSCO group, and it still requires shareholder approval. The DSIC contract has received board approval without a further shareholder vote.

How does the bareboat programme work?

Alongside the direct newbuilding investment, COSCO Shipping Energy has approved plans to take another 14 VLCC newbuildings on bareboat charter from six Chinese financial leasing companies. The programme, handled through subsidiary Huanyu Shipowning, carries maximum rental commitments of RMB17.4bn ($2.61bn) over charter periods of up to 20 years.

The lessor line-up breaks down as follows:

• Bank of Communications Financial Leasing — four LNG dual-fuel VLCCs, maximum combined commitment RMB5.2bn ($779m)
• ICBC Financial Leasing — three LNG dual-fuel vessels
• Agricultural Bank of China Financial Leasing — three conventionally powered VLCCs
• Bank of China Financial Leasing — one conventional vessel
• CITIC Financial Leasing — two LNG dual-fuel ships
• Minsheng Financial Leasing — one vessel

The charter programme comprises ten LNG dual-fuel and four conventionally powered VLCCs, with all 14 vessels expected to enter service during 2030. The leasing arrangements still require shareholder approval.

The company said the bareboat structure would allow it to expand its fleet without the same level of upfront capital expenditure required for direct ship ownership — capital discipline that lets the owner lock in future capacity while spreading the cost over two decades.

Is there more to come?

Yes, possibly a lot more. The board separately approved another proposal involving long-term leasing and financing arrangements for 16 VLCC newbuildings. That related-party proposal, which also requires shareholder approval, has yet to be accompanied by details of financing partners, shipyards, contract values or delivery schedules.

The company said further information would be disclosed once specific agreements are signed. That leaves it unclear whether the 16 vessels represent additional fleet expansion or overlap with other newbuilding plans already on the table. The proposed charters would run for up to 20 years, with the ships scheduled to enter the fleet during 2030.

The 16-vessel authorisation needed board-level scrutiny for a procedural reason: the company's cumulative leasing transactions over the previous 12 months exceed 50% of its audited net assets, triggering the shareholder vote requirement under listing rules.

What does this mean for the crude market?

For charterers and owners watching VLCC supply, the message is straightforward. COSCO is adding tonnage at scale — but not until 2029-2030, when the Yangzhou, DSIC and chartered vessels hit the water. The fuel strategy matters too: ten of the 14 chartered ships will be LNG dual-fuel from day one, and the owned newbuilds are at minimum LNG-ready, signalling where China's largest tanker operator expects environmental regulation and cargo economics to land.

The leasing-heavy structure also tells forwarders and traders how Chinese state-backed owners are financing fleet growth now: through bank lessors rather than balance sheets alone. With shareholder votes still pending on the Yangzhou contract, the bareboat programme and the 16-vessel proposal, COSCO's eventual orderbook could stretch well beyond the 24 supertankers announced this week — a capacity trajectory the crude trades will be pricing in through the end of the decade.