The company said that the order has been prompted by the signing of an additional two long-term time charter contracts of seven years each with Valero Energy Inc. for two Suezmax vessels with specialised Ice Class 1C capability starting in late 2018.
The latest deal is the fourth Euronav’s long-term (seven years) Suezmax time charter contract, the company added.
Delivery of these vessels is expected in the second half of 2018 when each of the time charter contracts will begin.
“Euronav believes it has secured an excellent price for two high specification vessels in line with its policy of not adding speculative new capacity to the global tanker fleet. Euronav anticipates the new vessels on order will replace its older Suezmax vessels hence this order will not add net tonnage to the global Suezmax tanker fleet,” Euronav said.
The fleet renewal is in line with Euronav’s expectations that asset values are approaching a low point supported by reduced immediate newbuilding berths at the yards and fewer speculative buyers.
Furthermore, the company pointed out that the addition of the further two seven-year contracts greatly increases its fixed income contribution to EBITDA in 2018 and onwards.
“By extending our strong partnership with a key customer, Euronav is also providing high quality and long duration earnings visibility for our stakeholders. Such fixed income capability provides Euronav with enhanced financial optionality as we move forward,” Euronav’s CEO, Paddy Rodgers noted.
In terms of its newbuilding fleet, the company recently acquired two VLCCs under construction which were acquired as resales of existing newbuilding contracts and four Suezmaxes under construction. The latest order brings Euronav’s owned and operated fleet to 57 ships, including also 1 V-Plus vessel, 31 VLCCs, 19 Suezmaxes and two FSO vessels (both owned in 50%-50% joint venture).