Tanker venture saves US$250m on newbuildings

GES, a joint venture formed by U-Ming Marine, Chinese Maritime Transport and government-owned CPC in July, has previously said that it would spend US$950m on six 300,000 dwt very large crude carriers and one 80,000 dwt chemical tanker between 2010 and 2016.

Now the price tag for the ships is estimated to be US$700m, according to U-Ming Marine president CK Ong.

Speaking at a Shanghai press conference, he said that the current price of a 300,000 dwt VLCC was about US$110m-$120min Japan and South Korea, and US$95m-$100min China. Joint venture partner CMT estimated in June that the cost per VLCC was US$145m.

CMT investor relations spokesman Frank Yang said that the joint venture partners had overestimated the cost because newbuilding prices for VLCCs had declined rapidly over the past few months.

The softening prices, an indicator of the current distress of the tanker market, would help to lower investments costs for the joint venture, he said.

A broker said the price of VLCC had declined as much as 30%over the past two years, but he added the price was about to hit the bottom.