Maersk Tankers, part of the Danish shipping conglomerate Maersk, has confirmed an order it placed earlier in 2016 for the construction of ten LR2 product tanker vessels at China’s Dalian Shipyard.
Under the deal, the shipbuilder is scheduled to deliver the new tankers over a period of three years, with the first vessels entering the fleet in 2019, the company said in its 2016 annual financial report. The contracts for the newbuildings were signed in late November 2016.
“The newbuilding contract is part of a fleet renewal to sustain a competitive fleet and strong market position in the LR2 segment,” Maersk Group said. Although the financial terms of the contract were not revealed, the company added that the contract reflects the decline in asset prices over the last 12 months.
Maersk Group also informed that the order has “a unique contractual structure,” which makes it optional, while keeping prices fixed.
Maersk Tankers said that its profit for the full year 2016 dropped to USD 62 million from USD 160 million seen a year earlier.
The result was negatively impacted by declining rates, but partly offset by improved commercial performance, contract coverage and cost savings.
Maersk Tankers’ average Time Charter Equivalent (TCE) earnings decreased by 17% compared to 2015, which was less than the general market rates decline, while its cash flow from operating activities was USD 180 million, down from USD 291 million for the respective periods.
The company’s orderbook now totals 11 mid-range (MR) product tankers, five of which are scheduled to be delivered during 2017 and the last six in 2018, as well as an option for ten long range 2 (LR2) product tanker vessels.