Cosco Energy Transportation to Buy New Tankers
Cosco Energy Transportation has entered into the Agreements with Dalian Shipbuilding Industry Company Limited for the construction of the Very Large Crude Carriers (VLCCs) and the Suezmaxs.
The total consideration for the construction of the VLCCs and the Suezmaxs is RMB 3.67 billion (USD 88.5 million).
The consideration is determined by reference to the market price of crude oil tankers ranging in sizes from 280,000 to 320,000 dead weight tons and 150,000 to 160,000 dead weight tons respectively during the past 6 months.
The expected delivery dates for each of the VLCCs are on or before 31 August 2020, 31 October 2020, 31 December 2020 and 31 March 2021, respectively.
Each of the Agreements provides that there will be no adjustment in the price of the relevant VLCC if the delivery is delayed for a period not exceeding 30 days. If the delay exceeds such period of time but does not exceed 210 days, respectively, there will be a reduction in the price of the relevant VLCC determined on the basis of the extent of the delay.
If the delay exceeds 210 days, unless the parties agree otherwise, the Company has the right to refuse to accept delivery of the relevant VLCC in which case all payments paid under the relevant Agreement together with interests will be refunded to the Company.
The expected delivery dates for each of the Suezmaxs are on or before 31 August 2020, 30 November 2020 and 31 January 2021, respectively. Each of the Agreements provides that there will be no adjustment in the price of the relevant Suezmax if the delivery is delayed for a period not exceeding 45 days.
If the delay exceeds such period of time but does not exceed 225 days, there will be a reduction in the price of the relevant Suezmax determined on the basis of the extent of the delay.
Under the Agreements, delay will be permitted on account of force majeure events. If the delay exceeds 225 days, unless the parties agree otherwise, the Company has the right to refuse to accept delivery of the relevant Suezmax in which case all payments paid under the relevant Agreement together with interests will be refunded to the Company.
There will be other downward adjustments in price of the relevant VLCC and Suezmax if its performance (such as speed, fuel consumption rate, tonnage) exceeds or falls below certain agreed criteria (as the case may be).
However, should the relevant performance exceed or fall below certain agreed benchmark, the Company has the right to refuse delivery of the relevant VLCC or Suezmax and accept a refund with interest from the Vendor, or negotiate a new price for the relevant VLCC or Suezmax.
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