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China Merchants Places Order for First Methanol-Fueled VLCC

China Merchants Places Order for First Methanol-Fueled VLCC

China Merchants confirmed that it today signed the order for what is likely to be the world’s first methanol-fueled VLCC. The company reported at the end of August that its board had authorized the management of its energy transport subsidy to proceed with final negotiations for the newbuild contract.

The vessel is part of the company’s planned efforts to update its aging fleet of VLCC tankers. The Chinese energy company currently operates 52 VLCCs as part of a tanker fleet that numbers over 300 vessels.  In addition to modernizing the fleet, China Merchants Energy Shipping (CMES) is moving forward with initiatives designed to enhance the group’s carbon indicators with energy savings.

China Merchants is referring to the new crude oil tanker as part of the company’s “pioneering experiments,” at enhancing the environmental performance of the fleet. The group has already ordered tankers fitted with wing sails and a year-ago took delivery on the first VLCC with four rigid sails. The group earlier this year ordered Aframax tankers that will be outfitted as methanol-ready. China Merchant’s vehicle transport operation ordered two 9,300-unit car carriers in March 2023 that will operate on methanol fuel and are due for delivery in 2025 and 2026. They also have options for four 9,000 cue vessels that would also use a dual-fuel design.

The new crude oil tanker will be 306,000 dwt using a dual-fuel design developed by China State Shipbuilding and its Dalian Shipbuilding Industry Group (DSIC). Few additional details were provided other than they plan to incorporate both a scrubber and shaft generator into the design.

According to the stock exchange filing, the tanker is being built at a relatively low price of $107.5 million. The delivery date is expected to be the end of 2025, which is earlier than the previous report which said no later than April 2026.

CMES has a long-standing relationship with Dalian Shipbuilding. The shipyard reports it has contracts so far from CMES for more than 40 ships, representing nearly $5 billion and a total deadweight of 10 million tons. The methanol-fueled tanker is the fourth time in the past two years that China Merchants has ordered oil tankers from DSIC.

While methanol is rapidly emerging as one of the leading choices for shipowners to adapt their designs to the need to reduce emissions, so far, the only crude oil tanker orders have been with a methanol-ready designation meaning they will require further adaptation to run on the fuel. The product/chemical tanker sector however was the pioneer in the adoption of methanol-fueled vessels. 

DNV reports there are currently 23 tankers in service capable of operating on methanol. A further 14 methanol-fueled tankers are on order for delivery by 2026.

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