India pressing ahead with four VLCC newbuilds

A senior official from The Shipping Corporation of India Ltd (SCI) has confirmed that it is pressing ahead with plans to acquire four VLCC newbuildings. SCI＇s director of technical and offshore services U.C. Grover told Tankerworld on Friday that tenders were floated late last year and at least nine yards had expressed interest At present technical details concerning ship specifications are being ironed out and discussions on pricing with selected parties are expected to begin in a few months, said Grover.
“To the best of my knowledge, there have been zero VLCC newbuilding orders confirmed worldwide in the last three months,” he said.
According to Grover, the current economic climate is preventing firm agreements on pricing pending more stable market conditions.
Brokers have highlighted to Tankerworld that prospective owners are hoping to benefit from much cheaper purchases, although currently pitched price levels are still not reflecting a firmly downward trend.
Aside from plans for the four VLCC newbuildings, Grover told Tankerworld that SCI has also been moving ahead with previous orders for 10 product tanker newbuildings and five crude oil tanker newbuildings including one VLCC to be delivered in June.
According to Grover, all 15 tankers will be delivered as scheduled.
With regards to financing, senior vice president Capt. R. Ahluwalia had previously told Tankerworld that the company＇s “state-run credentials did not allow for such details to be made public.”
One broker however, suggested to Tankerworld that “government funds will account for the whole purchase, as Indian refiners, also state-owned, will benefit from economies of scale with larger tanker shipments of crude.”
Local reports say India depends heavily on imported crude, with some 67% of its current annual demand of about 150 million metric tonnes (mt) being shipped in.
Sources say SCI’s move for the new VLCCs came on the heels of a request to the Directorate General of Shipping (DGS), by state-run refiner Indian Oil Corporation Ltd (IOC) for a change in rules to allow it to hire foreign super tankers for up to five years.
Local entities now can only hire foreign ships for up to two years after they receive permission from DGS. Foreign ships must also obtain a no-objection certificate from the local industry body, the Indian National Shipowners Association (INSA).
A Singapore-based broker told Tankerworld: “The fact that India-registered tankers do not need to adhere to these regulations would explain SCI＇s current expansion plans.”
An IOC executive has been quoted saying that the company had decided "to hire VLCCs for longer periods to transport crude to cut our freight bill.”
“This will give some kind of shipping tonnage security to IOC and insulate us from spot market risks,” he added.
SCI＇s fleet of tankers currently stands at 30 crude carriers, 9 product carriers, two gas ships, and three chemical carriers.