COSCO Shipping unit enters into CNY2.58b deal with MOL for LNG carrier

A subsidiary of COSCO Shipping Development has entered into a sale-and-leaseback arrangement for a 271,000-cubic-metre liquefied natural gas (LNG) carrier with a wholly-owned subsidiary of Japan's Mitsui OSK Lines (MOL).

The agreement was signed on August 26 by Oriental Fleet, a wholly-owned subsidiary of COSCO Shipping Development. Under the deal, Oriental Fleet will purchase the LNG carrier from the MOL subsidiary for a price of approximately CNY2.58 billion ($356 million). The vessel is expected to be delivered around July 2029.

Immediately following the delivery, the vessel will be leased back to the MOL subsidiary under a 240-month (twenty-year) bareboat charter. The total estimated charter hire to be paid to Oriental Fleet over the lease period is approximately CNY3.18 billion. At the end of the charter, the MOL subsidiary will be obliged to purchase the vessel back for $1.

The company stated that the sale-and-leaseback arrangement is part of its core ship leasing business and will expand the scale and improve the quality of its ship assets. It noted that the transaction will contribute to stable long-term income and cash flow, while also enhancing its overall financial soundness and supporting its long-term development.