Pan Ocean confirms order for two VLCCs

SOUTH Korea’s Pan Ocean has signed a contract worth Won350.5bn ($257m) to build two VLCCs, each with a capacity of 300,000 dwt.

HD Hyundai Heavy Industries will construct the vessels, which are scheduled for delivery during the third quarter of 2027. This order will enable Pan Ocean to expand its fleet from two to four VLCCs.

These will be ammonia- and LNG-ready vessels, enabling Pan Ocean to respond flexibly to increasingly strict global environmental regulations and rapidly changing energy demand.

In a stock exchange filing, the South Korean shipowner stated that the aim of expanding the fleet of VLCCs was to improve competitiveness in the liquid bulk business.

The new VLCC will measure 328 m in length with a 60 m beam. It has been designed to comply with the International Maritime Organization’s tighter greenhouse gas emissions regulations, the Energy Efficiency Design Index phase 3.

The vessel is also equipped with high pressure selective catalytic reduction technology to meet Tier III standards, the highest level of NOx emission regulations in Emission Control Area under the International Convention for the Prevention of Pollution from Ships.

Pan Ocean said in a statement: “According to recent market studies, a total of 108 VLCCs, approximately 12%, are expected to be 20 years old or older as of 2025, while only 88 newbuildings are expected to be delivered by 2027, resulting in a limited supply.

“As the IMO’s environmental regulations are expected to strengthen and the decommissioning of old ships is expected to accelerate, the proactive investment in an eco-friendly fleet is expected to significantly strengthen our competitiveness and expand our sales power.”

Meanwhile, it is questionable whether the expected shortage of VLCCs, which will result in high demand, is linked to South Korean shipyards winning more orders for them, given that shipbuilders are expected to negotiate prices conservatively.

SK Securities analyst Han Seung-han said in a report: “South Korean shipyards would also like to take on VLCCs, but given the high volume of enquiries for large containerships, they will be conservative when negotiating prices for less profitable VLCCs, given the limited slots available.”