Ocean Yield invests in four methanol-ready LR1 product tankers

Norwegian ship owning company Ocean Yield revealed it will purchase four LR1 product tankers, to be constructed at Guangzhou Shipyard International (GSI) in China.

The design of the vessels will enable the ships to be converted to dual-fuel operation with methanol as fuel. The tankers are scheduled for delivery in 2026 and 2027.

Upon delivery, the vessels will commence 15-year bareboat charters to subsidiaries of Braskem S.A., a New York-listed petrochemical company. Braskem S.A. currently has credit ratings of BBB- from S&P and Fitch, and Ba1 from Moody’s.

The bareboat charter rate will have a variable element linked to the respective vessel’s actual carbon emissions, incentivizing the charterer to keep emissions low. Ocean Yiels said that this is the first sustainability-linked transaction in the maritime leasing market.

“Since Ocean Yield was established in 2012, sustainability and responsibility have been integrated parts of our core strategy as we seek to be a facilitator for the decarbonization of the shipping industry. In Braskem, we have a found a partner who shares our values and ambitions. We are excited to build on our relationship with Braskem and introduce the inaugural sustainability-linked lease to the Ocean Yield portfolio,” CEO Andreas Røde said in a comment.

The transaction will add approximately USD 300 million to the company’s EBITDA backlog.

Ocean Yield is investing heavily in its fleet rejuvenation as part of its sustainability strategy.

During 2022, a total of 12 vessels were sold, all of which used conventional fuel. During the year, the company agreed to acquire up to 15 newbuildings, all of which are prepared for either methanol, ethane or ammonia as alternative fuel sources.

Earlier this year the company revealed that it had finalized the deal for ammonia-ready Newcastlemaxes intended for CMB N.V. shipping that would be built by Beihai Shipbuilding.

In addition to the ammonia-ready bulkers, these have also included the acquisition of two 36,000 cbm LEG carriers with long-term bareboat charters to Braskem S.A. The vessels will be equipped with tri-fuel engines enabling them to use various types of gas as fuel including LNG and ethane.

Last year, the company also invested in three 5,500 TEU container vessels intended for long-term time charters with ZIM. The vessels will also be methanol-ready.