Navig8 Group closes in on $340m LR2 order in China

Deal for up to eight tankers backed by Minsheng and New Times buyers’ credit

Navig8 Group is said to be close to finalising an order for up to eight long-range-two (LR2) products tankers at China’s New Times Shipbuilding, with support from a Chinese leasing company.

Tanker-market sources say Navig8 has secured 90% financing from Minsheng Financial Leasing (MFL) and taken a 10% buyers’ credit from the shipyard for four firm newbuildings, with options for four more.

Shipbuilding market sources point to a price of $42.5m each for the Tier-II tankers.

Talk of Navig8 placing a substantial tanker order first arose over Christmas, with initial suggestions that a series of eight aframaxes were in the works dismissed by executives. Now, instead, it seems the deal involves coated ships rather than crude carriers.

The deal is believed to be the first tanker order secured by New Times since a contract for two suezmaxes in February 2016.

A Navig8 spokesman could not be reached for comment before TradeWinds went to press.

The Navig8 group controls Navig8 Product Tankers, which was formed in 2013 in partnership with DVB Bank and listed on Oslo’s over-the-counter (OTC) exchange.

Navig8 Product built up an orderbook of 30 vessels, with 26 currently in the water. The final delivery is expected in March.

However, the OTC company has given no indication of an order at New Times and sources speculate this is because the tankers are for the group’s private account.

One broker indicates that Navig8 staff denied placing the order.

In any case, the OTC company’s fleet includes 15 LR2s, with seven delivered from South Korea’s Sungdong Shipbuilding & Marine Engineering and the final ship in a series of eight at China’s Guangzhou Shipyard International set to arrive next month.

Navig8 Product chief executive Nicolas Busch expressed optimism towards the products market this week after reporting a net loss of $5.6m in the fourth quarter of 2016 despite notching an operating profit of $4.1m.

“Despite a soft fourth quarter, product tanker market fundamentals are quite encouraging,” Busch said in the owner’s quarterly report.

“There will be significant refinery capacity additions coming online in the near-term in the Middle East, and the product tanker orderbook as a percentage of the global fleet is at a very healthy level.

“Additionally, lack of capacity in certain crude oil trades is causing owners to switch vessels from the clean to dirty market, effectively removing competition from our primary trades.”

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