Chinese in VLCC tie-up

China Merchants Enegy Shipping (CMES) and Sinotrans & CSC are teaming up to create a $1bn VLCC joint venture.

CMES will have a 51% controlling interest of the new venture with Sinotrans & CSC holding the remaining 49%.

CMES will contribute assets worth around $565m including nine operational VLCCs and 10 VLCC newbuild contracts.

Sinotrans & CSC will invest $543.78m in cash, CMES said in a filing issued on the Shanghai Stock Exchange on Tuesday.

CMES said the duo would also look to expand its operation through acquisitions of second hand crude tankers or further newbuildings.

The deal, which has been prompted by China’s rising demand for oil imports, is expected to be completed before 30 September 2014.

CMES has five VLCCs are on order at both Shanghai Waigaoqiao Shipbuilding and Dalian Shipbuilding Industry Co.

In April this year Sinotrans & CSC’s crude tanker arm, Nanjing Tanker, delisted from the Shanghai Stock Exchange.

It became the first Chinese state controlled company to be delisted after racking up four straight years of losses.