On 30 October 2025, COSCO SHIPPING Energy Transportation Co., Ltd. (the “Company,” Stock Code: 1138) released an announcement regarding a proposed charter transaction involving six 307,000-ton VLCC crude oil tankers equipped with dual (“methanol+LNG”) fuel reserves. Under this arrangement, a wholly-owned subsidiary of the Company (Pan Cosmos) intends to enter into a Bareboat Charter Party with Hainan COSCO SHIPPING Development, a connected party indirectly controlled by China COSCO SHIPPING Corporation Limited. The lease term for each vessel is set at 240 months ± 90 days.
According to the announcement, three of the vessels will be leased at a fixed bareboat charter rate, and three will adopt a floor rate with a profit-sharing mechanism tied to the TD3C-TCE freight index published by The Baltic Exchange. The expected annual rental for all six vessels—which will be delivered sequentially from April 2027 through November 2028—ranges between RMB296 million and RMB427 million, excluding taxes and fees. The maximum annual portion subject to the variable rate is estimated at RMB131 million.
The Company explains that these long-term leases aim to strengthen VLCC capacity, reduce large one-time capital expenditures, and maintain operational flexibility. Once the transaction is finalized, the vessels will be recognized as right-of-use assets under Hong Kong Financial Reporting Standards, with fixed lease payments treated as a capital acquisition and variable payments as expenses over the lease term.
As COSCO SHIPPING is the controlling shareholder of the Company, the proposed charter and the associated fixed lease payments constitute connected and discloseable transactions under the Hong Kong Listing Rules. Shareholder approval at an extraordinary general meeting will be required for these transactions. The additional variable lease payments fall under continuing connected transactions, subject to reporting and announcement requirements but exempt from independent shareholder approval. An independent board committee and an independent financial adviser have been engaged to review and provide opinions on the fairness and reasonableness of the arrangement.
A circular that includes details on the acquisition of right-of-use assets, recommendations from the independent board committee, and an independent financial adviser’s opinion is expected to be dispatched on or before 28 November 2025. The Board indicates that securing a stable long-term fleet with flexible cost structures promotes sustainable business operations while enhancing market competitiveness and operational resilience.