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Thursday, January 23, 2020 

Danish tanker operator Torm has adopted the HFO-and-scrubber option as a short-to-medium term solution for its latest newbuilds, but taking the longer view of decarbonisation of shipping, the vessels will be designed and built with the option of converting to dual fuel operation.

Torm has entered into an agreement to purchase two fuel-efficient LR2 newbuildings from Guangzhou Shipyard International (GSI) with expected delivery in the fourth quarter of 2021. Torm says it has utilised its long-term relationship with state-owned GSI to secure the contract. The operator already has 29 GSI vessels in the current fleet and has excellent technical and commercial experience with these vessels.

The two new ships will be constructed according to Torm’s requirements for optimal trading and fuel- efficiency, and they will have scrubbers installed. The vessels will be prepared for a potential later dual-fuel installation.

This move is being facilitated through a financing deal, which sees an investment of US$76m through an unnamed international financial institution. The deal is based on expected total CAPEX relating to the two vessels of US$95m, including extra costs related to Torm’s design requirements and scrubber installations. The financing will be structured as a ten-year sale and leaseback agreement with purchase options during the lease period and at maturity providing Torm with maximum capital commitment flexibility.

Torm recently entered into an agreement to sell an older Handy vessel, the Torm Loire (built in 2004), for a consideration of US$9m. The vessel was delivered to the new owner in late December 2019, and in connection with the transaction US$4m of debt was repaid.

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