International Seaways brings its LNG-ready LR1 newbuild tally to four

New York-based tanker company International Seaways has exercised options for two scrubber-fitted, LNG dual-fuel ready LR1 vessels at Korean shipbuilder K Shipbuilding Co.

The options were lifted in October bringing the ordering tally to four LR1 newbuilds at the yard worth approximately $231 million, the tanker owner said.

The newbuilds are expected to be delivered beginning in the second half of 2025 through the first quarter of 2026.

Upon delivery, they will be employed in Panamax International Pool, which, according to International Seaways, has consistently outperformed the market.

International Seaways reported a net income for the third quarter of $98 million, compared to net income of $113 million in the third quarter of 2022. Cumulative net income over the last twelve months was $643 million.

The drop in net income was ascribed to an increase in charter hire expenses, and an increase in vessel expenses, primarily due to the impact of VLCC newbuilding deliveries combined with inflationary increases in lubes, stores, and spares.

“We continued to generate significant cash and earnings from our diversified portfolio of crude and product tankers during the third quarter,” said Lois K. Zabrocky, International Seaways’ President and CEO.

“We expect the tanker markets’ attractive supply and demand dynamics to continue to drive strong tanker earnings for the foreseeable future. Supply side growth remains limited due to evolving regulations and limited newbuild capacity in the near term at shipyards while the world fleet continues to age. Positive tanker demand fundamentals are supported by increasing oil demand and higher tanker utilization from the shifting global energy trade, with geopolitical tensions driving further focus on energy security.”

The latest order is part of the company’s fleet optimization program, which has also seen the tanker owner and operator’s activity in the charter market.

Namely, during 2023, the company has entered into six, time charter agreements: one 2017-built Aframax, three 2008-built MRs, one 2011-built MR, and one 2012-built Suezmax. The charters have durations of two to three years and have increased contracted future revenues to approximately $344 million, the company said.

As part of its fleet renewal, the shipowner also sold two 2008-built MRs, which generated approximately $24 million in net proceeds after debt repayment.

Moreover, since the beginning of the year, the company has taken delivery of three dual-fuel VLCC newbuildings.

The 300,000 dwt Seaways Enterprise was delivered in April 2023, a month after the delivery of the first vessel from the batch, Seaways Endeavor.

International Seaways has one more dual-fuel vessel under construction at DSME and it is expected to deliver in the second quarter of 2023. The three LNG-powered VLCCs were ordered in 2021.

All three ships are employed on a long-term time charter with oil major Shell and are financed under a sale and leaseback arrangement with a fixed interest rate of approximately 425 bps.