MOL to fund construction of dual-fuel VLCC through sustainable financing

Business Developments & Projects

April 3, 2024, by Fatima Bahtić

Japanese shipping company Mitsui O.S.K. Lines (MOL) has signed a deal with Sumitomo Mitsui Trust Bank to raise funds through transition-linked loan (TLL) financing for the construction of a new dual-fuel very large crude carrier (VLCC).

The shipowner has decided to apply for the funds to finance the construction of the VLCC, powered by liquefied natural gas (LNG), to support decarbonization efforts. The contract with Sumitomo Mitsui Trust Bank was signed on March 28.

TLL is a financing method that considers changes in loan characteristics (interest rates, etc.) based on the achievement of greenhouse gas (GHG) reduction targets that the MOL has set (or will set) in advance.

The VLCC will stretch 229.5 meters in length and its breadth will be 60 meters. It will be built by Kawasaki Heavy Industries (KHI) at Dalian COSCO KHI Ship Engineering shipyard.

This is the sixth financing package based on the Sustainable Finance Framework formulated in January of this year, MOL noted.

As part of sustainable financing, the shipowner decided to issue blue bonds through a public offering in Japan’s domestic market in January 2024. The bonds are said to be the world’s first blue bonds in the shipping industry.

Blue bonds are pioneering financial instruments that aim to support sustainable marine and fisheries projects. They follow guidance provided by the International Capital Markets Association (ICMA) and other organizations.