SCF grows its fixed income industrial business

SCF Group continued to grow its long-term industrial business portfolio, with a focus on implementation of advanced and environmentally sound technologies. As of 30 September 2021, SCF operated a fleet of 43 industrial vessels with one vessel – the LNG carrier SCF Timmerman – joined the fleet in January 2021.

SCF Group focuses on the development of its liquefied gas transportation services. In January and July 2021 сontracts for three newbuilding 174,000-cbm LNG carriers were concluded with TotalEnergies. The vessels will be chartered for a period of up to seven years and add USD 360 million to SCF’s contract backlog. Delivery of the vessels is scheduled for 2023 and 2024.

In September 2021 SCF Group, through a joint venture with NYK, signed long-term time-charter contracts with NOVATEK Gas and Power Asia, a subsidiary of PAO NOVATEK, for four newbuildings 174,000-cbm Ice 1A LNG carriers. The vessels will be chartered for a period of up to fifteen years and SCF’s share adds a further USD 700 million to its contract backlog. Delivery of the vessels is scheduled for 2023 and 2024.

As a part of SCF’s offshore business development, two LNG-fuelled tankers will be retrofitted to shuttle crude oil and serve the Sakhalin-2 project under up to thirteen years contracts (signed in June 2021) starting from 2024, providing an additional contract backlog of USD 215 million.

Conventional Tanker Business

Q3 2021 continued to be challenging for SCF’s conventional tanker business with ongoing COVID-19 restrictions impacting international trade and economies. SCF is cautiously optimistic that the market is coming through the trough of the cycle, as the Group’s expectations of a seasonal uplift in rates begins to materialise.

Demand for oil transportation is recovering as oil product consumption heads towards pre-pandemic levels. At the same time, high steel prices are both encouraging an increase in vessel demolitions and discouraging owners from adding further newbuildings to the supply side.

As a part of SCF’s ongoing fleet modernisation and optimisation programme, the Group disposed of some aging vessels. During 9M 2021, four oil products vessels (two of which were partly owned through equity-accounted JVs), four oil tankers and two Panamax dry bulk carriers were sold. By selling the two Panamax dry bulk carriers, Sovcomflot has completed its exit from this non-core segment. Total net sale proceeds of USD 132.6 million, arising from these disposals, will further strengthen the Group’s liquidity position and will be applied towards financing SCF’s new projects.