COSCO transfers CLNG stake to bypass US sanctions

Market: Natural gas
24/10/19

Chinese shipping firm COSCO Dalian has transferred a 50pc stake in China LNG Shipping (CLNG) to its parent company, in a move that exempts 12 LNG carriers from US sanctions.

COSCO Dalian, which has been under US Treasury Department sanctions since last month, transferred its 50pc stake in CLNG to its parent company COSCO Shipping Energy Transportation, the parent firm said.

The transfer means that the 12 LNG vessels owned by CLNG will no longer be under sanctions. The US Treasury last month imposed sanctions on COSCO Dalian and any subsidiaries in which the firm held a stake of at least 50pc. The firm held 50pc equity in CLNG, with the rest held by other COSCO entities which are not under sanctions.

The exemption of these vessels from US sanctions may ease demand for spot charters in the LNG freight market. Spot charter rates in the Asia-Pacific basin rose earlier this month, possibly also reflecting the additional demand for spot charters as firms sought replacement vessels for some of CLNG's 12 LNG carriers.

Six of these are Arc7 ice-class vessels, under a joint venture with Bermuda-based Teekay Partners, and are provided to the Novatek-operated 16.5mn t/yr Yamal LNG project. Novatek reported on 22 October that this venture — named TC LNG Shipping — was no longer considered a blocked person by the US Treasury, likely as a result of this equity transfer.

The remaining six, conventional LNG carriers owned by CLNG operate in the Pacific basin, transporting LNG to Chinese import terminals.

Vessels operated by JVs in which CLNG holds 50pc or more
Vessel	Capacity m³	Type	JV partners

Eduard Toll	172,600	Arc7	Teekay
Rudolf Samoylovich	172,600	Arc7	Teekay
Vladimir Voronin	172,600	Arc7	Teekay
Nikolay Yevgenov	172,600	Arc7	Teekay
Georgiy Ushakov	172,600	Arc7	Teekay
Yakov Gakkel	172,600	Arc7	Teekay
Dapeng Sun	147,000	Conventional	CNOOC, Upper-Horn, Penghai Ship
Dapeng Moon	147,000	Conventional	CNOOC, Upper-Horn, Penghai Ship
Dapeng Star	147,000	Conventional	CNOOC, Upper-Horn, Penghai Ship
Min Rong	147,000	Conventional	CNOOC, Fujian Energy
Min Lu	147,000	Conventional	CNOOC, Fujian Energy
Shen Hai	147,000	Conventional	CNOOC, Shenergy
Cosco Shipping Energy Transportation
Yakov Gakkel not operational until later this year

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