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Landbridge Group: Building on Belt and Road

Rizhao-based Landbridge Group, a diversified multinational group specialising in port infrastructure, logistics, oil and gas, shipping and petrochemical industries, is gearing up to grab the opportunities from China’s grand Belt and Road Initiative to further expand its business with a competitive VLCC fleet.

The company currently owns six VLCC tankers. Four VLCCs are in water now and another two are set to be delivered by Dalian Shipbuilding Industry Co this year.

According to Sanjeev Verma, managing director of Landbridge Ship Management (HK), three of the company’s vessels are running in the VL8 pool while the remaining three are going to be time chartered out.

The newbuildings are financed by both equity and lease finance under sale and leaseback structures.

In May, Landbridge sealed a sale and leaseback deal with investment firm Värde Partners for one of its VLCCs.

“Landbridge Group is probably one of few shipping companies having presence across upstream, downstream and energy transportation. This creates a unique opportunity,” Verma says.

Landbridge owns Landbridge Rizhao Port, which is the largest private port in China, operates the Port of Darwin in Australia, and it is constructing one of the largest ports in Panama called Isla Margarita Port. Additionally, it has acquired an LNG field in Australia.

Verma says the company is a firm believer in China’s growth. The Landbridge executive sailed at sea for 13 years becoming a master mariner. Ashore he held a variety of positions including a six-year stint at Hong Kong’s Wah Kwong. He joined Landbridge in November last year.

“We aim to follow Beijing’s Belt and Road initiatives, the multi-trillion-dollar infrastructure building programme that China is pushing across large parts of the world. We are currently one of the biggest private VLCC tonnage providers from China, with an average age of the fleet being less than two years with all ships planned to be fitted with exhaust gas cleaning system within 2019. We shall maintain our fleet as young, economical and efficient ships,” says Verma.

Verma reckons the VLCC market will start to pick up from the second half of this year.

“The oil market is notoriously linked to geopolitics. Most recently, Venezuela and Iran sanctions are affecting oil supply. US crude production was just over 11.6m barrels per day at the end of 2018 making it the largest producer in the world. This is a positive sign with larger ton-mile benefitting positively,” Verma says, adding that on the supply side there are more than 70 VLCCs to be delivered in 2019 while 60 ships are expected to be taken off the market in 2019 for scrubber retrofitting. Verma predicts about 30% of the VLCC fleet will be fitted with scrubbers by the first quarter of 2020.

“So, we are very positive for the second half of this year and beyond to 2020, when the spread between HFO and MGO will keep paying premium to these ships with scrubbers. We see second half of 2019 and 2020 should be a good year to the VLCC market,” Verma concludes.

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