JES bags two new contracts worth US$248m

GROWING Chinese shipbuilder JES International has announced two new contracts for four dry bulk carriers and a crude oil tanker worth almost US$250 million, bringing orders to just over US$400 million for the year to date.

JES will build four 79,800 dwt Panamax bulk carriers for Croatian shipping firm Atlantska Plovidba for US$180 million, a 20 per cent rise in contract price for two similar ships previously ordered by the same client.

A US$54 million deposit representing 30 per cent of the contract value has been received, JES said. The ships will be built at its current yard and three of the four vessels will be delivered in 2011, with the last one in 2012.

The Jiangsu-based shipbuilding group also said it will build for Pertamina a new Aframax oil tanker, the third vessel order it has secured from the Indonesian state-owned oil and gas company.

The US$67.5 million price is about 10 per cent higher than Pertamina's previous tanker orders from JES. The orders, worth US$247.5 million in all, bring JES new orders over the last six months to US$407.5 million.

The vessel will be built at JES's new yard, which will cater to larger ships above 80,000 dwt, and is expected to be delivered by 2011. The new facility is currently under construction and will begin operations by the second quarter of FY2009, JES said.

When it is fully completed, JES will have additional capacity to construct concurrently three bulk carriers of up to 176,000 dwt each or two crude oil tankers of up to 300,000 dwt each or very large ocean engineering vessels and offshore equipment such as oil rigs.

Although the ongoing demand for dry bulk carriers is still a mainstay of the yard, building larger and more complex vessels for the offshore market is the direction the group plans to take in future.

Citing a recent survey by Lehman Brothers, JES chairman and chief executive Jin Xin notes that oil majors such as ExxonMobil, Royal Dutch Shell, BP, Chevron, Total and ConocoPhillips will spend a record US$70.7 billion this year on exploration and production.

'Riding on this sustained current growth coupled with a tight global supply of crude oil tankers, we are confident that demand for new tankers will continue to rise,' he said.

JES's current capacity is full till 2011 and with the new yard coming into operation, new building slots will open only in mid-2010.

With the group's current expansion, which will double its capacity and also enable it to take on larger-size jobs, JES intends to move more into the offshore market from 2010 onwards.

Mr Jin said the group has steadily followed its strategy of moving up to higher-value projects. As at March 31, JES's order book stood at about US$1.13 billion.
JES closed one cent lower at 33 cents last Friday.