MOL Russian LNG Charters Hit Sanctions Trouble

Japanese shipowner Mitsui OSK Lines (MOL) is being forced to renegotiate charters for four tankers that are part of its Russian business as sanctions tighten.

MOL said it needed to renegotiate the charters for three LNG carriers and a condensate carrier with ice-breaking capabilities in light of the strengthened sanctions by the EU and US against Russia.

The four vessels in question carry an investment value of JPY105 billion ($686.8 million)

MOL contracted a 54,800 cu metre, ARC7 class tanker to transport condensate in 2020 with delivery scheduled for the this year. A contract was signed with the project company for the Arctic LNG2 project in Far North Russia, whose largest shareholder was PAO Novatek.

The Japanese shipping company also had three charter deals for Arctic LNG2 for 172,500 cu metre, ARC7 Class LNG carriers, with the same charterer, which were due to be delivered last year, however delivery was reportedly delayed due to labour shortages at Korean yards where they were being built.

The US slapped sanctions against Arctic LNG2 in 2023 and started imposing restrictions on ships that began taking LNG from the plant this August.

MOL said in statement it had started renegotiating the charter deals but warned if talks encountered difficulties it might be unable to perform the charters.

“In the event that the charter agreements are discontinued, we will seek to sell the vessels to third parties. However, due to the difficulty of converting them for use in other businesses, as they have ice-breaking capabilities, it may be challenging to achieve sale prices we intend.”

MOL warned that in such a scenario it might incur losses on its investment.