Lloyd's List learned about the sale of a third of the vessels by Sovcomflot due to sanctions

The publication claims that one of the world leaders in the maritime transportation of energy carriers sells tankers,to repay existing Western loans

The Russian company Sovcomflot, which is one of the world leaders in the field of sea tanker transportation, plans to sell up to a third of its fleet in order to repay loans in Western banks under sanctions. This was reported by the British edition of Lloyd's List, citing a senior industry representative and four representatives of the financial and legal fields.

“At least 40 of the 121 vessels directly owned by Sovcomflot are being discussed [for sale] with buyers from Dubai and China,” the newspaper writes, noting that “the Russian company is acting quickly.”

The press service of Sovcomflot declined to comment.

Sovcomflot was valued at more than $3 billion during the IPO Business

Under the terms of the sanctions imposed by the UK and the EU, Western banks were given a so-called grace period to terminate agreements and contracts with Russian companies. Both jurisdictions have set a May 15 deadline for this. Until that day, banks can receive payments on loans from Russian companies and repay them. “This encourages Sovcomflot to sell a significant part of its fleet as soon as possible to anyone,” the publication concludes.

Lloyd's List says it has confirmation of the sale of eight Sovcomflot vessels, four of which have gone to Dubai-based Koban Shipping. “However, it is known that Chinese entrepreneurs are also buying ships, and several such deals are nearing completion,” the newspaper writes.

Four unrelated but involved sources in the legal and financial fields told the publication that the sale of the vessels is going "as a single block."

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Lloyd's List says it does not know the size of Sovcomflot's debt in Western banks, but notes that, according to the latest available edition of the company's consolidated financial statements, the carrier's total debt on short-term and long-term bank loans could be $2.1 billion.

“The process [for the sale of the vessels and the return of borrowed funds] is conducted in a 'sincere and very professional manner', which indicates that Sovcomflot's senior management is committed to maintaining relationships with financiers and charterers. <...> High-ranking bankers proceed from the fact that the management [of Sovcomflot] is trying to ensure its possible return to the international market when the sanctions are eventually lifted, ”the newspaper writes, citing an unnamed source.

Lloyd's List notes that on April 25, the company reported problems with payments on issues of Eurobonds totaling $928 million maturing in 2023 and 2028, which indicates the intention to fulfill financial obligations, despite the sanctions restrictions.

Since the end of February, many countries of the world have begun to introduce or expand sanctions against Russia. Hundreds of Russian companies, banks, carriers fell under the restrictions, businessmen, officials, parliamentarians and members of their families were included in the lists. The EU and the UK, as part of the sanctions, banned ships from Russia from entering their ports. As expected, in the coming days, the EU may adopt a new, sixth package of sanctions.

Sovcomflot replaces CEO Business

On April 7, it became known that Shell suspended the operation of two LNG carriers leased from Sovcomflot due to sanctions risks. Barents and Timmerman tankers are mainly used for LNG transportation in Asia and are not directly sanctioned. Nevertheless, Shell decided not to use ships as a precaution. According to Bloomberg, the ships have been anchored off the coast of Singapore for several weeks now.

The Sovcomflot Group of Companies calls itself one of the leaders in the maritime transportation of energy resources: liquefied gas, oil and derivatives. Own and chartered fleet, including joint ventures, consists of 134 vessels with a total deadweight of over 11.7 million tons.

The company's website says that Sovcomflot is the largest operator of the ice-class fleet, with over 80 vessels designed to operate in difficult climatic conditions. The company is involved in servicing large industrial projects in Russia and abroad - these are Sakhalin-1, Sakhalin-2, Varandey, Prirazlomnoye, Novy Port, Yamal LNG, Arctic LNG 2, Tangguh (Indonesia). The company's head office is located in St. Petersburg , representative offices are located in Moscow, Novorossiysk, Murmansk, Vladivostok, Yuzhno-Sakhalinsk, London, Limassol and Dubai.

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