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Riding on the mainland's growing demand for oil, China Shipping Development is to spend US$244 million  to buy five tankers, including its third  very large crude carrier (VLCC)  for international trade.

The board of directors earlier this week  approved the purchase of a 298,000 deadweight tonnes VLCC which will cost US$100 million,  the company announced to the Hong Kong stock exchange yesterday.

The board also agreed  to spend US$144 million  on  four tankers of 52,000 deadweight tonnes.

Chief financial officer Wang Kangtian said the company was positioning itself  to cater to China's surging oil needs.

'If  annual gross domestic product  growth remains at 8 per cent, we think demand for oil imports will continue to rise,'  Mr Wang said.

China imported 110 million tonnes of oil imports in the first 11 months,   he said, adding that that  may rise  to about 140 million to 150 million  tonnes next year.

The company's  tanker capacity for international trade doubled this year to 1.5 million deadweight tonnes after  it took delivery of its first VLCC  just days ago.

It will receive its second VLCC in April next year. The latest order  is scheduled to be operational in November 2007.

Mr Wang said the acquisitions  would be funded by internal resources. 'We only need to pay 20 per cent of the total amount in the near term. The rest will be paid in 2006 and 2007,' he said.

Rachel Tsang, an analyst with DBS Vickers, said  the company could easily afford the purchase. The securities house estimates  the Hong Kong-listed company will report 2.6 billion to 2.7 billion yuan in cash on hand by the end of the year. Gearing ratio is about 12.6 per cent.

China Shipping Development's  interim net profit this year almost doubled to 885.85 million yuan. Turnover rose 25 per cent to 2.95 billion yuan.



China Shipping buys five tankers on fuel needs