Nan Fung Shipping is mulling its options over two massive oil tankers it owns and has on charter to Sanko Steamship, Japan's fourth-largest shipping company which filed for bankruptcy protection on July 2. Several shipbrokers and tanker operators had already been in contact with Nan Fung Shipping to discuss possible deals, a source close to the company said. 'We are looking at options supposing Sanko allows us to take back the vessels,' the source said, adding that while the company was exploring possible opportunities, no decisions had been made. One of the most recent meetings was with a representative of US outfit Scorpio Tankers and shipbroker Associated Shipbroking late last week. Scorpio Tankers operates 19 tankers, including 13 in a pool of vessels with other owners. Nan Fung Shipping, part of the property and hospitality group founded by tycoon Chen Din-hwa, who died last month, said it had not had any contact with Sanko to discuss the ships or the charters. The source added the company would contact Sanko to understand more about the situation regarding bankruptcy procedures and the ships. He said Nan Fung understood Sanko management was busy dealing with more than 100 clients, including shipowners, banks, shareholders and lawyers. Nan Fung is not taking legal advice about the situation with Sanko. Sanko Steamship operated 147 vessels totalling more than 10.49 million dwt (deadweight tonnes) before it applied for bankruptcy protection. Most of these were owned by other shipowners and chartered to Sanko. He said Sanko cut the charter rate it was paying for Nan Fung's tankers between April and June as the Japanese company tried to reduce its outgoings. Charter hire payments for one of the tankers have returned to normal, but it is uncertain what is happening for the second ship. Nan Fung's two ships, the 105,700 dwt Sanko Blossom and Sanko Breeze, were delivered by Nan Fung straight to Sanko upon completion by Japanese shipyard Sumitomo in 2005. Brokers said the ships were believed to have cost Nan Fung US$36 million each when they were ordered and are among 17 ships, including nine tankers and five dry cargo ships, owned by the firm. Nan Fung Shipping, which chartered the ships to Sanko for 10 years, said the charters had three years to run before they expired. Under the terms of the bareboat charters, Nan Fung remained as the ships' owner while Sanko was given complete control of the management and operation, including crewing, maintenance and fuelling. Nan Fung is the second Hong Kong shipping company to be affected by the problems at Sanko Steamship after Wah Kwong Maritime Transport confirmed it was in negotiations over two ships. Wah Kwong Maritime Transport jointly owned the huge US$140 million supertanker, the 298,000 dwt Trikwong Venture, in partnership with Sanko Steamship. It was delivered in January and chartered to Dalian Ocean Shipping, an offshoot of the mainland's biggest shipping firm, Cosco, for five years. Wah Kwong and Taiwanese partner U-Ming Marine Transport chartered the Cape Victory, a 177,000 dwt iron ore and coal carrier, to Sanko Steamship for five years. Tim Huxley, Wah Kwong chief executive, said Hong Kong law firm Howse Williams Bowers was advising Wah Kwong on its legal position.