Fleet renewal measures announced by Frontline and CMB.TECH this week suggests that crude tanker companies are focused on having a modern and fuel-efficient fleet. This is despite the NZF (Net-Zero Framework) delay, which we saw in October 2025, suggesting that stricter GHG regulations will continue to play a dominant role in shipping space. In this thought piece, we decode the potential rationale for fleet renewal by these companies and how this will translate into improved financials.

Frontline announces sale of 8 VLCCs and acquisition of 9 newbuild VLCCs; CMB.TECH sells 6 VLCCs

Frontline Shipping in its latest press release announced the sale of eight of its oldest first-generation ECO VLCCs, built between 2015 and 2016, for a total price of USD 831.5 million. The transaction is expected to generate capital gains of USD 217–227 million, which are expected to be recognised by end-1Q26. Simultaneously, the company has also entered into an agreement to acquire nine latest-generation, scrubber-fitted ECO VLCC newbuilding contracts from an affiliate of Hemen Holding Limited, its largest shareholder, for an aggregate price of USD 1,224 million. Of these vessels, six are currently under construction at the Hengli shipyard and three at the Dalian shipyard in China, while seven are scheduled for delivery in 2H26, followed by one vessel in 1Q27 and the final vessel in 2Q27. Frontline intends to fund the acquisition through a combination of cash and long-term debt.

Frontline Shipping’s timely access to newbuild capacity, without construction delays, positions the company to capitalise on a strong rate environment, supporting higher earnings visibility. Additionally, the transaction is expected to reduce the company’s average fleet age to 6.8 years from 7.8 years.

Another major tanker company, CMB.TECH (formerly Euronav) announced the sale of six VLCCs, built between 2007 and 2016, generating capital gain of USD 261.1mn which will be recognised by end-1Q26. These sales would reduce the company’s average tanker fleet age from 8.9 to 8.0. Since the start of 2024, CMBT has been diligently taking steps to renew its fleet by selling older vessels and ordering younger ones.

Companies capitalising on firm second-hand prices

Companies are capitalising on elevated second-hand prices by divesting older tonnage amid stricter ESG regulations, while redeploying cash from vessel sales along with strong operating cash into younger and more fuel-efficient vessels. Second-hand VLCC values have been increasing since 2H25. Newbuild and newbuild resale values of VLCC increased around 1.0% in last three months, while for 5- and 10-year-old VLCC tankers prices surged 1.3% and 1.7%. respectively. The strongest gain was recorded for 15-year-old VLCCs, whose values climbed 3.4% in the past three months.

Scrubber-fitted vessels to reduce bunker fuel cost

Frontline’s latest move would help it reduce operating costs and make its vessels attractive to charterers. The replacement of 10-year-old vessels with newer scrubber-fitted ECO VLCCs would lower fuel consumption and improve operational efficiency. Lower fuel consumption will definitely help reduce GHG emissions of the vessel, and thus the cost of EU Allowances under EU ETS. In addition, these vessels offer greater flexibility for future retrofitting to dual-fuel engines capable of operating on alternative fuels such as methanol or ammonia. The installation of scrubbers also allows vessels to operate on high-sulphur fuel oil (HSFO), which is cheaper than low-sulphur fuel oil (LSFO), translating into an estimated fuel cost savings of approximately USD 1.7 million per vessel per year (for a VLCC eco vessel). Should the company choose to convert some of these engines to alternative fuel capability, it would ensure compliance across the wider fleet with regulatory frameworks such as Fuel EU Maritime and the IMO’s Net-Zero Framework (not yet adopted) through the sharing of surplus.

We expect the fleet renewal to be an ongoing theme for tanker companies going forward. Reasonably firm second-hand prices make it a comparatively easier decision for the companies from a capital allocation perspective. A younger fleet should also translate into higher earnings for the tanker companies, provided the ongoing strength in tanker rates continues.
Source: Drewry