Knutsen NYK Offshore Tankers entered into new long-term charters with a subsidiary of BG Group plc, on 12 September 2014, to provide shuttle tanker services in Brazil.
The contract with BG will be serviced by two Suezmax-size DP2 shuttle tanker newbuildings to be constructed by Hyundai Heavy Industries (“HHI”) in South Korea. The contract for two new shuttle tankers with HHI was also signed on 12 September 2014.
A shuttle tanker is a ship designed for oil transport from an off-shore oil field as an alternative to constructing oil pipelines.
Upon delivery scheduled for end of 2016, the vessels will start operations under long-term time-charters. If BG declares all extension options, the vessels could operate under the charters for up to a maximum of 20 years.
BG will also for a period of one year have the option to increase the number of shuttle tankers to three or four in total at similar terms.
Pursuant to the Omnibus Agreement between Knutsen NYK Offshore Tankers AS and NYSE listed KNOT Offshore Partners LP (“KNOP”) requiring KNOT to offer to KNOP vessels with contracts longer than five years, KNOP will have the option to acquire the vessels at fair market value from Knutsen NYK Offshore Tankers AS following the charterer’s acceptance of the vessels.
KNOP owns, operates and acquires shuttle tankers under long-term charters in the offshore oil production regions of the North Sea and Brazil. KNOP is structured as a master limited partnership. KNOP’s common units trade on the New York Stock Exchange under the symbol “KNOP.”