Good news for the local shipping industry, as a major ship-owning company registered in Bermuda and listed on the New York Stock Exchange has reportedly initiated the transfer of its activities to Cyprus.
The Royal Gazette, a Bermuda news outlet, said the company is Frontline Ltd, whose fleet includes oil tankers.
According to the report, Frontline’s board has already decided to register its fleet under the Cypriot flag.
Frontline is the world’s fourth largest oil tanker company, based in Hamilton, Bermuda and controlled by John Fredriksen, a naturalised Cypriot citizen.
Its primary business is transporting crude oil.
The company had one of the world’s largest tanker fleets consisting of VLCC, Suezmax and Suezmax OBO carriers (82 tankers total, with 18 more on order).
John Fredriksen (born 10 May 1944) is a Norwegian-born Cypriot shipping billionaire businessman based in London.
He was one of the first foreign investors to obtain a Cypriot passport through his investments in 2006.
Fredriksen, 78, is top of the “Cyprus Rich List” with a net worth in 2009 estimated at €2.7 bln.
It was reported that Fredriksen chose Cyprus because of the favourable laws on inheritance tax (0%).
Through his investment companies Hemen Holdings and Meisha, Fredriksen controls Frontline and Golar LNG from his luxury home in London.
Golar LNG, the parent of Golar Energy, unsuccessfully bid for Cyprus’ LNG supply contract, which was later rejected after the government decided to award the contract to public utility EAC.
A final decision will be taken on 20 December at an AGM, with reports saying the move will be greenlighted and executed this month.
A document filed on behalf of the US authorities that supervise publicly traded companies noted: “Frontline believes that the transfer will provide legal, administrative, and other related advantages.
“As a well-established ship management centre, Cyprus is expected to offer many advantages to the company, including attracting experienced personnel commercially, administratively and managerially.”
In the same document, Frontline notes there will be benefits from the tax regime, which is approved by the European Union, while it is added that the geographical position of Cyprus will benefit the company.
Frontline recently entered into a merger process with Belgium’s Euronav NV last July based on an agreement and specific plan.
Once the merger is completed, one of the largest oil transportation companies in the world will emerge.
The combined oil fleet will consist of 69 very large crude oil carriers, 57 medium to large tankers (Suezmax vessels), and 20 tankers with a deadweight capacity between 80,000 and 120,000 metric tonnes (LR2/Aframax).
The news had revitalised the shipping sector after authorities announced that approximately 20% of the oil tanker fleet registered in Cyprus had migrated to other registries since 6 October, when Brussels signalled its intention to cap the price of Russian seaborne oil.
Deputy Minister for Shipping Vasilis Demetriades has been lobbying the European Commission to implement compensatory measures for the sector.
New sanctions on Russia for invading Ukraine came into effect when imports of Russian seaborne crude into the EU were prohibited.
In October, the European Council adopted a decision prohibiting the maritime transport of Russian crude oil (from 5 December) and petroleum products (from 5 February 2023) to third countries and the related provision of technical assistance, brokering services and financing or financial assistance.
The embargo was agreed upon in June, but member-states were afforded a transitional period to implement the ban.
A few countries – Hungary, Slovakia, and the Czech Republic – are temporarily exempt from the prohibition due to their geographical situation and a high degree of dependence on Russian crude.
Meanwhile, the EU has also set a price cap of $60 a barrel on Russian oil transported on tankers.
This led to oil tankers de-listing from registries in EU and G7 countries in search of registries in other jurisdictions.
According to the deputy ministry, about 20% of the registered oil tanker fleet, measured in tonnage, has left the Cyprus shipping registry since 6 October.
It corresponds to approximately 900,000 tonnes of gross tonnage.
Before the sanctions, oil tankers registered with Cyprus accounted for 10% of the total tonnage.