China Merchants Energy Shipping and Sinotrans & CSC Holdings have entered into an agreement to form a $1.1bn very large crude carrier (VLCC) joint venture (JV).

Under the deal, China Merchants Energy Shipping will hold a 51% stake in the JV and provide $566m in assets, including nine existing VLCCs and a further ten on order, while Sinotrans & CSC will invest $544m in cash.

"The JV aims to form one of the world’s leading tanker fleets by scale, strengthen both parties’ capability of transporting China’s oil imports and boost their competitiveness."

The companies are seeking to develop a VLCC fleet with a capacity of up to 250,000 deadweight tonnes each, reported The Wall Street Journal.

China Merchants Energy said in a statement that the JV aims to form one of the world’s leading tanker fleets by scale, strengthen both parties’ capability of transporting China’s oil imports and boost their competitiveness in the global markets.

In-line with these efforts, once established, the JV plans to order newbuilds or buy second-hand vessels. The deal is expected to be completed by the end of September.

Sinotrans & CSC Holdings has recently unveiled plans to restructure its oil shipping arm, Nanjing Tanker, which was the first state-backed company to de-list from the Shanghai Stock Exchange.