british confidence bp shipping vlgc

SEACOR Orders Pair of VLGCs from Hyundai Heavy

Rob Almeida
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May 2, 2013

British Confidence, a VLGC owned by BP Shipping, image: BP

After a $10.9 million loss in the first quarter this year, SEACOR Holdings’ (NYSE:CKH) Executive Chairman of the Board, Charles Fabrikant was justifiably unhappy with his company’s results.  However, it’s time to move on.

And move on they have.

The Fort Lauderdale-based shipping firm announced today that it has executed an agreement with Hyundai Heavy Industries Co., Ltd. (HHI), through a subsidiary of SEACOR Ocean Transport Inc., for the construction of two 84,000 cubic meter Very Large Liquefied Petroleum Gas tankers (VLGCs) at an undisclosed price. The ships will be powered by MAN G-type diesel engines and “equipped to meet current and expected environmental and regulatory requirements,” according to a statement by SEACOR.

Deliveries are expected in 2014 and the contract includes options to purchase up to three additional VLGCs with delivery in 2015.

SEACOR anticipates that the new vessels will be managed by Dorian (Hellas) S.A. in a pool together with three VLGCs owned by affiliates of Dorian. Dorian also has an option to acquire or co-invest in up to 50% of the vessels under contract and option with HHI.

Expansion of LPG Market

With the expansion of oil and gas development, particularly in North America, the demand for LPG ships is on the rise, prompting other shipping firms, like Vancouver-based Teekay, to order additional LPG carriers as well. The world’s largest LPG shipowner, StealthGas, has noted recently of their need to redeploy their fleets. In a Bloomberg report last month, StealthGas’ Chief Executive Officer Harry Vafias said in an interview that 25 percent of his fleet will be deployed to the Americas region by the end of 2013, an increase of 10% over its current distribution.

The report continued:

While the U.S. is producing the most crude in two decades, the government only allows exports of refined products, boosting demand for vessels hauling everything from gasoline to butane to propane. The nation’s LPG shipments rose 33 percent in 2012, Energy Department data show.

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