March 22, 2013 [OPIS] - Bermuda-based specialty liquids shipping and terminal company Stolt-Nielsen is planning to add second-hand tonnage to its fleet of very large gas carriers (VLGCs) through mergers and acquisitions, it said in its annual report 2012 released this week.
The expansion plans came as its marine LPG transportation division, Stolt-Nielsen Gas, nearly halved its equity loss last year, to $0.9 million from $1.7 million in the previous year, reflecting its 33% ownership in joint venture Avance Gas Holding, which doubled its fleet.
“Stolt-Nielsen Gas’ strategy is to continue its consolidation play by offering owners of VLGC fleets the opportunity to participate in building Avance Gas into a significant and profitable VLGC player focusing on second-hand tonnage rather than newbuildings,” the group said.
“Stolt-Nielsen Gas is also currently exploring opportunities in the terminal market for both LPG and LNG, working in close cooperation with [sister company] Stolthaven Terminals,” the company said on its website.
The group would not identify any potential projects in the LPG terminal sector. “For terminals, we are looking for opportunities … as we have the expertise from the Stolthaven Terminals division,” financial planning manager Julian Villar told OPIS Thursday.
Avance Gas expanded its fleet to eight VLGCs last year through two purchases from Greek Maran Gas Maritime (the M.G. Knossos and M.G. Vergina, renamed to Promise and Providence, 83,800 cbm each) and a swap with Transpetrol Shipping. The latter sold the Prospect and the Progress (82,440 cbm each) for a one-third stake in the joint venture and cash.
Stolt-Nielsen focuses on second-hand tonnage with prompt delivery, rather than on newbuildings, to capture “favourable” fundamentals in the LPG transportation segment, which it sees prevailing in the next few years. This offers a better return than new ship orders with a lead-time of several years, the Oslo Stock Exchange-listed group said in mid-2012.
The Avance Gas fleet is mainly employed on the spot market, loading in the Middle East for primarily Asian destinations, according to Stolt-Nielsen. Future fleet additions would mainly be employed in areas in which the joint venture is already trading. “If there is a shift in dynamics in the markets, we will have a look at it,” Stolt-Nielsen’s Villar said.
Saudi Arabian Sungas Holdings is the third equal owner, having brought the Iris Glory, Thetis Glory and Venus Glory (83,700 cbm each) into the joint venture in 2010.
Stolt-Nielsen expects LPG shipping market conditions “to remain volatile in the near term,” following “a roller-coaster ride” in the past, with new tonnage expected to start having an impact on supply and demand dynamics.”
Last year’s charter rates had been softer than expected, despite a temporary improvement in the third quarter, partly because lower LPG exports from the Middle East caused a slump in the final quarter as unscheduled works affected output, the group said in its annual report.
