Following the shipbuilding contract from June 2023, Norwegian shipping company Avance Gas has now declared the option to book another two mid-sized LPG/ammonia carriers at Nantong CIMC Sinopacific Offshore & Engineering (CIMC SOE).
Illustration only; Archive. Courtesy of Avance Gas
The ships will have a cargo capacity of 40,000 cubic metres and are scheduled for delivery during the second and fourth quarters of 2026.
Like their sister ships ordered in June this year, the newbuildings will be equipped with dual-fuel engines capable of running on both LPG and compliant fuel oil.
As the ships will also be equipped with shaft generators, this will further improve operation and maintenance cost while improving the environmental profile of the ships, Avance Gas said.
In addition to being able to transport traditional LPG cargo, the vessels can also carry ammonia cargo. The seaborn ammonia trade is expected to grow significantly in the coming years due to the numerous blue and green ammnia projects incentivized through various tax credits and carbon taxes.
The contract price for the newbuildings is approximately $61.5 million per vessel, i.e. $123 million in total.
Øystein Kalleklev, CEO of Avance Gas, commented: “We are pleased to expand our fleet with another two MGCs. With these ships, we have contracted in total four new MGCs thereby broadening our product offering in Avance Gas while renewing the fleet.
“(…) Given the high expected growth of the ammonia trade, the four new MGCs are very attractive addition to our fleet where we already have two VLGCs on water which are ammonia ready in terms of running it as fuel, while the two VLGCs for delivery next year can both carry and burn ammonia.
“Given the substantial cash balance in Avance Gas of $220 million at the end of the first quarter, the recent sale of Iris Glory at $60 million and the strong freight market, we have the capacity to fully finance these ships without adversely impacting our ability to contine to pay dividends as we will demonstrate when reporting the second quarter results on August 30, 2023.”
