BW LPG acquires dual-fuel and scrubber-equipped VLGCs from Avance Gas in a deal valued at $1 billion

Singapore-based LPG vessel owner and operator BW LPG has signed agreements to acquire twelve very large gas carriers (VLGCs), four of which are dual-fuel, from Norwegian shipping company Avance Gas.

The transaction, valued at over US$1 billion, includes four 91,000 cubic meter dual-fuel VLGCs, two of which will be built in 2022 and two in 2023, and eight 83,000 cubic meter VLGCS built in 2015, six of which are equipped with exhaust gas scrubbers.

By May 2023, Avance Gas received four 91,000 cubic meter dual-fuel VLGCs from South Korean shipbuilder Hanwha Ocean.

The acquisition is expected to significantly expand BW LPG’s fleet, increasing the number of owned and operated VLGCs from 41 to 53, of which 22 will be LPG dual-fuel.

According to BW LPG, this move consolidates the company’s position in the VLGC sector and comes at an opportune time as newbuild VLGC deliveries are declining and global LPG export volumes continue to grow.

Prior to delivery of five of the vessels, approval must be obtained from the lessor of two sale-leaseback facilities and the charterers of three time charter agreements. The transaction will be completed on a ship-by-ship basis and is expected to be completed by December 31, 2024.

Andreas Sohmen-PaoChairman of the Board of BW LPG, commented: “This strategic transaction supports BW LPG’s ambition to offer enhanced shipping and product delivery options to our customers in the fast-growing LPG sector. The addition of these 12 vessels will result in a larger fleet and greater flexibility and, based on our market assessment, is expected to be earnings accretive. They will also support our product trading and terminal activities.”

Kristian SorensenCEO of BW LPG, said: “Today’s transaction represents an important milestone in BW LPG’s history and reflects our ability to execute large fleet acquisitions by maintaining a solid balance sheet and leveraging the BW LPG stake as attractive currency. The acquired vessels will further increase our commercial scale and increase our operating leverage in a market that we expect to be strong in the coming years, thus solidifying earnings and dividend potential.”