Norwegian shipping company Avance Gas under John Fredriksen has delivered the first very large gas carrier (VLGC) to Andreas Sohmen-Pao’s LPG company BW LPG, marking the start of deliveries of total 12 vessels as part of $1.05 billion agreement signed earlier in 2024.
Avance Gas completed the sale and delivery of its first VLGC, the 2015-built scrubberless vessel Chinook, on November 1, 2024 to BW LPG. The VLGC is currently on a variable time charter expiring in mid 2025, which has also been successfully assigned to BW LPG.
In August this year, the two parties signed an agreement for Avance Gas to sell its entire fleet of very large gas carriers (VLGCs) to BW LPG for $1.05 billion. According to the transaction, BW LPG, a dual-listed company under the BW Group, will take over 12 VLGCs built between 2015 and 2023, expanding its VLGC fleet to 41. The transaction and delivery are expected to be completed by the end of this year, including 12.77% of BW LPG shares worth approximately $333 million and $585.4 million in cash, as well as $132 million in debt replacement related to two sale and leaseback vessels.
Earlier this year, Avance Gas also sold a total of four VLGCs to other buyers, which will now total about $435 million in 2024. Upon completion of the deal, Avance Gas will become the second largest investor in BW LPG and own four medium-sized gas carriers.
BW LPG said the fleet expansion comes at an opportune time as VLGC newbuilding deliveries decline and global LPG exports continue to grow. By the end of this year, the global VLGC fleet will reach approximately 400 vessels, with an additional 13 newbuildings scheduled for delivery in 2025.
The 11 remaining VLGCs are scheduled for delivery to BW LPG before the end of 2024. According to Avance Gas, eight VLGCs are expected to be delivered to BW LPG in November and the remaining three VLGCs are expected to be delivered in December.
“We are pleased to start executing deliveries of the VLGC fleet to BW LPG with the first delivery of Chinook successfully executed according to plan. During the next few weeks, we will deliver the remaining 11 VLGCs to BW LPG.
“While the winter market for VLGCs has so far been on the soft side, we are glad to see that BW LPG has been able to capture more of the value chain economics though its integrated operations. Hence, we are looking forward to becoming the second largest shareholder of BW LPG with a 12.8% shareholding before year-end,” said Øystein Kalleklev, CEO of Avance Gas.