Middle East gas exports sustaining VLGC boom
Middle East and US exports are keeping VLGC rates at record levels says Avance Gas CEO
Avance Gas’ CEO Christian Andersen believes spot market VLGCs are being kept in high demand by Middle East and US exports.
US exports of liquefied petroleum gas, coupled with cargoes of LPG from the Middle East have supported profits for very large gas carrier owners, he told Lloyd’s List.
Andersen added however that there was a risk these ‘super profits’ might drop to normal levels, which would hurt operators’ bottom line as they rapidly expand capacity.
Avance Gas, he said, is currently seeking to double its fleet size to around 30 VLGCs, competing with market leader BW LPG.
Andersen said that they will continue to tap into the banks for its capital raising because banks are the most competitively priced finance, but that a drop in the market would put pressure on the company to seek “other sources of capital”.
VLGCs have seen sustained high freight rates due to demand for the export of cargoes from the United States’ Gulf of Mexico waters and the Middle East.
Rates on the VLGC Middle East to Asia benchmark trade currently stand at around US $106 per tonne, according to the Baltic Exchange. This translates into around US $70,000 per day for VLGC owners.
“It’s the highest freight market since the Viking age and we are making a lot of money,” said Andersen