Avance Gas Holding Ltd ("Avance Gas") (AGAS) has
declared the option of the two mid-sized LPG/ammonia carriers (MGCs) from
Nantong CIMC Sinopacific Offshore & Engineering Co., LTD (CIMC SOE), announced
in June 2023. The two newbuildings are equipped with dual fuel engines capable
of running on both LPG as well as compliant fuel oil. The ships will have a
cargo capacity of 40,000 cubic meters and are scheduled for delivery during the
second quarter and the fourth quarter of 2026. The ships are sister ships of the
two MGCs contracted in June.
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. In addition to be able to transport traditional LPG cargoes, the
vessels can also carry ammonia cargoes. The seaborn ammonia trade is expected to
grow significantly in the coming years due to the numerous blue and green
ammonia projects incentivized through various tax credits and carbon taxed.
Contract price for the newbuildings is approximately $61.5 million per vessel
i.e., $123 million in total, same as the two ships contracted in June as the
Company has utilized its option to acquire two more ships at this attractive
price prior to the option lapsing.
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. These ships will be fitted with dual
fuel LPG engines as well as shaft generators making them highly versatile and
future proof in terms of emissions. These ships are not only perfect for the LPG
trade but also ammonia trade as parcel sizes for ammonia cargoes tend to be in
this size lot. 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 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 continue to pay dividends as we will demonstrate when
reporting the second quarter results on August 30, 2023."