Great Eastern shipping steps on gas with two back-to-back vessel buys
Great Eastern Shipping Co Ltd is stepping on the gas with the purchase of a second-hand very large gas carrier (VLGC) built in 2007, on Monday, its second gas carrier in less than a week as India’s biggest private ocean carrier looks to tap the rising demand to import liquefied petroleum gas (LPG) into Asia’s third biggest economy.
This is the third gas carrier to be purchased by the Mumbai-listed firm in less than six months, taking its total gas carrier fleet to five comprising three very large gas carriers and two medium gas carriers.
On March 26, the company had announced the purchase of a second-hand medium gas carrier. The VLGC and the MGC will join the company’s fleet in the first quarter of FY19.
In September 2017, it purchased a medium gas carrier.
“We continue to inspect more, though, nothing is finalised,” a spokesperson for The Great Eastern Shipping said.
The company did not disclose the price of the ships nor the investment involved in the acquisition, but said that the two ships are being offered on tenders issued by state-run oil firms for transporting LPG.
India’s LPG imports have doubled in the last five years as local production failed to keep pace with a 45 per cent growth in demand, making India one of the world’s biggest LPG import markets after China and Japan.
The government’s push for use of clean energy for cooking in rural households that have been using wood and coal as fuel for decades has led to a surge in consumption of LPG cylinders. The rising use of LPG in cars has also spurred demand.
China, India and Japan together make up about 45 per cent of global LPG purchases.
Local shipping companies get a right of first refusal (RoFR) to match the lowest rate offered by a foreign flag ship in tenders issued by state-run oil firms under the chartering guidelines framed by the Director General of Shipping, India’s maritime regulator. If Indian shipping companies decline, the foreign flag ship is allowed to carry the cargo.
The Great Eastern Shipping is expanding its gas carrier fleet after Varun Resources Ltd – once India’s biggest LPG ship operator collapsed under a mountain of debt and is being liquidated under the Insolvency and Bankruptcy Code.
Varun’s collapse has left a huge gap in India’s LPG shipping tonnage which has opened up a big opportunity for ship owners such as The Great Eastern Shipping to encash.