There is no danger of Russian charterer Sibur holding on to US owner Navigator Holdings’ LPG carriers if the petrochemicals giant were to be sanctioned, the shipping company has said.
Asked by Clarksons Platou Securities analyst Omar Nokta on a conference call if there was a risk the company would not get back the four vessels if sanctions tightened and the contracts became void, chief financial officer Niall Nolan said there was “no chance” of that happening.
“I mean the ships are crewed by our crew and they are not used for privatised trade, meaning staying within any particular country, in this case, Russia,” he added.
He explained that if there were some suggestion that the charterer was refusing to hand over a vessel, the company would direct it to a destination of its choosing.
Navigator said last week that four LPG carriers are on long-term charters to Sibur that expire in June this year and in December 2023.
The company cannot cancel the deals as Sibur has not been sanctioned, but it will not seek to renew the contracts.
Chief commercial officer Oeyvind Lindeman said Navigator is continuing to monitor all sanctions.
“So just to make [it] clear, those ships on the existing charters comply with US, UK and EU sanction policies and regulations,” he told the call.
“Should something change, it will give you the option to terminate if sanctions are either on the product or the counterparty,” Lindeman added.
Propane business
The four vessels are shipping propane into Europe, he added.
“European consumers are currently unrestricted in buying those products for the time being. And the ports that we go to are still allowing ships to call at those ports. So good question, and it’s in flux, and we’re monitoring on an hourly, minutely basis,” the CCO said.
He added that there were 1.5m tonnes of Russian LPG exports last year into Europe. Of this, 350,000 tonnes were carried by sea and the rest by rail.
Were this to change, some of the shortfall could come from the Mediterranean, but the US would be the largest source, Navigator believes.
“There is a huge opportunity for North America to supply any shortfall for Europe, which I think increases tonne-miles,” Lindeman added.
Russian volumes small
Navigator’s ships will be involved in these trades, he said.
But Russian exports were less than 5% for the shipowner in 2021.
“So should that go away it’s only a small, small part of the business. Even Trinidad & Tobago was bigger for Navigator,” Lindeman said.
The CCO expects LPG volumes to decline without sanctions over the next nine months anyway, in parallel with the European Union’s target of reducing Russian gas imports by two-thirds by the end of the year.
