Idan Ofer's Eastern Pacific Shipping (EPS) has ordered three LPG carriers at Hyundai Mipo Dockyard (HMD) against a long-term charter with Norwegian oil major Equinor.
They will be fitted with dual-fuel propulsion that can run on LPG, which is in line with the policies of both companies to use alternative marine fuels to reduce greenhouse gas emissions.
The 40,000-cbm design for the trio is slightly larger than the standard 38,000-cbm medium-sized gas carrier design built by most shipyards. But the unique size was an Equinor requirement.
EPS confirmed the contract with TradeWinds but did not disclose pricing details for the vessels or the charters.
TradeWinds understands that EPS won a competitive tender for the contract, which will see Equinor charter the ships for five years upon delivery. The contract includes options to extend the charters.
Sources familiar with EPS said the deal marks a series of firsts for the Singapore shipowner.
It is the first time it has taken part in a competitive tender to secure long-term business, and the tenures of the charters represent a major diversion from the way it traditionally fixes out its ships.
On the hydrocarbons side of its business, EPS has always been a spot player in the tanker sector.
In LPG, where its existing gas carrier fleet of 11 vessels includes the three 60,000-cbm LPG carriers acquired from Neu Gas Shipping last August and two 37,300-cbm vessels delivered by HMD earlier this year, the preference has been shifting over the past year towards period charters mostly of up to a year with large chemical conglomerates.
Excellent counterparty
“Winning the Equinor tender is quite a coup for EPS. Equinor is an excellent, solid-name counterparty and it is a nice alignment in both companies’ vision and interest in lower-emission shipping,” said a source with close connections to the company.
EPS has been a strong proponent of gas-powered vessels, and has in recent years ordered a slew of dual-fuel containerships and tankers that can run on LNG.
Equinor has also shown a strong preference for chartering LNG or LPG-fuelled ships.
The company, which is the largest oil and gas producer on the Norwegian continental shelf and has significant operations in Australia, Africa and the Americas, has between 90 and 100 vessels, from small LPG carriers to VLGCs and VLCCs to LNG carriers, on charter at any given time.
The time is right
It opted for LNG dual-fuel systems for its most recent shuttle tankers being built to operate off Norway, and has contracted with Exmar for an LPG dual-fuel VLGC that will be delivered this year.
Late last year, Equinor’s senior vice president of asset management, Ann-Elisabeth Serck-Hanssen, and vice president of shipping Kjetil Johnsen told TradeWinds that it believed the time was right to proceed with gas as an alternative fuel, as they could see the supply chain infrastructure was coming into place.
Equinor would pursue the LNG fuel option in all sectors where it was commercially viable as part of its ambition to ensure its shipping operations had a strong sustainability profile.
