Almost half of the newly minted very large ammonia carrier orderbook is owned by companies new to the LPG shipping sector, according to Clarksons Research.
Researcher Oliver Stavrinidis said companies such as George Economou’s TMS Cardiff Gas and Evangelos Marinakis’ Capital Gas have been muscling in on a sector that only saw its first order placed last May.
LNG carrier power Nakilat and tanker pools player Maersk Tankers have also made their moves.
These four companies will control 14 VLACs between them on delivery.
A VLAC is in essence a VLGC, optimised for carriage of ammonia as well as LPG.
The remaining 18 ships on order are owned by Idan Ofer’s Eastern Pacific Shipping, Greece’s Naftomar, Japanese giant NYK, PascoGas and Dorian LPG.
The ships represent 26% of the large LPG carrier orderbook.
“Contracting has accelerated quickly,” Stavrinidis said.
“While some VLGCs have previously been ordered with ammonia-handling capabilities, those ships could only carry ammonia at circa 85% of capacity, compared with 98% for VLACs, which have (among other upgrades) stronger tanks to better handle the higher density of ammonia.
“This marks a clear shift in the ammonia carrier sector, with vessels that currently specialise in ammonia trade usually only 15,000 cbm to 40,000 cbm.”
Record earnings spurring orders
Stavrinidis argued that ordering of VLACs in recent months has been supported by record VLGC earnings in 2023.
He also pointed out that a VLAC costs just $1.5m more than a VLGC, making the type “an attractive proposition given increased trading flexibility”.
“VLACs have proved an interesting development for the LPG carrier fleet, dominating ordering in the early stages of 2024 and attracting several new entrants into the sector,” he said.
“The ongoing evolution of the LPG carrier fleet looks set to continue, with significant long-term growth potential in a range of emerging vessel sectors.”
Last week, TradeWinds reported that hunger for newbuildings continues unabated at Evalend Shipping of Greece.
The Kriton Lendoudis-led company has 21 vessels worth more than $2.1bn on order and is said to have added two more VLACs to the tally at South Korea’s HD Korea Shipbuilding & Offshore Engineering.
A surge in demand for clean energy will boost the ranks of VLACs as the ammonia trade is transformed, according to Maritime Strategies International.
The consultancy predicts that the next 25 years are likely to see requirements for green and blue ammonia providing the impetus for owners to order close to 400 VLACs compared with a current fleet of 375 VLGCs focused on carrying LPG.
