Singapore’s BW LPG is expanding its footprint in India’s huge LPG market with fresh investments worth $40m, the company announced on Thursday.
The Oslo-listed shipowner will invest $30m in Confidence Petroleum India through a preferential allotment of ordinary shares.
The investment will give BW LPG an initial 8.5% stake in the Mumbai-listed LPG cylinder maker as well as the option to increase its shareholding.
BW LPG said the investment will support Confidence Petroleum as it expands its capacity in LPG downstream assets.
“Confidence currently has about 60 LPG bottling and blending plants and over 200 auto LPG dispensing stations across India, and it envisions substantial future growth,” the shipowner said.
BW LPG and Confidence Petroleum will also form a 50:50 joint venture called BW Confidence to develop LPG-importing infrastructure in India.
The Mumbai-based joint venture will collaborate with BW LPG’s trading division as well as India subsidiary, BW Product Services and BW LPG India respectively, to source and deliver LPG from the international market to meet Confidence Petroleum’s growing LPG import needs.
BW LPG will also invest around $10m to jointly develop and operate an onshore LPG import terminal at Jawaharlal Nehru Port Trust (JNPT) Port in Mumbai, India.
The agreement, signed between BW Confidence and Ganesh Benzoplast, will fund the construction of the largest cryogenic LPG storage terminal facility at JNPT Port.
When completed, it will be able to fully offload a 93,000-cbm VLGC in a single discharge operation and will also have the potential to connect to the Uran Chakan pipeline to ensure a competitive and efficient supply of LPG into India, BW LPG said.
Construction work on the terminal is due to start in the first half of 2024 and is expected to be fully operational in 2026.
BW LPG said the $40m investment in India would be funded by returns from investments in BW India.
“These agreements represent a significant milestone in our commitment to grow in India and underscore our confidence in the potential of the domestic LPG market as well as our joint venture partners,” said BW LPG chief executive Kristian Sorensen.
“We have generated strong and stable returns from our Indian subsidiary, and we are ready to advance our growth trajectory along the value chain, to generate even better returns for our shareholders.”
India is the second largest LPG consumer globally with an LPG penetration rate of over 99% for its 1.4bn people, according to BW LPG.
BW LPG India, in which BW LPG controls a 52% stake, controls a fleet of eight VLGCs. Established in 2017, it is India’s largest owner and operator of VLGCs.
