Evangelos Marinakis-controlled Capital Gas is upbeat about extending its four-ship newbuilding play amid positive forecasts for the mid-term LNG shipping market.
Speaking at Fearnley Securities’ LNG lunch symposium in London this week, Capital Gas director Jerry Kalogiratos said: “We have a number of options which we would like to exercise as we do see there is growth potential and there will be demand for those ships.”
He declined to elaborate further, explaining that Capital is a private company.
Kalogiratos gave an insight into how Capital had made its decision to enter the LNG shipowning sector this year, saying it had been contemplating the move for some time.
The company confirmed an order for four firm 174,000-cbm LNG newbuildings at Hyundai Heavy Industries in South Korea in July, for delivery in the fourth quarter of 2020 and second quarter of 2021.
Kalogiratos said Capital had recognised the strong fundamentals of the industry but explained that the issues for the company had been technology and the newbuilding price.
XDF gas-injection
He said the technology issue has been resolved, pointing out that the company has opted for XDF gas-injection propulsion on the HHI vessels.
The ships will also be fitted with Mark III Flex cargo-containment systems with partial reliquefaction giving a low boil-off rate of 0.08%.
Coupled with this, Kalogiratos added LNG newbuilding prices, which had previously been more than $200m, had sunk to historical lows.
Kalogiratos, who said LNG charterers are proving “welcoming” to the company as a new entrant, said the most important factor for the investment decision was the price per cubic metre of cargo capacity.
This effectively allowed the purchase of larger ships at much lower prices, with an increased earnings upside on top of this for what are more efficient ships.
He said that looking at the potential returns on the vessels and assuming a small increase in yard prices over the past six months to $185m to $195m — depending on specifications — for a second half 2021 delivery vessel, Capital already sees a return on equity of 10%.
Referring to the low entry point for the company on its newbuildings in a later panel session, Kalogiratos said: “Those ships, at that price, would break-even in any market.”
