Eastern Pacific Shipping has placed the first order for a new type of vessel — the ultra large ethane carrier (ULEC) — as it sights an initial fleet of up to eight ships.
It comes with the Idan Ofer-controlled shipowner set to secure charter contracts from China’s Satellite Chemical for the groundbreaking vessels.
The new ships will offer 50% more capacity than the world’s current biggest very large ethane carrier.
Industry sources told TradeWinds that Eastern Pacific has inked contracts for six 150,000-cbm ULECs at Jiangnan Shipyard in China against charters with Satellite, previously named Zhejiang Satellite Petroleum Co.
In addition, they said Ofer’s rapidly growing shipping company is in close discussions for two similar-size ULEC newbuildings with HD Hyundai Heavy Industries in South Korea for Satellite business.
The Jiangnan ULECs are said to be costing about $200m each and the HHI ships will cost slightly more.
The Chinese-built ethane dual-fuel ULECs will be kitted out with type-B cargo tanks capable of carrying ethane, ethylene and LPG.
Eastern Pacific is looking to take delivery of the eight ULECs in 2027. Details of the charters on the ships have yet to emerge.
The shipowner, which brokers say has moved quickly, and sometimes aggressively, to scoop up business for new ship types is understood to have been in a race for the pioneering ULECs alongside one of the biggest VLEC owners, Pacific Gas, and Sinogas Maritime.
Singapore-based Eastern Pacific declined to comment on market talk relating to the orders. Satellite did not respond to questions sent to the company.
Satellite has worked with Eastern Pacific previously on ethane, with Ofer’s company building six VLECs for the Shenzhen Stock Exchange-listed company.
An initial four VLECs were ordered at Samsung Heavy Industries in 2020 with two more contracted at HHI a year later.
The Chinese ethane buyer is expanding its capacity and is said to be moving on to this larger size of ethane carrier to transport the volumes it has already secured from the US.
Satellite has two ethane crackers in operation, one under construction and is planning for a fourth one, all in the same area.
These crackers will be in full operation by 2027.
Scaling up
Global demand and capacity for ethane as a petrochemical feedstock to produce ethylene for plastics production has been growing and with it the demand for larger vessels to take advantage of economies of scale.
The ULEC represents a new breed of ethane carrier.
Work started on ULECs in 2019 with design work underway between yards and cargo tank designers and has been ongoing.
In the past few days, classification society American Bureau of Shipping awarded approval in principle to a ULEC design from Jiangnan Shipyard which would use an insulation system designed by the yard and three type B cargo tanks.
To date, the largest vessels to be deployed have been VLECs which top out at just shy of the 100,000-cbm capacity mark.
Satellite shipped its first ethane cargo to China in 2020 to commission its cracker at Lianyungang in Jiangsu province.
The cargo was brought in on the 37,300-cbm Navigator Nova (built 2017), which was loaded at the Marcus Hook terminal on the US east coast.
The company later deployed six VLECs of 98,000 cbm, which were built by Malaysia’s MISC and chartered back to the company for 15 years.
Eight more VLECs joined Satellite’s fleet in 2022. Four of these 98,000-cbm vessels were built by Eastern Pacific for a total price of $441m with Satellite chartering two more VLECs from China’s Tianjin Southwest Shipping and Eastern Pacific added the final pair.
