Owners of very large gas carriers see liquefied petroleum gas exports continuing to rise in 2024 and 2025, even as the rate of growth is set to slow, according to the latest quarterly results from BW LPG and Navigator Holdings Ltd.
North America LPG exports by VLGCs are set to grow by 12.3% in 2024 and then 8.7% in 2025, BW LPG said in a presentation Tuesday. That compares to a forecast of 16.2% forecast for this year, the data showed.
Middle East exports of LPG shipped by VLGCs will gain by 4.9% next year and 3.4% in 2025, compared to a forecast 5.3% for 2023, BW LPG said.
Forward freight agreements for the remainder of this year continue to reflect the high spot rates, the shipper added. Spot rates during 3Q 2023 were exceptionally strong, supported by growth in North American LPG exports and higher demand in the Far East.
Transit restrictions at the Panama Canal have caused more ships to ballast back to the U.S. through the long way via Suez or Cape of Good Hope compared to a year ago, BW said, adding that alternative routes will lead to as much as a 50% increase in voyage duration.
Fewer transits result in logistical disruptions and inefficiencies that ultimately end in longer voyages, as well as higher costs for the transits that are available, said Navigator, adding the supply of available tonnage could also shrink as a result.
“We reiterate our positive view for 2023 and 2024, amid high volatility,” said BW in the presentation. “Key underlying drivers include high oil price leading to increased oil and gas exploration conducive to continued strong export growth from the U.S. and steady growth from the Middle East [and] new propane dehydrogenation plants coming on stream in China.”
Meanwhile, North American natural-gas liquids production has hit all-time highs with August production exceeding 200 million barrels/day, according to Navigator. It said monthly Handysize ethane and ethylene cargos from the U.S. continue to rise, adding that during this quarter, ethylene export volumes are expected to remain near nameplate capacity.
“U.S. ethylene and ethane exports for 2023 are showing greater volumes compared to any of the previous years,” said Navigator. “The combined Handysize exports of ethylene and ethane reached 339,000 metric tons during September 2023, only 1,000 mt shy of the record set during April 2023.”
The ethylene export terminal, in the U.S. Gulf Coast at Houston, had a 3Q 2023 throughput totaling 249,857 mt, compared to 189,140 MT in 3Q 2022.
Navigator Holdings Ltd. together with Enterprise Product Partners L.P, the joint venture partner, have agreed to the Terminal Expansion Project, which is expected to increase the export capacity to at least 1.55 million MT/year from the current 1 million MT/year. Long lead items have already been ordered and construction has started and is expected to be completed in 4Q 2024.
By the end of 2023, BW LPG will take delivery of the BW Kyoto following the declaration of an attractive purchase option in 1Q 2023. The vessel will be on a six- year time charter from 1Q 2024 and is expected to produce a return on capital employed of approximately 18%.
BW LPG has also entered into an agreement to sell the BW Princess (2008 built) with estimated delivery in 1Q 2024, generating approximately $64 million in liquidity and a net book gain of $20 million. The BW LPG pool will also be joined by the Sinogas, with one dual-fuel VLGC, the Gas Venus, to be added in 4Q 2023.
BW reported net profit after tax for 3Q 2023 at $122.3 million, with earnings before interest, taxes, depreciation and amortization at $183.9 million.
Navigator posted for 3Q 2023 adjusted EBITDA of $72.2 million and net income attributable to stockholders of Navigator Holdings of $19.1 million.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
— Reporting by Dermot McGowan, [email protected]; Editing by Rob Sheridan, [email protected]
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