Oslo: From his Oslo office , Christian Andersen, 54, founder of Avance Gas, seems at ease, confident that the coming years are destined to be strong ones for VLGCs despite the naysayers who worry about the orderbook and the falling oil price. Indeed, such is his strong belief in the sector he even uses the Maritime CEO platform to seek out potential acquisition targets.
Commenting on the collapse in crude price and its impact on the LPG availability in the US, Andersen sees sufficient refinery capacity and export of natural gas, combined with a continued development of crude oil production, suggesting LPG volumes will be solid.
Andersen, whose CV includes stints at BW Gas as well as founding Amanda LPG Trading, points to Cheniere Energy’s recent green light to expand its $18bn Sabine Pass natural gas liquefaction facility, as another source of optimism. The Sabine Pass is the first facility to ship LNG from the continental US.
The global order book of 85 ships with delivery from 2015 to 2017 does not faze him either as the ton/mile scenerio will jump when the US starts exporting to Asia.
Up to 2012 the Middle East was main exporter of LPG with more than 35m tons a year. The US started out exporting 3.5m tons, this doubled in 2013, and exports reached close to 11.5m tons in 2014, and is expected to reach close to 20m tons this year and up to 30m tons next year.
”We will continue to have exports from the Middle East at around 32 to 33m tons and the same number of exports coming out of the US,” Andersen reckons.
Avance is a spot player. All the ships are spot focused bar one on time charter, albeit even this one is priced on a spot basis.
”We will continue to work on flexible or floating pricing rather than fixed pricing, as this is better for the shareholder, so it is not likely that we will change strategy in the near future,” Andersen maintains.
Avance is a three-way venture between Norway’s Stolt-Nielsen, Saudi Arabia’s Sungas Holdings and Bermuda-based shipowner Frontline 2012. The company has made clear it wants to grow.
Avance has actively looked for mergers and acquisitions, but has not found the right candidate to date.
”We have not done anything since we took over two ships from Angelicoussis a couple of years ago and we have a less active approaching policy right now. We are however very interested in building up the size of the company, so if anyone wants to talk to us, they are welcome,” says Andersen.
Avance took on its first ship in 2009. In late 2010, it acquired three VLGCs in a share/cash transaction and Sungas became a 50% shareholder in the company. In mid-2012, Avance acquired Maran Gas’s LPG ships in a cash transaction, adding two ships to the fleet, then consisting of six modern VLGCs. In the summer of 2013, Avance did a private placement to Frontline 2012, whereby the Fredriksen vehicle became a 33% shareholder alongside Stolt-Nielsen and Sungas. In October of the same year, Avance acquired Frontline 2012’s newbuilding program at Jiangnan Shipyard, building the fleet to 14 units. That same month it listed on the OTC market at the Oslo Stock Exchange and in April last year it became a publicly listed company on the Oslo Stock Exchange.
The ships Avance took on at Jiangnan Shipyard in China have been Andersen’s biggest source of consternation. The VLGC Breeze and VLGC Monsoon are two Chinese newbuilds that have had to go for urgent repairs within weeks of being delivered.
“We do not see that the incidents on Monsoon and Breeze say anything on ships built in China on a general matter. However, we are working to sharpen up the delivery procedures on the five remaining ships in the series of eight ships,” Andersen concludes.
Andersen is one of 14 shipowners profiled in the latest issue of Maritime CEO magazine, which can be accessed free of charge by clicking here.