Chinese gas trader Oriental Energy has signed a strategic agreement with Hong Kong-based energy trader Kunlun Holding to collaborate on LPG trade.
Under the agreement, Oriental Energy will manage Kunlun’s LPG storage facilities and purchase 2.5m tons of LPG from Kunlun each year from 2018 to 2020.
The two companies will also start negotiations on the establishment of a VLGC pool. Oriental Energy expects the pool to be set up before the end of May.
In a separate agreement, Oriental Petroleum, the controlling shareholder of Oriental Energy, will transfer the lessor’s interest in a lease contract of eight VLGC newbuildings to Kunlun Shipping, the shipping unit of Kunlun Holding. The vessels will be chartered back to Oriental Energy upon completion.
Oriental Petroleum announced a plan to build eight VLGCs and charter them to Oriental Energy in 2015. So far the company ordered two 84,000 cu m VLGCs at Jiangnan Shipyard. The contracts of the remaining six vessels have yet to be announced.
Currently Oriental Energy owns a fleet of eight VLGCs and Kunlun Shipping runs a fleet of two VLGCs.