Owner and operator of very large gas carriers BW LPG has exercised another option for the delivery and retrofitting of a further four dual-fuel LPG propulsion engines, committing to retrofit 12 of its VLGCs with LPG propulsion technology.
The move comes in less than 20 days since the company announced it was doubling its LPG retrofits from the original four to eight. The option for an additional four units was lifted on the back of stronger-than-expected performance during rigorous type-approval tests, BW LPG said.
“For us, as the world’s largest owner and operator of VLGCs, this means that we invest significant resources and expertise to pioneer technology that can be used to push our industry towards decarbonization without the need for dedicated newbuilding orders. We thank our industry partners who have worked in close collaboration with us to ensure that this pioneering technology is safe and reliable for implementation,” Anders Onarheim, BW LPG CEO, said.
Delivery and retrofitting of these 12 dual-fuel engines into BW LPG’s fleet is set to begin in 2020 and is scheduled to be completed in the second half of 2021.
The further investment in LPG retrofits is being revealed as BW LPG reports a net profit after tax of USD 153.8 million, against loss after tax of USD 34.1 million reported in Q4, 2018.
Time Charter Equivalent (TCE) income increased to USD 191.6 million in Q4 2019, against USD 84.6 million in Q4, 2018, mainly attributable to higher LPG spot rates and higher fleet utilization.
“For 2020, we continue to have a positive freight outlook, supported by sustained U.S LPG exports despite a high number of newbuild deliveries in the first half of the year. So far, in Q1 2020, we have seen limited impact from the COVID-19 outbreak on LPG freight rates. However, the unpredictable development of this outbreak has increased uncertainty with potential near-term impact on LPG imports into China and longer-term impact on LPG production following the decline in oil and gas prices,” the company said.
BW LPG expects the scheduled terminal expansions by Enterprise and Targa in the latter half of 2020, combined with an increasingly likely easing of the U.S.-China trade war, to support strong U.S. export growth.
On the other hand, the company doesn’t see much potential for growth in Middle Eastern exports in 2020 due to the uncertainties on whether OPEC+ production cuts will be extended, and heightened political tensions in the region.
“For the longer term, we maintain our view that sustained U.S. LPG production growth and no further newbuild orders remain key to a balanced VLGC market,” BW LPG concluded.