Greece-based shipping company Capital Product Partners L.P., which is engaged in the seaborne transportation of natural gas, containerized goods and dry cargo, has set sights on exploring further growth in the LNG space.
Speaking in a recent webcast on the company’s strategy moving forward Jerry Kalogiratos , CEO & Director at Capital Product Partners, said that the LNG market was ‘particularly interesting’ for asset acquisition when looking at the market fundamentals.
At the moment the shipowner is finalizing the acquisition of four vessels, announced a year ago. As informed, one vessel remains to be acquired.
To remind, the acquisition included three containerships and one LNG carrier worth a total of $597.5 million.
The LNG carrier is a 174,000 cubic meters X-DF vessel, named Asterix I, built by Hyundai Heavy Industries, while the three 13,278 TEU containerships, include Manzanillo Express, Itajai Express, and Buenaventura Express. These vessels are fitted with hybrid scrubbers and are being constructed by Hyundai Samho Industries. Hapag-Lloyd has entered into firm ten-year charter agreements for all three containerships.
The acquisition of vessels remains a priority, and the company anticipates exploring further growth opportunities in the second half of the year.
The fundamentals of the LNG industry are strong, with an anticipated increase in the supply of LNG and growing demand for liquefaction capacity. Additionally, the role of LNG in energy security and the energy transition further supports the positive outlook for the LNG industry in the long term.
The increasing demand for LNG, coupled with environmental regulations and the preference for advanced vessel technologies, presents a positive outlook for the LNG shipping market.
The global LNG shipping market witnessed steady growth in 2022, defying short-term seasonal pressures in the spot charter market. Demand for LNG continued to rise, supported by ongoing energy security concerns and robust long-term charter rates. Furthermore, the earnings premiums for new-generation LNG vessels remained notable, driven by a tight market and a high LNG price environment.
Term charter rates for LNG carriers remained firm throughout the year, with the 1-year time charter (TC) rate for a 174,000 cubic meter unit reaching $175,000/day by the end of April, underscoring the structural tightness in the market, Capital Product Partners said.
The United States played a significant role in driving LNG trade growth, with exports projected to increase by 9% to 85 million metric tons (mt) this year. The resumption of operations at Freeport LNG (14 million metric tons per annum) contributed to this growth. The expanding US LNG exports have had a positive impact on the demand for LNG carriers.
In addition, the partnership has a total of ten vessels that have been unencumbered after prepaying $23.4 million of floating rate debt. The company said that all of its vessels are now employed, with the first charter expiration set for Q1 2025.
Regarding the company’s current unencumbered ships, CPP CEO highlighted the flexibility and financial strength they provide. He mentioned the possibility of leveraging these assets for cash if an acquisition opportunity arises, emphasizing that the company is in no hurry and has sufficient liquidity at present.