Avance Gas Flying High on Record VLGC Freight Rates
- Business & Finance
Nasdaq-listed owner and operator of very large gas carriers (VLGCs) Avance Gas ended the third quarter of the Financial Year 2015 with USD 72.3 million net profit, a 124% increase compared to USD 32.3 million net profit reported in 3Q2014, mostly due to the all-time-high VLGC freight rates and a strong demand for liquefied petroleum gas (LPG) in Asia.
VLGC freight rates climbed to record levels in the quarter, with the Avance Gas Spot VLGC Index averaging USD 99,836/day in 3Q2015, up from USD 79,757/day in 2Q2015.
Avance Gas’ fleet continued trading spot and on spot-indexed time-charter contracts in the quarter ended September 30. The time charter equivalent (TCE) earnings were USD 94.4 million in 3Q2015, up from USD 59.1 million in 2Q2015. TCE earnings for the quarter reflected a 295-day increase in operating days to 975, largely due to the impact of additional newbuildings entering service.
Three newbuildings were delivered to Avance Gas in the third quarter: Sirocco on July 17, Levant on August 18, and Chinook on September 22.
Pampero, the last of eight newbuildings from Jiangnan Shipyard, was delivered on October 19, and is expected to complete gassing up operations in Indonesia mid-November.
During the quarter ended September 30, the three terminals in the US Gulf – Enterprise, Targa and Nederland – operated close to full capacity, with average monthly exports reaching 1.5 million tonnes, Avance said in its financial report.
‘The growth in US LPG export and continued growth in Asian imports are expected to support healthy utilization rates for the global VLGC fleet through 2015 and 2016,” the company said in its financial report.
”The impact of the widening of the Panama Canal, which will enable VLGCs to transit, is included in Avance Gas’ fleet utilization models from second half 2016. While this will reduce sailing distances, the net effect for the VLGC fleet is still uncertain.”