GasLog charters LNG newbuilds to BG Group’s MSL
Monaco-based GasLog has agreed to charter to Methane Services, a BG Group unit, three of GasLog’s uncontracted newbuilds that are currently under construction.
MSL also has an option to elect to charter an additional six newbuilds provided it makes that election within 2015, GasLog informed in a statement.
Under the deal, MSL will charter three newbuildings commencing mid-2018 and early 2019 for average initial terms of approximately 9.5 years at attractive rates, which will add approximately $845 million of fixed rate revenue to GasLog’s existing contracted revenue backlog.
MSL has an option exercisable within 2015 to charter an additional six newbuildings for average initial terms of approximately 10 years, which would add approximately $1.8 billion of fixed rate contracted revenue should MSL exercise its option.
The three firm ships to be chartered by MSL will be modern 174,000 cubic meter LNG carriers with low-pressure, two-stroke propulsion technology. Two of the vessels will be delivered from Hyundai Heavy Industries. One vessel will be delivered from Samsung Heavy Industries.
Together with MSL’s entry into the 9.5 year average charters on the three GasLog newbuild vessels, and as part of MSL’s overall portfolio management, the three existing charters on the GasLog Shanghai, GasLogSantiago and GasLog Sydney (all owned by GasLog Partners) will be adjusted. MSL will lengthen two of the existing charters by approximately 4 months and shorten one charter by 8 months. MSL retains the existing extension options of two consecutive periods of three or four years on all three vessels, GasLog informed in its statement.
MSL also has an option to elect to charter an additional six newbuilds from GasLog, with average initial terms of ten years at rates consistent with the three firm charters, provided it makes that election within 2015. If MSL makes that election, MSL would take earlier delivery of the three firm newbuilds described above immediately upon their delivery from the shipyards in 2017.
If MSL exercises the options, the three charters of the GasLog Shanghai, GasLog Santiago and GasLog Sydney would be further adjusted by a potential shortening of a maximum 31 months in total, with the aim of redelivering these ships to coincide with the newbuild deliveries in 2017. This option is currently exercisable only within 2015 and the two companies are discussing a possible extension of such option beyond the end of 2015.
If MSL does not exercise the extension options on the GasLog Shanghai, GasLog Santiago and GasLog Sydney and GasLog Partners does not enter into a third-party charter on such vessels, GasLog and GasLog Partners intend to enter into a bareboat arrangement that is designed to guarantee the total cash distribution from each vessel. However, if they are unable to agree on such bareboat arrangement, GasLog will enter into a time charter with GasLog Partners on equivalent terms to the existing MSL time charters for any period of shortening.