Navigator, Enterprise to expand their joint ethylene export terminal

Navigator Holdings, the owner and operator of the world’s largest fleet of handysize liquefied gas carriers, has joined hands with Enterprise Products Partners on expanding their existing ethylene export terminal joint venture at Morgan’s Point, Texas on the Houston Ship Channel.

The developments making up the expansion project will be owned by Navigator Ethylene Terminal LLC, a joint venture that is 50/50 owned by Navigator and Enterprise.

Navigator expects that the expansion will provide significant additional ethylene refrigeration capacity for the joint venture, creating an opportunity for additional revenue through increased volumes.

“Navigator expects to make cash contributions to the export terminal joint venture for construction commencing in the first quarter of 2023 and ending in 2024, at which time the expansion project is expected to begin commercial service,” the company said.

Ethylene throughput for the third quarter of 2022 at the Ethylene Export Terminal totaled 189,142 metric tons, a reduction from the 268,444 and 267,110 metric tons throughput in Q2 and Q1 2022, respectively.

According to Navigator, the reduction was expected as the third quarter is normally the seasonally weakest period of the year. The reduction was attributed to an economic slowdown in Europe while Asian demand also remained muted due to ongoing COVID restrictions.

“Looking ahead to the fourth quarter of 2022, October 2022 volumes significantly increased to 104,000 tons with another 79,000 tons expected for November, primarily as Asia reopens resulting in multiple cargoes being transported to the Far East for the first time since the second quarter of 2022,” the company said.

The announcement comes on the back of Navigator’s new joint venture deal with Greater Bay Gas Co. Ltd., signed two months ago with the intention to acquire five ethylene vessels over the next fifteen months.

Navigator Holdings specializes in the seaborne transportation services of petrochemical gases, such as ethylene and ethane, liquefied petroleum gas, and ammonia. Ammonia continues to grow in importance for the company, especially as Europe seeks to import energy, feedstocks, petrochemicals, and ammonia from wherever the region can source supply.

“Our vessels employed in the seaborne transportation of ammonia during the third quarter increased from seven to 10 vessels, comprising 25% of our handysize earnings days. Europe imported 613,000 mts of ammonia during October alone, which was a historic record. A record 126,000 mts or 20% of the ammonia volume was loaded in Asian ports, which is an emerging trend with handysize vessels carrying ammonia over significantly longer distances and is increasing our time charter coverage. As such, 53% of our fleet is contracted for the next six months and 41% for the next 12 months,” the company said reporting on its Q3 results.

“We believe there is an increasing demand for the seaborne transportation of LPG and ammonia for use in energy and food production, which is less sensitive to market fluctuations. The transportation of ammonia and LPG typically remains a time charter business and 12 of our vessels are currently on medium-term time charters.”

Navigator Holdings reported $2.4 million of net income for the three months ended September 30, 2022, a decrease from $6.7 million year-on-year, while for the first nine months of the year net income was $43.5 million compared to $9.7 million in the same period in 2021.