Navigator Holdings ties up ethylene quintet in new JV with Greater Bay Gas

Navigator Holdings Ltd., owner and operator of handysize liquefied gas carriers, has entered into a joint venture agreement with Hong Kong-based Greater Bay Gas.

The joint venture, owned 60% by Navigator and 40% by Greater Bay Gas, intends to acquire a total of five ethylene vessels over the next fifteen months. The ships are made up of two 17,000 cbm, 2018-built and three 22,000 cbm, 2019-built ethylene vessels.

The vessels are currently commercially managed by the Luna Pool collaborative arrangement, which was formed in March 2020 by Navigator, Greater Bay Gas, and Pacific Gas Pte from Singapore.

The JV intends to acquire each ship following the exercise of the respective purchase options from their existing owner by Equator Fund Limited, the parent company of Greater Bay Gas, as each of such options becomes exercisable.

The aggregate purchase price for the ships stands at approximately $233 million, which is expected to be financed through commercial bank finance, with the remainder sourced from capital contributions from Navigator and Greater Bay Gas. Navigator said it would finance its share of the capital contributions from available cash resources.

Once acquired, each vessel will continue to be commercially managed by the Luna Pool, while the technical manager of the vessels will remain Pacific Gas.

“Following the success of our Luna Pool collaboration with Greater Bay Gas Co. Ltd. (HK), the formation of this 60/40 Joint Venture is the natural next step in our strategic alliance, enabling us to benefit further from our combined strengths,” Mads Peter Zacho, Chief Executive Officer of Navigator, said.

” The joint venture with Greater Bay Gas will result in a reduction in the average age of Navigator’s fleet and will allow us to take advantage of more efficient vessels, lowering emissions and offering improved economics to our customers. The Joint Venture is accretive as it further consolidates the handysize segment and puts us in a strong position for further growth and development in an evolving marketplace.”

“If the Luna Pool experience symbolized falling in love a few years ago, then we witness a happy marriage today. Naturally, following the Joint Venture we anticipate a successful journey together and with such holistic synergy, the Luna Pool is expected to be more productive to contribute to the global gaseous business community,” Steven Xiao, Director of Greater Bay Gas, commented.

Navigator Holdings specializes in the seaborne transportation services of petrochemical gases, such as ethylene and ethane, liquefied petroleum gas and ammonia and owns a 50% share, through a joint venture, in an ethylene export marine terminal at Morgan’s Point, Texas on the Houston Ship Channel, USA. Navigator’s fleet consists of 53 semi- or fully-refrigerated liquefied gas carriers, 21 of which are ethylene and ethane capable.  

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.

During the second quarter of 2022, Navigator Holdings increased the number of vessels employed on ammonia charters to seven vessels.

“This now constitutes 15% of our earnings days which we anticipate will continue to increase,” the company said in its half-year results.

Looking at other market trends, ethane exports from the U.S. reached record levels in June 2022 of 684,000 mts. The competitiveness of ethane compared to naphtha as a feedstock for the production of ethylene remains and Navigator Holdings believes this will continue.

As informed, North American LPG exports also reached record levels during the month of June 2022 with 5.1 million tons departing its shores for international markets. The handysize portion of the total natural gas liquids and petrochemical export volumes are approximately 7%, the upward trend in volumes is beneficial as it ultimately increases vessel demand for handysize vessels.