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Biggest LPG line idles four vessels

Biggest LPG line idles four vessels
BW Gas Ltd., the world?s biggest shipper of liquefied petroleum gas, idled four tankers because rates plunged so low that each vessel was losing the company about $25,000 a day.

World's Biggest LPG Shipping Line Idles Four Vessels.

BW Gas Ltd., the world"s biggest shipper of liquefied petroleum gas, idled four tankers because rates plunged so low that each vessel was losing the company about $25,000 a day. The Berge Racine will idle until the end of the year, when it will be given to new owners, Andreas Sohmen-Pao, chief executive officer of parent company BW Group, said by phone, confirming a note sent to clients. Three other carriers will also stop trading until freight rates improve, he said today.

?The conditions are so bad and have been bad for so long we see this as a painful but necessary decision,? Singapore- based Sohmen-Pao said. ?It"s impossible to say how long we will be putting them into lay-up,? as ship deactivation is called.

Cargoes have dwindled over the past year because of delays at natural-gas projects and reduced crude output by oil- producing nations, said Geir Olafsen, chief analyst at Inge Steensland A/S, an Oslo-based shipbroker specializing in LPG. The gas is a byproduct of crude oil and natural gas output.

?Ships were built against expected new exports,? Olafsen said. ?When they were delivered, that created a big overhang? because anticipated cargoes failed to materialize, he said.

Removing the crews from the idled vessels will cut daily operating costs to about $2,500 per ship, from as much as $12,000, Sohmen-Pao said. Each carrier was making about $5,000 a day in rental income and needed $30,000 to break even, he said.

LPG Shipped

The amount of LPG shipped from the Middle East, the main cargo-loading region, fell 10 percent last year from 2008 to 27.3 million metric tons, Olafsen said. Over the same period, the fleet of very large gas carriers expanded 6 percent to 140 ships, he said.
?We feel this is the only rational thing to do at this stage,? Sohmen-Pao said. ?We hope others will make rational decisions? and deactivate ships.

In contrast with the LPG market, rental income from hauling crude oil and dry bulk commodities such as iron ore is enough for owners to make profits. Supertankers carrying 2 million- barrel cargoes of crude to Asia from the Middle East, the industry"s benchmark route, are making $47,004 a day, according to the Baltic Exchange. Frontline Ltd., the biggest operator of such ships, needs $30,800 to break even on them.

Capesize commodity carriers most commonly used to ship iron ore to China, the biggest steelmaker, from Brazil and Australia are making $37,307 a day.
Three of the ships being idled by BW Gas are VLGCs, and they represent 11 percent of the company"s fleet, according to data on its Web site. The fourth is a large gas carrier.

The Berge Racine was built in 1985. The three other vessels are the 2001-built BW Denise, the 1992-built BW Helios and the 2000-built Berge Danuta.

BW Gas"s ships have a carrying capacity of 1.2 million deadweight tons, or 8.2 percent of the global fleet"s capacity of 14.6 million tons, according to data from Clarkson Research Services Ltd., a unit of the world"s biggest shipbroker.

www.turkishmaritime.com.tr

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