Euronav and Avance Gas Each to Build LNG- and Ammonia-Ready Newbuilds
As the industry continues to seek long-term solutions to meet the challenges to decarbonize shipping, shipowners are facing difficult decisions for fleet upgrades while protecting the long-term viability of their investments. Increasing they are looking to flexibility and dual-fuel solutions that prepare for the future.
This strategy was demonstrated by two shipping companies with their recent orders for new construction. Euronav announced that it has entered into an agreement with the Hyundai Samho yard for two VLCC newbuilding contracts with an option for a third that will all be prepared for a transition to LNG and ammonia. At the same time, Avance Gas Holding also announced the order of two additional VLGCs also prepared to transition to LNG and ammonia.
Euronav said that it will be investing $186 million in the two newbuilds, including $4.2 million in additions and upgrades to the standard specifications. The new VLCCs will be fitted with exhaust gas scrubber technology and ballast water treatment systems to meet current regulations while they will also be LNG-ready. Euronav reported that it is working in cooperation with the shipyard and classification society to include an ammonia-ready notation to be prepared for when technology, logistics, and the regulatory framework allows for it. They noted that they expect to have defined the ammonia notation by the end of the summer. The first vessel is scheduled for delivery in the fourth quarter of 2022 followed by the second in the first quarter of 2023. Euronav also has the option to contract a third VLCC with the same specifications that would be delivered in the second quarter of 2023.
“As a market leader in our segment, Euronav acknowledges our responsibility to support innovation towards decarbonizing the transportation of oil, while protecting and building value with the capital our shareholders have entrusted us with,” said Hugo De Stoop, Euronav CEO. “With this order, Euronav is tangibly driving innovation and investing in the energy transition. These ships are not only the latest generation of low consumption design but also have the option to be converted or retrofitted to use either LNG or Ammonia as a low emission fuel of the future. As there are no such alternatives in the second-hand market today, and with rising steel prices and constraints over yard capacity to 2024, we wanted to seize this opportunity to rejuvenate the fleet with two or three modern VLCCs that will replace older and less efficient ships that will leave our fleet around the same time of their delivery.”
Avance Gas also announced today that it has increased its dual-fuel VLGC newbuilding program from four to six 91,000 CBM vessels. The newbuilding program is with Daewoo Shipbuilding and Marine Engineering in South Korea, with the two additional VLGCs announced today for delivery in the second half of 2023.
Like Euronav, Avance Gas’s new vessels will be capable of burning. Further, it also intends that the vessels will be prepared for ammonia as fuel as the company positions for a zero-carbon fuel solution as soon as the technology is ready and feasible.
Both companies note that this strategy is part of their efforts towards decarbonization of their respective segments. It also demonstrates the broader approach shipowners are taking during this period of transition in the industry.