Navigator set for VLEC debut

Wilbur Ross’s Navigator Holdings could be the first mainstream shipowner to place contracts for very large ethane carriers (VLECs) after revealing it is in talks to enter the fledgling sector.

Only six VLECs have been contracted globally and they were placed directly by India’s Reliance Industries at Samsung Heavy industries in July.

David Butters, chief executive of Navigator, says “pretty far advanced” talks have taken place with shipyards and charterers regarding deals for such vessels.

Speaking on a conference call with the company fresh from securing a charter for its first 35,000 cbm ethane carrier newbuilding, Butters said: “We have been discussing with shipyards the design and construction of very large ethane carriers (VLECs).

“Because of the unique nature of these vessels we would not order them without securing long term time charter agreements in advance.”

He says the owner does not have contracts in place but it is working “diligently and aggressively” on the VLECs.

Designs and yards in place

Butters says he can’t predict whether the company will win any of the charters it is discussing. However, he says Navigator has a pretty good idea of the design of the ships, which yard will build them and to what schedule.

“We want them to be flexible enough to carry LNG, LPG and ethane,” Butters added.

“We have been sharing all of that information with a number of potential charterers who are in discussion with the various terminal operators,” Butters said.

He prices the vessels at between $120m and $130m.

Reliance decision unique

TradeWinds reported earlier this year that BW and Exmar were among the owners looking to break new ground with VLEC orders against potential charters with Reliance.

Butters says the decision by Reliance to go alone was disappointing for Navigator and the other owners who had been involved with the company as it planned the project.

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He says Reliance's decision not to team with an established gas shipowner in ordering VLECs is likely to be a one-off.

“It is a unique company with its own way of doing business,” Butters said. “They may come back as they will have to face the reality that ethane ships are the most complex vessels to operate in this industry.

“They are more complex than LNG.”

Yesterday Navigator netted a 10-year deal for the first ethane carrier at Jiangnan Shipyard.

This prompted suggestions from analysts that VLEC orders would soon follow along with contracts for the final three 35,000 cbm ships at the same yard.

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