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Monday, 27 August 2012 00:01 - - {{hitsCtrl.values.hits}}
Reuters: Shipping tycoon John Fredriksen ordered two new very large Liquefied Petroleum Gas (LPG) carriers from an undisclosed Chinese shipyard and promised further buys, saying he aimed to capitalise on depressed vessel prices and strong LPG demand.
Norwegian-born Fredriksen - who earned the nickname “Big Wolf” from risk-taking early in his career - ordered two new 83,000 cubic metre LPG carriers for $127 million via his unlisted firm Frontline 2012 and secured an option for another four for a contractual value of $254 million, the company said in a statement on Monday.
“The high growth in LPG production, combined with a low new-building order book and historic low new-building prices for fuel-efficient tonnage, creates a unique opportunity to enter this market,” said Fredriksen, one of the richest men in the world with wealth estimated at $11.3 billion by Forbes magazine.
“Frontline 2012 is currently in discussions regarding a further increase of the new-building programme and will continue to pursue its target within three years to create the global leading commodity shipping company,” the company added.
The shipping sector has struggled with overcapacity and depressed charter rates, after a slew of vessels ordered during the pre-2009 economic boom hit the seas just as growth slowed in many markets in the wake of the global financial crisis.
Yet LPG is a bright spot, reflecting a relative lack of new vessels in this sector and rising demand for LPG - used in everything from domestic heating and cooking to powering cars - as Asian and African economies industrialize and household energy consumption increases.
Fredriksen earlier said he would continue to buy newbuilds, despite the shipping sector’s slump, as lower operating costs of recently build ships would give him a cost advantage over rivals in the longer term.
Fredriksen created Frontline 2012 from his listed Frontline entity, once the world’s biggest crude tanker firm, when high debt, a costly newbuild programme and high freight threatened to sink the company.
He put up his own cash to save Frontline and spared the banks any restructuring pain, hoping that newbuilds would eventually allow him to survive the slump.
The sector crisis has bankrupted several shipping firms and earlier this month Britain’s oldest operator, Stephenson Clarke Shipping Ltd, went into liquidation after nearly 300 years of trading.
