Al Seer Marine, a subsidiary of Abu Dhabi-based International Holding Company, has formed a Dh624 million ($169.91m) joint venture with energy company BGN International.
They plan to acquire a portfolio of Very Large Gas Carriers (VLGCs) that are used for transporting liquefied petroleum gas around the globe.
The joint venture will also award a contract to South Korea’s Hyundai Heavy Industries to build two new VLGCs, each with a capacity of 86,000 cubic metres, the companies said in a statement on Wednesday.
The new carriers are due for delivery in the first and second quarters of 2023, respectively.
“Continued global demand for cleaner fuel-burning sources, such as LPG in emerging markets, will require greater infrastructure, including VLGCs,” said Reahd Al Kindi, Al Seer Marine’s chairman.
“The partnership will bring together operational, regional and financial expertise to manage the initial portfolio of VLGCs we have just acquired as well as the growth potential in the marketplace.”
The demand for VLGCs is expected to be high in the market because of the limited supply of vessels. At the start of the year, there were only 312 VLGCs in the world, with 18 of those operating as storage units, the companies said.
LPG, a refined product, is in high demand in Asia, mainly as a cooking fuel stored in cylinders for stoves as well as a propellant, refrigerant, vehicle fuel and as a feedstock for the petrochemicals industry.
“With continued growth for LPG demand, expanding BGN’s global infrastructure will be critical,” said Ruya Bayegan, its chief executive. “This joint venture with IHC and Al Seer Marine represents another strategic partnership for BGN and an opportunity for scalable growth in the foreseeable future.”
The partnership also marks a shift in strategy for Al Seer Marine, which was previously involved in activities such as high-tech boatbuilding and unmanned systems development among others.
Dubai company BGN International deals in the trading, storage and transportation of petroleum, petrochemical products and other commodities.