Japanese LPG importers Astomos Energy and ENEOS Globe have allied in an arrangement that could expand their operations of very large gas carriers (VLGCs).
The cooperation between Astomos Energy and ENEOS Globe, announced on 6 July, aims to realise synergy in LPG procurement, imports and shipping.
Astomos Energy controls 21 VLGCs, including six owned ships and 15 time-chartered ships.
ENEOS Globe controls five VLGCs, meaning its alliance with Astomos Energy could see both companies controlling 34 ships, including vessels that are under construction.
Given that there are about 170 in-service VLGCs, the Astomos-ENEOS tie-up would give both companies a 20% market share in LPG shipping.
Company sources told IHS Maritime there is a need to bring down shipping costs as spot rates are now about USD137,000 a day. Growing LPG exports from the US Gulf and congestion in Indian ports have tightened tonnage supply.
IHS Maritime’s Sea-web.com data show that since 2013, eight VLGCs have been ordered at MHI and Kawasaki Heavy Industries for Astomos Energy’s operations. Of the ships, four will be owned by the company and the others are time-chartered from Japanese shipowners.
Astomos Energy wants to up its LPG cargo levels from the current 10 million tonnes per year to 12 million tonnes by 2017, tapping on growing exports from US shale production. That would work out to 386 VLGC shipments in a year. It has import contracts with US suppliers Targa Resources and Enterprise Product Partners as well as Qatari supplier Tasweeq, among others.
While recent years have seen consolidation among Japanese LPG importers, the latest tie-up would not progress into a merger of Astomos Energy and ENEOS Globe.
Astomos Energy said, “This arrangement seeks to result in more efficient LPG procurement and there are no plans for a formal merger.”
In 2006, Idemitsu Gas and Life Company and Mitsubishi Liquified Gas Company to form Astomos Energy Corporation. In 2011, JX Nippon Oil & Energy Corporation and Mitsui Marubeni Liquefied Gas integrated their LPG businesses to form ENEOS Globe. Mitsui Marubeni Liquefied Gas was itself a joint venture between Mitsui and Marubeni Corporation.
In April this year, Cosmo, Showa Shell, Sumitomo, and Tonen General merged their LPG import businesses to form Gyxis Corporation.
As Japan’s LPG demand stagnates in the face of cheaper LNG and post-Fukushima energy-conservation efforts, it is becoming harder for individual LPG importers to survive in the long term.