Scorpio Tankers Inc. (NYSE: STNG) (the "Company") announced on July 2 that it has reached agreements with two yards in Korea to construct a minimum of 5 and up to 10 newbuilding vessels designed for the carriage of liquefied petroleum gas ("LPG").
Emanuele Lauro, chief executive officer and chairman of the board, commented, "We are excited about our entry into LPG which we have long considered an extension of the product market. With common customers, shipbuilders, and trade lanes, and offsetting seasonal swings, the product tanker and LPG markets are highly complementary. Most importantly, LPG, as with refined products, is competitively priced in the global marketplace and winning new, distant customers, and this is reflected by accelerating export volumes out of the US Gulf.
We are pleased with our agreements with two of the most reputable builders of VLGC vessels. These orders replace a previously announced order for 4 LR2 vessels, and the structure of the LPG market presents an array of opportunities for us to build value with our shareholders."
The Company has reached agreements with Hyundai Samho Heavy Industries ("HSHI") and Daewoo Shipbuilding and Marine Engineering Co., Ltd. ("DSME") for the construction of a minimum of five and up to 10 Very Large Gas Carriers ("VLGC") for approximately $74 million each.
The vessels are 84,000 cubic meter tankers designed for the carriage of LPG. Of the first five vessels, two will deliver in the second quarter, one in the third quarter, and two in the fourth quarter of 2015. These agreements replace the previously announced agreement to construct four LR2 vessels at Samsung Heavy Industries.