Norwegian very large gas carrier (VLGC) shipowner and operator Avance Gas has signed a US$135 million sale and leaseback agreement with Bank of Communications unit Bocomm Leasing for two vessels.
The Avance Castor and Avance Pollux are scheduled for delivery in Q4 2023 and Q1 2024, and are being built by Daewoo Shipbuilding and Marine Engineering in South Korea.
The lease deal with Bocomm Leasing means that long-term financing has now been put in place for the final two vessels in Avance Gas’ series of six newbuild 91,000 cubic metre-capacity carriers.
The vessels have lower fuel consumption, larger cargo intake and reduced bunkering time, and they will have significantly lower carbon-dioxide emissions. They can operate on liquified petroleum gas (LPG) and are being prepared to eventually use ammonia as fuel, as Avance Gas positions itself for a zero-carbon fuel solution as soon as the technology is ready and feasible.
Oslo-listed Avance Gas announced the sale and leaseback deal with BoComm Leasing as it presented its earnings for the second quarter of 2022. Avance Gas executive chairman Oystein M. Kalleklev says that with the worldwide energy crisis, the company believes the clean properties of LPG should be compelling, especially when coupled with its affordable price compared with other fuels.
In May, the company signed a US$555 million sustainability-linked term facility with a bank syndicate, putting in place debt finance for nine VLGCs, including the financing of the third and fourth newbuilds, Avance Rigel and Avance Avior, due to be delivered in the first quarter of 2023.
There was also an accordion option to finance the final two newbuilds, but the company has instead opted for a sale and leaseback with Bocomm Leasing.