Energy vessel operator BW LPG has signed a debt facility worth US$290mn to refinance six ships in Singapore.

The finance comes from the Export-Import Bank of Korea (Kexim, the Korean export credit agency), which acted as ECA lender. ABN Amro and Overseas-Chinese Banking Corporation (OCBC) were mandated lead arrangers, with ABN Amro also acting as co-ordinator and facility agent. The funds are priced at Libor + 1.88%, amortising in 16 years.

BW LPG owns and operates liquefied natural gas (LPG) vehicles. Its fleet consists of 55 very large gas carriers (VLGC) and large gas carriers (LGC), with a total carrying capacity of 4.5 million cubic metres.

The ships to be refinanced were formerly owned by Aurora LPG, which was acquired by BW LPG in December 2016. The acquired fleet included nine VLGCs.

The downturn in the LPG market saw the company’s profits fall significantly in 2016, down to US$23.6mn from US$326mn the year before.

Nonetheless, chief executive officer Martin Ackermann says this transaction demonstrates BW LPG’s ability to tap markets at a tough time and will assist in its cost cutting efforts.

He says: “This financing exemplifies our strategy of cost leadership, and our ability to leverage the BW LPG platform value in obtaining market leading financing. The ex-Aurora fleet is now fully refinanced at similar competitive terms and structure as the rest of the BW LPG fleet, which further strengthens our competitive edge in a challenging market. We thank our lenders for their continued support.”

A recent report from analysis company Research and Markets found that the LPG market is due to expand, as governments look to adopt it as a transportation fuel.

It reads: “Government policies will continue to shape the future development of the natural gas vehicle over the coming years. Further, cost of fuelling with LPG is substantially cheaper than petroleum-based fuels, even when necessary costs are included, both buying relatively more expensive vehicles, and developing fuelling infrastructure, fleet operators have a potential opportunity to capitalise on a major cost-saving. Expansion of the LPG fuelling network is also expected to drive the market in future.”