Oriental Energy will officially withdraw from the LPG business and focus on green chemicals and hydrogen energy after entrusting all 15 of its VLGC fleet to its affiliated company KEEGAN SHIPPING HOLDING PTE,LTD.
On Feb. 25, Oriental Energy announced the signing of the entrusted operation agreement and related transaction with KEEGAN SHIPPING HOLDING PTE,LTD.
Oriental Energy will withdraw from LPG international and domestic trading businesses and will entrust MATHESON ENERGY PTE.LTD. to operate eight existing VLGCs with 10-year chartering contract and four with one-year chartering contract.
On February 24, 2021, Oriental Energy agreed to sign the Fleet General Entrusted Operation Agreement with KEEGAN SHIPPING HOLDING PTE,LTD.
KEEGAN SHIPPING HOLDING PTE,LTD is a Singapore-based ship investment and operation management company, which was established on June 29, 2017, with a registered capital of about US $38.84 million.
The 15 VLGCs will be entrusted to KEEGAN on a back-to-back sublease basis.
In addition, Oriental Petroleum, the controlling shareholder of Oriental Energy, has signed a framework agreement with Jiangnan Shipyard for the construction of six VLGCs.
Get out of LPG and bet on hydrogen
Oriental Energy has been the largest importer and distributor of LPG in China for six consecutive years. However, the international and domestic trade volume of LPG remains at a relatively high level, but compared with LPG deep processing business, LPG trade has a lower profitability, a large amount of capital occupied and obvious volatility, which has brought a great impact on the company's finance and business performance.
On the basis of ensuring the domestic LPG deep processing business and terminal retail business demand, Oriental Energy took the initiative to adjust the business structure and regional layout.
First, reduce the active trade volume of LPG and gradually withdraw from the international and domestic trade sectors of LPG; Second, adjust the regional layout of the company's LPG deep processing business; Third, it actively participates in the construction of the hydrogen energy industry chain in the Yangtze River Delta and the Pearl River Delta, and is determined to become China's largest hydrogen supplier and a high-quality hydrogen storage and transportation system service provider in the future.
Oriental Energy stated that this transaction with Keegan Shipping is to meet the needs of strategic transformation. After the ship is entrusted to Keegan, the company will focus more on the green chemical and hydrogen energy industries.
Source: Sarah Yu, XINDE MARINE NEWS
The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.
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