Aygaz Enters Very Large Gas Carrier Market with $119 Million Contract
Turkey’s leading LPG distributor, Aygaz, has made a significant leap into the very large gas carrier (VLGC) sector by signing a newbuilding contract worth $119 million with South Korea’s HD Hyundai Samho. This strategic move marks Aygaz’s first venture into the VLGC market, a shift from its previous focus on smaller LPG carriers. The contract was officially announced following a binding agreement reached after a letter of intent was signed in December 2022. The new vessel is expected to be delivered in the second quarter of 2028 and will be utilized for LPG trading and transportation.
The new VLGC will be capable of operating on both conventional fuel and cleaner alternatives, aligning with the industry’s increasing emphasis on reducing emissions. Aygaz aims to enhance its LPG supply chain with this investment, which underscores the company’s commitment to adapting to evolving market demands and regulatory pressures. The vessel will either be owned directly by Aygaz or through a wholly owned subsidiary, with payments structured in installments, most of which will be completed prior to the vessel’s delivery.
Financial Implications and Strategic Goals
The $119 million investment represents approximately 12.5% of Aygaz’s current market value, 6.7% of its total assets, and nearly half of its net tangible fixed assets. This substantial financial commitment highlights the scale of Aygaz’s ambition to expand its operations within the LPG sector. The company, which is majority-owned by the Koç Holding conglomerate, is the only publicly listed LPG distributor in Turkey and has previously limited its shipping activities to smaller LPG carriers ranging from 7,000 to 11,000 cubic meters.
The decision to enter the VLGC market signifies a transformative step for Aygaz, moving from regional and coastal gas shipping into the deep-sea LPG trade. This expansion is expected to enhance the company’s competitive position in the global LPG market, allowing it to better serve its customers and adapt to changing industry dynamics. By investing in a larger and more versatile vessel, Aygaz is not only aiming to increase its operational capacity but also to ensure compliance with stricter environmental regulations that are becoming increasingly prevalent in the maritime industry.
As Aygaz embarks on this new chapter, the company is poised to leverage its existing expertise in LPG distribution while exploring new opportunities in the international shipping arena. The upcoming VLGC will play a crucial role in this strategy, enabling Aygaz to meet growing demand for LPG transportation and contribute to the overall efficiency of its supply chain.
