Contract for Ethylene Carriers

I.M. Skaugen ASA, Oslo (IMS) has entered into preliminary agreement with the Zhonghua Shipyard in Shanghai, China for an order of up to 10 vessels of 8,400 cbm size ethylene gas carriers. The order will be firm for 4 vessels and with an option for 6 more. The agreement is subject to miscellaneous customary issues regarding design details and building specification as well as financing issues.

IMS has discussed the project with several financial partners and will work in the coming few weeks to finalise all the related financing issues and the yard contract with its detailed building specification. The new vessels will be larger and more efficient compared to the “Norgas Average” vessel (7,121 cbm), and should therefore have an increased earnings capacity. The first 4 vessels will be delivered during year 2002.

Newbuilding prices for such vessels have over the last 5 years declined about 35%, and it is believed that this declining trend has now stopped and that such prices may increase somewhat again. The newbuilding orderbook in this segment (semi refrigerated LPG fleet from 4,000 up to 22,000 cbm) stands currently at 17 units including 4 options, which amounts to 9.3% of present IMS fleet.