Ocean Yield’s foray into LNG to add $840 million to its backlog

Norwegian shipowner Ocean Yield has revealed its intention to buy an interest in France’s Geogas LNG from infrastructure fund CVC DIF, which marks its first acquisition in the liquefied natural gas (LNG) segment.

The transaction is set to enable the Norwegian player to hold an indirect economic interest of up to 34% in France LNG Shipping (FLS), a 50:50 joint venture (JV) between NYK Line and Geogas LNG, adding an estimated $840 million to Ocean Yield’s EBITDA backlog. Subject to certain customary conditions, the transaction is anticipated to be closed in the second half of 2024.

Andreas Røde, Ocean Yield’s Chief Executive Officer, noted: “We are pleased to partner with NYK, Geogas Maritime and Access Capital Partners for our first transaction in the LNG segment. FLS controls a fleet of modern LNG carriers with a low carbon footprint and long-term charters to investment grade-rated counterparties.”

FLS’ fleet comprises multiple LNG carriers on long-term charters, whose average contract duration is ten years, or 14 years including extension options. These ships are on assignments with players the shipowner describes as “tier-one investment grade-rated European energy companies”.

Six vessels are on the water with an average age of three years, while an additional two are scheduled for delivery in 2024 and 2025. The ownership of four additional newbuilds is expected to be transferred to FLS upon the closing of the transaction, with delivery targetted for 2027.

Late last year, the shipowner inked a deal to purchase two 2022-built Suezmax tankers, the 157,300 dwt Cypress and the 158,300 dwt Cedar. Built at South Korea’s Daehan Shipbuilding, the tanker duo was to be delivered to their new owner in Q4 2023.

Before that, the firm decided to invest in four LR1 product tankers. After construction at Guangzhou Shipyard International (GSI) in China, the ships were meant to be converted to dual-fuel operation with methanol as fuel, with delivery expected in 2026 and 2027.