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MARINE LOG
MARITIME SERVICES
DIRECTORY

Thurssday, August 16 2000

Firm Contract for 4 new LPG/ethylene carriers
I.M. Skaugen ASA, Oslo (OSE: SKA) has finalized an agreement with the Zhonghua Shipyard in Shanghai, China for an order of up to ten 8,400 cu. m size ethylene gas carriers.

A new company, owned 50% by GATX Capital Corporation, San Francisco, a subsidiary of GATX Corporation and 50% by I.M. Skaugen (IMS) will be the buyer of the first 4 vessels. The order is thus now firm for 4 vessels and with an option to build 6 more vessels at the same price and terms.

The total contract price for the four vessels (exclusive of the 6 option vessels and all pre-delivery charges and delivery costs) will be about $83 million, or $20.8 mill per vessel. Pre-delivery, finance and other costs of about $5 million will take this to about $88 million per ship. The first vessel will be delivered from the yard in March 2002 and the final
vessel in the first quarter of 2003.

The option vessels are at same price and terms as the four firm vessels. The first option for two vessels will have to be exercised by August 2001, the second by February 2002 or and the final option in August 2002.

The financing for the new company to purchase the first four vessels has been confirmed, and will not require Skaugen to issue any further equity.

"As a result of the close cooperation with our partners," said CEO Morits Skaugen, "we have developed a fully financed newbuilding project that only will require cash injection of minor amounts of equity during construction. After construction the available financing is for about 85% of the newbuilding price."

The vessels will all be part of Skaugen's NGC fleet which currently consists of 14 gas carriers (13 with ethylene capacity) and with about 100,000 cbm capacity, operating in the revenue pool.

Skaugen said the four ship newbuilding project was in line with the company's strategy of strengthening the position of NGC as the second largest ethylene carrier in the world as well as its long term
objective of renewing the NGC gas carrying fleet.


The new vessels will be larger and more efficient compared to the present 7,121 cu.m "Norgas Average" vessel and will have an increased earnings capacity.

Over recent years, I. M. Skaugen has negotiated and explored several acquisition possibilities in the second-hand market without finding the ideal candidates at the right price and terms, noted Skaugen.

"We then started, and have spent most of this year, investigating various newbuilding alternatives and developing a NGC design for such vessels that is state of the art," he said.

Newbuilding prices for such vessels have declined about 35% over the
last five years, he continued, but it is believed that the declining trend has now stopped and prices may again increase somewhat .

Excluding the IMS newbuilds, the orderbook for the semi refrigerated LPG fleet from 4,000 up to 22,000 cu. m) currently standsat 17 units including 4 options, or 9.3% of present fleet. This corresponds to about a 5% increase in the fleet for delivery in 2000, 1.9% for 2001, 1.7% for 2002 and 0.4% for 2003 .

IMS chose the Zhonghua yard because of its "on time" and "on specification" delivery performance record and "the fact that the well reputed Shanghai Edwards Shipyard, which has long experience in building such gas carriers, is now a part of this yard,"

Skaugen said that, though "close supervision is still needed," Chinese yards are in general between 15-30% lower on prices than Korea and thus China is probably the lowest priced area of the world to build vessels.

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