March 29, 2005

I.M. Skaugen building LPG carriers in China

Norway's I.M. Skaugen (IMS) is building two 3,200 cu. m LPG carriers for its own use at a Chinese shipyard south east of Shanghai.

IMS is developing its Chinese marine transportation services and is seeking involvement in both Chinese domestic transportation and import and export of LPG and petrochemical gases and product. Building the Chinese petrochemical industry into a "world-class" operation will require the marine transportation of many oil, LPG and petrochemical raw materials and related semi-finished products. The logistical solutions need to attain an international standard.

Since 1999, IMS has been been carrying LPG on the Yangtze river through a joint venture that last year handled over 100,000 tons of products.

Now IMS is using its own working capital to build the two 3,200 cu.m LPG carriers. They will be delivered in the second half of 2006 and will be built to specifications and the rules to fly either the Hong Kong or the PRC flag.

The delivered price ro IMS will be about US $15 milliom, inclusive of all pre-delivery expenses.

IMS has entered into a shipbuilding arrangement that sees it assuming a large part of the responsibility for not only vessel design, but also for sourcing of steel and components.

"To manage these additional risks," says an IMS statement, "we are developing further, and building on, our competence of doing business in China. We have prior experience from building complicated gas vessels at shipyards in China that have little experience in building such vessels and for export customers, but this cooperation creates more of an alliance to share the risks and rewards of an efficient design and construction process. By creating such an alliance with this shipyard we are both hoping to assist the shipyard in developing its business to service the export markets in the future while we at IMS get access to vessels that will enable us to improve not only our cost leadership, but also our service leaderships in our business segments."

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