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Monaco-headquartered GasLog Ltd. has ordered two new 174,000-cubic-metre (cbm) tri-fuel diesel electric LNG carriers from Samsung Heavy Industries Co., Ltd. in South Korea. The vessels are expected to be delivered in Q3 and Q4 2016, respectively, and upon delivery will commence firm seven-year charters with a subsidiary of BG Group plc.

The company explains that due to the benefits accrued from building a series of ships, these vessels will have a lower delivered cost than the two vessels ordered in February, 2013 and are expected to generate a combined annualized earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately US$46–$47million over the first twelve months of operation. In addition, GasLog has secured up to 6 additional options from Samsung, 4 of which are priced, with delivery dates through 2017.

Following the recent delivery of the GasLog Skagen into a BG Group charter, GasLog now has a fourteen-ship fully owned fleet, of which six ships have been delivered and are on charter and eight ships are either under construction or to be constructed. Two of the vessels to be delivered will go on charter to Shell and a further four to BG.

The strength of GasLog’s existing fleet commitments and the addition of these new fixed rate term charters gives it additional flexibility to look at a range of charter periods for its two open vessels, scheduled for delivery at the end of 2014 and beginning of 2015. The company considers that these factors allow it to be opportunistic in placing these vessels into shorter-term charters if it determines such charters would be beneficial to overall profitability.

GasLog said that it does not foresee the need to raise new equity within the next couple of years to fund these two new orders, due to the support received from Samsung Heavy Industries, the 'attractive' terms that were agreed and the recent launch of its Norwegian bond.

Paul Wogan, CEO, commented: "It is very pleasing to be able to conclude these significant contracts with our largest customer. These contracts reinforce our strategy of building high quality ships at competitive prices for charter to strong, creditworthy customers. It also supports our view that GasLog, as one of the world’s leading LNG shipowners, is well placed to continue to benefit from the long-term secular growth of the LNG market. We are very pleased to be building the new vessels at Samsung with their solid track record for delivering vessels on time and on budget for GasLog. As well as being tri-fuel and fitted with four stage compressors the vessels will have a Boil Off Rate of 0.09% and have a number of fuel saving devices that make them extremely efficient. In addition the options we have secured show a strong commitment between GasLog and Samsung to continue to support each other’s growth ambitions."

Image: GasLog Singapore.