Albany, NY -- (SBWIRE) -- 03/13/2015 -- What is Driving the Demand for Very Large Gas Carriers (VLGC)?

LPG gas has been in the spotlight mainly for the ever-expanding shale oil and gas production in the U.S. Due to the high crude oil production activities in the U.S., the country is recognized as the main exporter for LPG. Although the LPG market may have been rattled by turbulence and recent profound changes witnessed throughout the third quarter of the present fiscal year, the demand for the U.S. shale oil and gas is still quite high despite substantial fluctuations. All the above factors are fueling the demand for LPG transport, globally. Also, insights into the global very large gas carrier market segment shows that the rising shale gas production in the U.S. is increasing LPG exports from the country, ultimately resulting in a high demand for VLGC.

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Sensitivity Analysis of Demand and Supply of VLGC

A leading U.S. market firm's analysis speculates that even though the market for VLGC will not seek equilibrium for the next year or two, the coming years after that until 2020 are still expected to be good. By the end of 2020, the market for VLGC is projected to witness more new-building deliveries and increase in orders driven by rising LPG export volumes from the U.S., high income potentials, lower interest rates, as well as high level of liquidity within investors in the oil and gas capital markets. VLGCs have a high capacity for gas transportation – almost 82,000 cubic meters. Currently, the segment accounts for approximately more than 60% of the LPG fleet.

The Panama Canal Expansion: Spurs the U.S. – Asia-Pacific LNG Trade

The LNG as a transportation fuel trade from the U.S. to Asia is expected to benefit from the expansion of the enlarged Panama Canal that is projected to unfold in late 2016. The canal's expansion will allow the passage of heavy tankers and larger vessels such as the LNG vessels and VLGCs for the first time. This would minimize the transit route between the North America and Asia-Pacific region and the trade between both the countries will rise rapidly due to the decrease in transportation costs.

Energy Hungry Countries like Asia-Pacific Stimulates the Highest Demand for VLGCs

The Asia-Pacific region is the most attractive market for VLGCs due to the constantly increasing demand for LPG. The high LPG prices available in the Middle East certainly restrained the Asian consumers to buy LPG from the markets of the Middle East. Hence, this leads the consumers in the Asia-Pacific to advance towards an increased demand from the U.S. market.Several countries such as Japan, India, and China are key centers for LPG imports in the Asia-Pacific and are invariably looking for effective energy solutions through different aspects. The increasing demand from developing regions in Asia-Pacific is also encouraging the shipping companies to make investments into constructing cost-effective VLGCs.

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Identifying the Future Shipbuilders in the LNG Carriers Market

A majority of the shipping companies in the U.S., especially in the North America region have placed huge orders for VLGC construction. This aspect highlights that North America is projected as the next major player in the LNG trade market over the forecast period 2014-2020. After, North America, the Middle East region enjoys maximum market attractiveness as one of the major exporters of LNG. Increasing refineries in the Middle East are expected to provide further growth opportunities for the VLGC market. Moreover, the European shipping industry is spotted for a recovery from the global economic crisis of 2008 and the region has gradually started taking new orders for the construction of VLGCs.

Other regions such as Russia and the South American nations also augment the demand for very large gas carriers in the next five years.

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