J M Baxi Group enters LPG shipping business with $87.3 million VLGC purchase

The J M Baxi Group has purchased one of three vessels sold by LPG shipping giant Dorian LPG Ltd, marking the Indian logistics conglomerate's first foray into the sector.

This comes after Dorian LPG announced on Thursday that it had sold the Bahamas-flagged ship Constellation (IMO: 9734680) to an unnamed buyer in a deal that delivered $87.3 million (about ₹8,327 crore) in proceeds to the VLGC specialist.

It was later revealed that the 2015-built very large gas carrier (VLGC), with a capacity of 84,000 cubic metres, had joined the fleet of J M Baxi Marine Energy, a Singapore-registered subsidiary of the J M Baxi Group.

Built at South Korea’s Hyundai Heavy Industries, the Constellation was purchased by J M Baxi Marine Energy Pte Ltd in a 50-50 partnership with one of the top cash buyers of ships for recycling, as per an ET Infra report.

It was since reflagged with the Singapore flag, and renamed Tiny Daisy.

The report added that the exhaust gas scrubber-fitted VLGC, managed by the shipping giant Synergy Marine Group, is currently on charter to a global oil major, with ship trackers showing it en route to the Sohar Port in Oman after departing from the Mundra Port last week.

Marine exhaust gas cleaning systems, which are often called scrubbers, are those that remove sulphur oxides and boiler exhaust gases from the ship.

Notably, this comes at a time when spot rates for just booking VLGCs have soared to $150,000 per day for shipments outside the Arabian Gulf, which rises to $300,000 per day for shipments inside the embattled Arabian Gulf.

This is not only due to the risks associated with commercial shipping in the Arabian Gulf, but also due to the soaring war risk insurance premiums as a byproduct of the four-month-long war in the Gulf.

Though the war is seeing a tense impasse for now, shipping in the Strait of Hormuz and the Red Sea remains incredibly fraught with risks—not just due to the active possibility of militant groups shooting at vessels, but also due to the presence of naval mines (in parts of the Strait of Hormuz, for example).

The J M Baxi move also comes just months after it signed an agreement with Japan’s Kawasaki Kisen Kaisha, Ltd (K LINE) and GAIL (India) Limited (GAIL) in January this year to jointly own a 174,000-cubic-metre LNG carrier currently under construction at South Korea’s Samsung Heavy Industries Co., Ltd.

The finished LNG carrier will be delivered by 2027, after which it will be deployed on a long-term time charter with GAIL.