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ASBAGASVOY, the new voyage charter party for gas tankers developed jointly by BIMCO and the Association of Ship Brokers & Agents (U.S.A.), Inc. (ASBA) has seen a rapid uptake after its release to the market in September 2020. Christian Hoppe, BIMCO’s General Counsel, has talked to BW LPG, Petredec and Clarksons about why ASGABASVOY was their preferred choice of charter party in a recent LPG fixture.
The strong growth in the LPG shipping market in the last decade has created a need for a gas specific charter party. In response, BIMCO teamed up with ASBA to develop what will hopefully become the preferred choice of voyage charter form for the gas tanker industry: ASBAGASVOY.
Petredec’s fixture in July 2021, as charterers, of the Very Large Gas Carrier (VLGC) BW Magellan from BW LPG is a showcase example of the benefits of using ASBAGASVOY. The fixture was for a voyage from Houston to Chile and all parties involved agreed on fixing on ASBAGASVOY terms. But why use ASBAGASVOY rather than ASBATANKVOY – one of the most widely used tanker charter parties in the world that has traditionally been much used in the gas sector?
Clarksons, who acted as brokers in the fixture, considers there are several benefits in using a gas specific charter party such as ASBAGASVOY.
“Having a charter party that has been developed specifically for the gas trade should benefit all parties – brokers, owners and charterers – as the terms specific to the industry are embedded into the form,” says Tom Becker, Global Managing Director Gases at Clarksons.
Harry Chilton, Head of Trading at Petredec, highlights that they wanted to transition to a gas-specific form which they had trained on and which, already at the outset, reflected the most relevant aspects of the gas trade.
“Using ASBAGASVOY has made negotiations easier. The typical amendments to ASBATANKVOY are no longer required, which contributes to reduced risk and liability”, says Chilton.
Petredec has now successfully used ASBAGASVOY for both chartering in and chartering out and, since the BW Magellan, also chartered out one of their own VLGCs, the Shergar, to a European distribution company for a voyage from the US to Asia loading in September.
The reason why ASBAGASVOY is gaining traction in the gas sector so rapidly is most likely because it provides clauses regulating technical issues unique to gas carriers, adding clauses which previously have been included as rider clauses.
One of the main features to be noted in particular is that the form has a relevant presentation clause. The clause includes three options: a generic presentation clause mainly for LPG; a generic presentation clause for pressurised gas tankers; and an option named “other” where the parties will have to fill in their agreed presentation clause. This ensures that the form can be used for petrochemicals.
Among other clauses commonly used in gas fixtures, ASBAGASVOY includes a proper lighterage clause, a half percent loss clause and an option for a ‘GASVOY’ interpellation clause – a cancelling provision – all now featuring in the printed form. To future proof the form, a provision has also been included enabling the parties to agree to the use of electronic bills of lading.
BW LPG is currently using ASBAGASVOY with several counterparts and working on increasing the number going forward. Niels Rigault, Executive Vice President at BW LPG, highlights that by replacing the oil tanker clauses from ASBATANKVOY with gas related clauses, the result is a leaner and more specific voyage charter form.
“We believe this creates a more well-balanced charter party, which is easier to work with for both charterers and owners,” says Rigault.
ASBAGASVOY has hit a busy gas tanker market. According to VesselsValue, 2021 has so far shown a doubling in newbuilding activity compared to last year. LPG rates earlier this year reached a five-year high, although this was relatively short-lived. Following a global drop in cargo miles in February, VLGC cargo miles have since improved.
Clarksons emphasises that high activity amid expanding exports from North America and increasing demand in Asia has led to further ton/mile growth which, married to the inefficiencies such as the Panama Canal delays, has given support to the market in 2021.
“Given the underlining growth in the fleet into 2022 further growth in spot market demand remains the key to market performance,” adds Becker.
Petredec and BW LPG also have a positive view of the LPG market in the shorter term. The reasons referred to are amongst others increasing US production of natural gas liquids leading to record exports, together with growing petrochemical demand in Asia.
“We see healthy VLGC demand going forward. As well as being gas specific, ASBAGASVOY is particularly useful in the current market conditions as it retains the well-established balance between owners and charterers, allowing a straightforward and simplified negotiation process in a busy market environment,” says Chilton.
Current volatility is expected to remain and for VLGC freight rates to average above breakeven. While the high number of recent newbuilding orders have increased the uncertainty for 2023, there would seem to be a clear market for ASBAGASVOY.
“The strong growth in the LPG shipping market in the last decade has created a need for a gas specific charter party, and we believe more market participants will see the benefit going forward,” adds Rigault.
ASBAGASVOY is a new charter party for the gas tanker trade jointly authored by BIMCO and ASBA. It is based on, and follows the sequence of, ASBATANKVOY. An amended ASBATANKVOY has been the preferred form for gas tanker fixtures for many years .
ASBAGASVOY introduces gas-specific terminology and does not require a string of standard amendments. ASBAGASVOY replaces ASBATANKVOY clauses which pertain to the traditional product tanker trades. The charter party has been developed for both refrigerated and pressurised liquefied gasses.
A set of Optional Additional Clauses has been developed for possible use with ASBAGASVOY. The primary focus of the Optional Additional Clauses is vessel presentations for petrochemical gases. Other clauses are included because they are often used in gas fixtures.
Find ASBAGASVOY together with explanatory notes as well as the Optional Additional Clauses.