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LPG shipping segment enjoyed healthy rebound in 2012 says StealthGas head, Harry Vafias

Fuel efficient ships, or so-called “Eco Ships” will slowly but steadily gain more and more market share, at least as long as the oil prices stay at high levels. In an interview with Hellenic Shipping News Worldwide, Harry Vafias, CEO of StealthGas and the Vafias Group (active in five different shipping markets), talks about the revival of the LPG shipping markets during 2012, the introduction of newer and more fuel efficient vessels in the Group’s fleet, while he also mentions that the best pirate-deterrant so far has proven to be the use of armed guards on board the company’s vessels which transit through areas like the Gulf of Aden.

2012 proved to be a challenging year for the shipping industry. Could you highlight us the main issues regarding the market where StealthGas is active, i.e. the LPG shipping business?

2012 indeed was very tough for all major shipping segments and especially the crude tankers! The small LPG market however proved to be a star performer due to its tiny orderbook, growing demand and general stability of freight rates. Stealthgas succeeded to not oly post record results close to 200 percent up from same quarter last year but also to expand by ordering four more Newbuildings.

One of the latest trends in shipbuilding seems to revolve around the so called “eco-carriers”, vessels with high fuel efficiency that usually command a price premium. Do you believe that these vessels will become dominant in the future?

Taking a few steps at a time, these ships will dominate the market, especially if the oil price remains very high. The unfortunate thing is that while shipping finance is scarce we have seen orders of about 120 eco type MR’s in the last 9 months! Owners have to realize that there won’t be any balance in the marketplace if they continue to keep ordering ships in an already oversupplied market!

What measures have you implemented to reduce the fuel consumption of your fleet?

On the tanker and bulker side we have yet performed any measures since all ships are on long period and thus charterers and not owners are responsible for the speed and consumptions of the said vessels. On the LPG side Stealthgas took delivery of 12 japanese LPG Newbuildings that had low consumptions in any case, but for the rest of the fleet we are looking for new technologies like deratting the engines, installing propeller fins etc.

Are you looking to invest in carriers that are making use of fuel-saving technologies and if so, which type of technology available do you believe will be among the most popular ones?

For our new type in house designed LPG ships called the diamond series which are under construction in Korea for 2014 deliveries, we have installed electronic eco type engine, we have designed the hulls to be more hydrodynamic, we have shortened the hull length so that ships are more flexible to visit smaller ports, we have added water treatment ballast system technology and finally ships are ice class 1B for ice trading in the north sea.

How did StealthGas fare in terms of financial performance during another tough year, like 2011

2011 was relatively tough but 2012 has been a game changer for us! Rates are up 15 pct, the fleet has been generating a lot of free cash flow and we are the only listed company with $150 million market cap that generates annual EBITDA of $80 million!!!

Which do you believe are the prospects of the LPG shipping market in 2013 and the future in general?

The future for the small LPG business looks rosy for at least 2 more years, due to the small orderbook, strong demand especially from the east and the finalization of several LNG projects that will lead to the supply of lots of LPG as well.

Will you be looking to enter new niche segments, like for instance the LNG shipping business, which at the moment appears to be among the least affected from tonnage oversupply pressures?

We are happy to continue to operate in our chosen 5 segments ie capesize bulkers, pressure LPG, semi ref LPG, MR’s and crude carriers and we are not looking at least in the short term to enter any new segment.

Piracy is also among the main problems for ship owners and crews alike. Has this activity impacted your company or not? If so, what are the most appropriate measures a ship owner can take, in order to avoid a possible hijacking?

We have several ships trading often around the Gulf of Aden and we have realized that the most efficient way to tackle this, except from increased insurance and K&R, is armed guards! We have been using them regularly and we never had an attack from pirates.

Operating from Athens, how did the country’s recession and financial struggles impact your business? Have things changed in terms of the way you conduct business during these past three years?

There is no direct effect on our business, however there is a lot of indirect effect in the form of psychological negativeness and sadness for what has happened to our beautiful country! We don’t want to leave our country and settle somewhere else, so we will continue to fight on, create jobs for the younger generation and hope that these problems are slowly eradicated!

Nikos Roussanoglou, Hellenic Shipping News Worldwide

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