Reliance to sell six very large ethane carriers to Japan firm

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Published: April 18, 2019 2:00:53 AM

Reliance Industries (RIL) on Wednesday said it has signed a binding definitive agreement with Japan’s Mitsui OSK Lines (MOL) and an unnamed strategic minority investor to sell its stakes in firms that own RIL’s fleet of very large ethane carriers (VLECs).

Reliance to sell six very large ethane carriers to Japan firmReliance to sell six very large ethane carriers to Japan firm

Reliance Industries (RIL) on Wednesday said it has signed a binding definitive agreement with Japan’s Mitsui OSK Lines (MOL) and an unnamed strategic minority investor to sell its stakes in firms that own RIL’s fleet of very large ethane carriers (VLECs).

The VLECs are currently owned by RIL’s Singapore-incorporated 100% subsidiary Reliance Ethane Holding Pte (REHPL) through six limited liability companies which are special purpose vehicles. RIL did not reveal financial details of the deal.

“Transaction closing is subject to regulatory approvals. Post-closing, SPVs shall be jointly controlled by REHPL and MOL,” RIL said in a statement. MOL is the operator of the six VLECs.

“Given MOL is currently the operator of all the six VLECs, investment by MOL will deepen our relationship with them and ensure continued safe and efficient operations of the VLECs,” RIL’s executive director PMS Prasad was quoted as saying in the statement.

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RIL in 2014 had placed an order with Samsung Heavy Industries for these VLECS which were built at shipyards in South Korea. Since 2017, the Indian conglomerate has been using the carriers to import liquefied ethane from the US as the country found abundance of ethane post the shale revolution.
Ethane is used as a substitute for naptha and natural gas as feedstock in petrochemical plants.

“MOL has detailed knowledge about these assets (VLECs) having supervised the construction and delivery of the six VLECs and subsequently operating them since their delivery. We are therefore happy and look forward to using this strategic opportunity to be a joint owner and to significantly strengthen our existing relationship with Reliance,” Takeshi Hashimoto, member of the board and executive vice-president of MOL, said in the statement.

The six VLECs will be added to MOL’s existing fleet of over 850 vessels which include LNG carrier, other tankers, dry bulkers, car carriers, ferries, and coastal RoRo ships and cruise ships, Hashimoto said.

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