December 18, 2025
In this episode of Capital Link’s Shipping Sector Webinar Series, we welcomed Mr. Kristian Sørensen , CEO of BW LPG Ltd. (NYSE: BWLP) (OSLO: BWLPG), Mr. Ted Young, CFO & Treasurer of Dorian LPG Ltd. (NYSE: LPG), and Mr. Mads Peter Zacho , CEO of Navigator Gas (NYSE: NVGS).
The webinar, moderated by Mr. Christopher Robertson, MBA , Vice President, LNG Infrastructure and Maritime Shipping at Deutsche Bank Securities Inc., focused on the LPG carrier market. The panelists discussed various aspects of the LPG shipping market, including vessel classifications, technical capabilities, and market dynamics for transporting specialized cargoes. The conversation also covered growth prospects in natural gas liquids production, differences across shipping segments, and future trends in the LPG shipping sector, including investment strategies and valuation metrics.
To watch the full discussion, please visit the following link:
The discussion provided insight into the structural drivers shaping the LPG shipping sector, including export-led demand growth, capital discipline following a multi-year fleet expansion cycle, and a more measured approach to new vessel ordering.
The panel highlighted that LPG shipping fundamentals are increasingly driven by global energy and petrochemical flows rather than short-term freight volatility. Several speakers noted that demand growth is closely linked to long-term shifts in production and consumption patterns rather than short-term price movements. BW LPG is the largest owner-operator in the VLGC sector, specializing in vessels over 84,000 cubic meters. According to Μr. Sorensen, the company maintains a fleet of 51 VLGCs within a global fleet of approximately 413 vessels. In addition, BW LPG operates an Indian-flagged subsidiary fleet of nine VLGCs and a physical LPG trading arm handling approximately 5–6 million tons annually.
Dorian LPG, as Mr. Young noted, is solely active in the VLGC sector with 27 vessels. Both companies primarily serve the long-haul propane and butane trades, from the U.S. Gulf and the Middle East to Asia.
Navigator Gas operates in the handy and midsize segments and is the owner-operator of the world’s largest fleet of handysize liquefied gas carriers. The company transports LPG, ammonia, and petrochemical gases such as ethylene and ethane, with a fleet of 57 semi- or fully-refrigerated vessels, 27 of which are ethylene-capable. Navigator Gas also holds a 50% ownership interest in an ethylene export marine terminal at Morgan’s Point, Texas.
There are many differences between these two segments. Mr. Young explained that VLGCs are fully refrigerated, cooling LPG to approximately -52°C for transport, allowing them to move large volumes efficiently on long-haul routes. By contrast, Navigator Gas’ vessels, 32 of which have ethylene capability, are mostly semi-refrigerated which can handle a broader temperature and pressure range, allowing them to switch cargoes based on market arbitrage.
The discussion highlighted the trade-off between scale and flexibility across LPG shipping segments. Larger VLGCs benefit from economies of scale on long-haul routes, while smaller and midsize vessels provide operational flexibility for shorter trades and specialized cargoes.
This segmentation creates multiple earnings profiles within the LPG shipping market, enabling the sector to serve diverse end uses while reducing reliance on any single trade lane or cargo type.
“Where it makes sense and where you can get the economies of scale, you put it on a larger vessel,” Mr. Zacho commented, “and when you need product and geographical flexibility, that’s when you come to us. He added that currently the company is cleaning several vessels that were carrying ammonia allowing them to now carry petrochemical cargoes, as they have been quite profitable lately.
U.S. Production and Global Use
The panelists noted that LPG benefits from the persistently gassy nature of maturing shale basins such as the Permian. Even with flattening crude oil output, NGL production is forecast to grow by 25-32% by 2030. “All that additional natural gas liquid must be exported,” Mr. Zacho pointed out, highlighting multi-billion dollar investments in U.S. export infrastructure backed by firm offtake agreements. “Let’s say three years ago, the production of one barrel of oil in the Permian Basin would yield about half a barrel of NGL. In 2025 that number is 0.66 barrels, so it’s up a real 33% just in three years,” he said.
LPG is a cleaner-burning cooking and heating fuel supporting urbanization and steady consumption growth. Residential and commercial use alone accounts for roughly 40-45% of global LPG demand, and it tends to grow with population growth. In emerging Asia, it replaces smoky biomass, improving public health and providing an affordable, easily transported energy source. In the petrochemical sector (accounting for around 40% of demand), it serves as a competitive feedstock, both in traditional cracking and dedicated propane dehydrogenation (PDH) plants have no direct competition from naphtha.
Beyond that, LPG is gaining traction as a marine fuel itself, with companies such as BW LPG adopting dual-fuel propulsion for their new vessels. The ongoing consolidation of naphtha-based petrochemical capacity in Europe, as Mr. Young said, is a positive, as replacement capacity in Asia is often more LPG-intensive, increasing ton-mile demand. “There’s no competition from naphtha, and so we’ve seen a lot of growth in that sector, particularly in China”, he concluded.
Capital Discipline
After a period of significant fleet expansion and consolidation, boosted by BW LPG’s $1 billion acquisition of the Avance Gas VLGC fleet in 2024, the focus has shifted toward balance sheet strength and shareholder returns.
The discussion suggested that elevated newbuilding prices and sizeable existing orderbooks are encouraging owners to prioritize cash flow generation, deleveraging, and capital returns over fleet growth.
Mr. Sorensen and Mr. Young both highlighted dividends as their primary vehicle for returning value, with Mr. Young turning the spotlight toward Dorian’s corporate finance experience, which revealed a stronger market response to dividends versus buybacks. “We’ve managed to strike a pretty good balance between debt reduction, fleet investment, and shareholder returns. We really saw no measurable impact on our total shareholder return when we did meaningful buybacks, yet we saw a massive increase when we actually started paying dividends.”
Mr. Zacho highlighted Navigator Gas’ recently improved return of capital policy, in which the quarterly cash dividend was increased to $0.07/share (from $0.05/share) and the net income payout percentage was increased to 30% (from 25%). Mr. Zacho also noted that the company has repurchased an additional $50 million of shares for three consecutive years, stating that this trend of additional ad hoc share repurchases will likely continue in 2026.
Leverage is conservative across the board, with net loan-to-value ratios comfortably below 30%. This shift reflects a broader maturation of the LPG shipping sector, as companies increasingly align capital allocation decisions with shareholder return objectives.
This prudence extends to new investments. Newbuilding prices have been elevated and there is a substantial orderbook already in place for VLGCs (approximately 25% of the fleet), The consensus among the panelists was that there will be a pause in major new orders. “We find the asset prices currently being too elevated,” Mr. Sorensen said, an opinion Mr. Zacho agreed with for the midsize segment. Instead, strategies favor fleet renewal through selective second-hand purchases or paper-for-steel consolidations.
Fleet Supply, Regulation, and Environmental Transition
On fleet supply, the outlook varied by sector. For VLGCs, Mr. Young acknowledged a 25% orderbook to fleet ratio but emphasized that strong demand growth and an aging global fleet provide balance. He also said that “the vast majority of the older ships in the global fleet are really focused on the Iranian trade. Depending on what happens in the regulatory environment, it would render a large part of that fleet, generally obsolete.” He added that most older ships tend to be fuel inefficient and maintenance-intensive.
For Navigator Gas’ segment, Mr. Zacho saw a benign orderbook of about 10%, with potential for negative fleet growth due to scrapping as more than 20% of the vessels exceed 20 years of age.
Additionally, the impending ban on scrubber discharges is accelerating a shift that is already happening. Mr. Sorensen said that BW LPG is “tilting our fleet composition more and more toward LPG dual fuels.” To that, Mr. Zacho agreed: “We are building dual-fuel vessels. We haven’t considered scrubbers for a long time. It’s probably better if the refinery is there removing the sulfur rather than if we do it on each ship.” In turn, Mr. Young added that the existing scrubber investments had vastly exceeded internal calculations but saw the future in alternative fuels, rendering scrubbers a fading solution.
Market Valuation
When it comes to market valuation, it was acknowledged that while traditional shipping metrics like NAV are still relevant, there has been a growing focus on earnings and dividend yield, particularly among US investors. With public equities like Navigator Gas trading at a significant discount to NAV, share buybacks are seen as an accretive tool. As a result, the sector may be transitioning toward earnings-based valuation metrics common in other industries.
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