Oslo-listed Avance Gas has secured a $104m sustainability-linked loan to finance two dual-fuel liquefied petroleum gas (LPG) newbuilds set for delivery in Q4 2021 and Q1 2022.

The ships, named Avance Polaris and Avance Capella are being built at the South Korean shipyard Daewoo Shipbuilding & Marine Engineering (DSME). The Norwegian VLGC pure-play owner said the newbuildings will significantly lower the company’s carbon footprint.

The loan has a maturity at the earlier of five years from delivery of the second newbuilding and June 2027. It has an annual sustainability margin adjustment mechanism linked to Avance Gas’ aim to slash and outperform the carbon intensity targets set in the Poseidon Principles.

Avance Gas, whose largest shareholder is John Fredriksen via Hemen Holdings, currently has a fleet of 13 VLGCs on the water and six dual-fuel LPG newbuildings on order.