Tekay: global LNG trade up in first nine months

Global LNG trade is higher in the first nine months of this year compared to the same period of 2014, Teekay’s Research Projects Manager, Nicholas Schneider said in the company’s marine market gas update.

Due to ongoing mild weather and weak demand in Asia, global LNG trade only rose 3 percent compared to the same period last year, the report reveals.

However, global exports have recently started to increase due to the startup of new Asia Pacific export projects and were higher year-over-year in Q3 2015.

World LNG Fleet

The world LNG fleet increased 5 percent in total cubic meter capacity in the first ten months of 2015. The LNG carrier fleet now consists of 395 vessels and 139 newbuildings on order, not including regas vessels and small LNG carriers. Contracting for new LNG vessels has slowed in 2015. After an all-time high of 63 orders in 2014, there have been 24 orders to date in 2015.

The number of vessels available on the spot market has ranged between 30 and 40 vessels for several months now according to Fearnley LNG, which is higher than the 10 – 15 vessels that were available throughout 2014. Higher availability of spot vessels is due to several factors: the delivery of uncommitted vessels in 2014 and 2015, project outages in Yemen and Angola, the delivery of ships in advance of Australian export project start-ups, and less Atlantic to Pacific arbitrage trade.

LNG Charter Rates

As of early November 2015, short-term charter rates for modern diesel-electric vessels were $28,000 – $35,000 per day, according to Affinity LNG.

Outlook

LNG fleet utilization should gradually increase through 2016. Nine separate LNG projects are scheduled to start or further ramp-up in 2016, including four large projects scheduled to start over the next six months, the report says.

While LNG vessel demand will increase next year, so will fleet supply; 46 newbuild LNG vessels are scheduled to deliver by the end of 2016. Any further export project delays or startup problems could cause vessels to deliver in advance of cargos, which could keep short-term rates near current levels through 2016.

In the longer-term, there is approximately 140 million tonnes per annum (MTPA) of export capacity currently under construction. According to the International Energy Agency, this will increase LNG trade to approximately 350 MTPA in 2020, roughly a 45% increase over 2014 volumes.

While LNG trade will grow strongly to 2020, low energy prices are having an impact on LNG export projects currently in planning; several export projects that were scheduled to take a final investment decision (FID) in 2015 now appear likely to delay their decision to 2016 or later.

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Source: Teekay