LNG newbuild duo finds multi-year gigs as long-term contracts gain momentum

U.S.-listed shipowner Capital Clean Energy Carriers (CCEC) has secured employment for two liquefied natural gas (LNG) carriers under construction at Hyundai Samho. The company has also provided an update on the LNG market status in Q1 2025.

According to CCEC, known as Capital Product Partners (CPLP) before the company decided to change its name and pivot to the LNG and energy transition business in August 2024, the deals refer to two 174,000 cubic meters (cbm) vessels, Athlos and Archon, scheduled for delivery in the first quarter of 2027.

The former has been chartered for a firm period of five years, with an additional five-year option, and the latter for a firm period of seven years, also with a five-year optional extension to what the firm says is a major energy company. The charters will start once the vessels are delivered from the shipyard. 

Jerry Kalogiratos, Chief Executive Officer of CCEC, commented: “We are very pleased that two of our LNG carriers under construction have secured long term employment well in advance of their scheduled delivery. In our view, these fixtures signal that the long-term fundamentals of LNG shipping remain robust for high quality owners like CCEC, operating latest generation LNG/Cs, despite the challenges in the short-term market.”

Additionally, both charter agreements give the company the option to substitute other latest-generation LNG carriers from its fleet to perform in place of either of the vessels to boost its commercial flexibility and fleet deployment strategy.

Furthermore, on January 30, 2025, the LNG carrier Axios II, which joined the shipowner’s fleet in early 2024, started its previously announced seven-year bareboat charter. The charterer has the option to extend the bareboat charter by an additional three years.

As a result, CCEC now has an average remaining firm charter duration of 7.3 years and $3.1 billion in contracted revenues. If all extension options are exercised by charterers, the average duration would increase to 10.2 years, with total contracted revenues rising to $4.5 billion.

According to the company’s CEO, the firm now has only four latest-generation LNG carriers under construction from its fleet of 18 that will be available for charter once delivered. Talks with multiple partners are said to be underway regarding the future employment of these vessels.

Kalogiratos claims his company is largely insulated from current spot LNG market conditions, ahead of the two open newbuildings’ delivery in Q3 2026. With the scheduled delivery of 16 new LNG carriers and other gas carriers, the company aims to reposition itself to become the largest U.S.-listed company focused on the LNG and gas transportation space.

Looking at the orderbook, there are 307 LNG carrier vessels on order, with 21 vessels delivered during Q1 2025, the shipowner stated. Of those 307, 21 remain open, and four of those are part of CCEC’s fleet. The company expects the long-term prospects for these vessels to remain robust, especially as older, less efficient vessels become obsolete as the regulatory environment evolves.

According to the CCE, the LNG shipping market remained largely unchanged throughout Q1 2025 compared to the previous quarter. The combination of an oversupply of LNG carriers and reduced tonne-mile demand continued to weigh on the spot and short-term charter market.

In the Atlantic basin, vessel supply continued to outpace demand as EU LNG prices continued to trade at a premium compared to Asian LNG prices. The firm believes this has resulted in the charterer freight length being relet in the spot and short market, as well as to the laying up of older technology LNG carriers.

As observed by CCEC, the LNG spot market in Q1 2025 averaged $16,700 per day for a 2-stroke vessel, with 1-year time charters at around $30,000 per day. However, the commercial removal of older vessels and the occasional widening of the arbitrage between east and west have led to a recovery in Atlantic spot charter rates, with 2-stroke vessels trading at around 40,000$ per day by the end of April 2025.

Mid- and long-term rates have continued to command a significant premium to the spot market, with the five- to ten-year range for a newbuild vessel delivering in 2027 between $85,000 and $90,000 per day.

The current market dynamics are expected to pick up speed with the commercial removal of older, smaller, and less efficient vessels. Currently, the older technology steam turbine fleet is said to comprise approximately 200 vessels or around 30% of the fleet on the water.

Eight older steam turbine vessels were sold for demolition in 2024, which CCEC considers a record, and the momentum has continued in 2025 with three such vessels removed so far this calendar year. In this context, Seapeak announced its intention to sell three laid-up steam vessels in March.

CCEC argues that the LNG market witnessed a resurgence in long-term contracting activity since the start of the year, highlighted by what are perceived as major agreements involving super majors and national oil companies around the world. One of the biggest projects in this regard is QatarEnergy’s giant fleet expansion program.

These developments are thought to reflect a continued global demand for LNG, particularly in Asia and Europe, and underscore the potential for increased LNG shipping requirements in the coming years, as liquefaction projects receive or come closer to a final investment decision (FID).

One of the recently greenlighted projects in this context is Woodside’s Louisiana LNG. A day after the FID was secured, the Australian firm inked a deal to purchase up to 640 billion cubic feet (bcf) of gas on a long-term basis from BP.