Awilco LNG widens loss

Oslo-based LNG shipping company Awilco LNG reported full-year 2015 freight income of US$37.4 million, down from $78.5 million a year ago.

Awiclo LNG posted a net loss before tax of $36.3 million in 2015, as compared to $2.6 million in the year before.

“The decrease was due to low rates and reduced utilisation caused by new vessel deliveries, reduced ton-mile as the price arbitrage West to East was limited and limited new LNG production,” Awilco LNG said in its 2015 results report on Friday.

Due to the increase of the LNG fleet combined with limited new LNG production, 2015 ended up as a “tough year for LNG shipping owners without long term charter coverage,” Awilco LNG said.

Awilco LNG owns four carriers, of which only two are currently delivering chilled gas, namely WilForce and WilPride. The company’s other two LNG tankers, WilGas and WilEnergy, were laid-up.

LNG market

Following increased seasonal demand the Asian LNG imports improved in the fourth quarter last year as compared to the quarter before. Despite the increase in Q4, the estimates for full year 2015 were still “disappointing and down 4.3 % year on year,” Awilco LNG said.

The largest reduction came from Korea, Japan and China which were down by approximately 4.2 MT, 3.3 MT and 1.5 MT respectively. On a positive note, the LNG imports to Jordan, Egypt and Brazil all increased in 2015.

According to the report, the Far East gas price increased slightly during the quarter, starting at just above $6.6/MMBTU and ending at about $6.9/MMBTU. Despite the marginal increase in the Far East price, there were no arbitrage opportunities between West and East, which had a negative impact on ton-mile.

According to market analysts the inter-basin trade was down by 26 % in 2015, resulting in a reduced average sailing distance of 5.9 % year on year.

Due to continued overhang of vessels combined with negative ton-mile development, market rates for TFDE LNG carriers were unchanged at about USD 30,000 per day throughout the period.

There were pockets of increased activity towards the end of the year and at the start of the New Year, but so far with little impact on the rates, Awilco LNG said.

Despite the weak LNG transportation market in 2015, newbuilding ordering was at a relatively high level in the first half of 2015, but eased off towards the end of the year. In total 20 newbuildings were ordered in 2015, compared to above 50 in 2014.

According to shipbrokers the total orderbook at end 2015 for LNG vessels above 100,000 cbm (excl. FSRU and FLNG) stand at 131 vessels, of which only 12 are available for contract.

The numbers show that 27 vessels were delivered during 2015 and 39 are scheduled for delivery in 2016.

As a result of the weak market some deliveries can be expected to be delayed, Awilco LNG added.

LNG World News Staff