Awilco LNG’s freight income down

Oslo-based LNG shipping company, Awilco LNG, reported a first quarter freight income of US$8.9 million, down from $12.1 million in the same quarter the previous year. 

The freight income also dropped in comparison to the previous quarter when the company recorded an income of $9.6 million, the report issued on Friday shows.

The decrease was due to a minor reduction in rates and utilisation of WilPride, from 62 percent in the fourth quarter 2015 to 57 percent during the first quarter, Awilco LNG said.

Awilco LNG said its fleet utilisation for the quarter ended at 78 percent, compared to 81 percent in Q4 2015.

The company posted a net loss for the quarter of $4.6 million compared to a net loss of $12.6 million in the previous quarter.

LNG Market

The Far East gas price continued the declining trend during the quarter, starting at about $6.9/mmBtu and ending at $4.4/mmBtu. The UK NBP price followed the same trend, starting at about $4.8/mmBtu and ending at $3.78/mmBtu.

The continuous falling Far East gas prices have further limited the arbitrage possibilities resulting in a persistent negative impact on ton/mile.

“Despite falling LNG prices, LNG imports to Japan and South Korea continued the weakening trend from 2015, and imports were down 6 percent and 5 percent respectively during the quarter,” Awilco LNG said

On a positive note, LNG import to China has finally started to improve after a disappointing 2015, increasing by 17 percent in the first quarter 2016.

New LNG production capacity added in Q4 2015 and Q1 2016 had a slight positive impact on the market as the number of available vessels was reduced during the quarter. However, due to the continued overhang of available vessels, the rates have only improved marginally.

In Q1 the first LNG trains from Australia Pacific, Sabine Pass and Gorgon all shipped their first cargoes. The combined added capacity from the tree LNG trains after ramp-up is estimated at about 14 mtpa. The Gorgon train was subsequently closed down due to start-up problems and is expected to restart in May.

The re-start of the Angola LNG plant is imminent with Chevron’s CEO recently saying the cargo shipment is expected in May. This is supported by the seven Angola vessels being pulled out from the spot market.

“In total, more than 45 mtpa of new LNG capacity is scheduled for start-up in 2016. Analysts forecast total production capacity in 2020 to 450 mtpa, which represents an increase of about 50 percent compared to the 2015 capacity,” Awilco LNG said.

During the second half of 2015, the newbuilding orders eased off and have remained at a low level since. So far in 2016, no newbuilding orders have been placed compared to 10 vessels in the same period last year.

According to shipbrokers the total orderbook at the end of the first quarter 2016 for LNG vessels above 100,000 cbm, excluding FSRU and FLNG was 129 vessels, of which only 14 are available for contract.

There were seven vessel deliveries during the quarter and further 37 are scheduled for delivery until the end of 2016. As a result of the weak market and shipyard constraints some deliveries are expected to be delayed.