Golar LNG shrinks loss, says shipping market improving

FLNG Hilli (Image courtesy of Goalr LNG)
FLNG Hilli (Image courtesy of Golar LNG)

Bermuda-based LNG shipper, Golar LNG on Wednesday reported a third-quarter operating loss of $28.3 million, as compared to a loss of $37.2 million in the quarter before.

Golar LNG said that both shipping rates and utilization improved during the quarter with utilization increasing from 31 percent in the second quarter to 37 percent in the third quarter of 2016.

The company has also reported it has cut its net loss to $23.9 million from $84.6 million in the previous quarter.

Although the start of the quarter began in the same way as the first half of the year with excess tonnage affecting rates, activity increased in August resulting in a step up in rates and utilization, particularly for owners with open tonnage in the Atlantic basin where spot rates in excess of $40k/day were achieved.

Both chartering activity and rates have since eased, but levels remain well above the lows reached in the first half of 2016, the company said.

Commenting on the spot market activity, the company said that a total of around 300 spot fixtures are expected to be concluded in 2016, a significant step up from around 190 voyages in 2015.

New production continues to deliver with Train 9 of Malaysia LNG, Petronas FLNG1 and train 2 operations of Gorgon and Sabine Pass set to start during the fourth quarter.

Looking to 2017, significant additional production is expected from Gorgon and Sabine Pass together with new production from Whetstone. The FLNG Hilli is also set to start producing. All in, approximately 135 million tonnes of new production equivalent to 52 percent of current LNG production is expected to deliver between now and the first quarter of 2021, Golar LNG said.

During recent months a number of market participants have chosen to take shipping coverage for 2017. Up to 16 vessels in the global spot fleet have been fixed for periods of 6-18 months starting between September and February.

Golar believes that this tightens the outlook for structural availability into 2017. As new LNG arrives and prompt availability of shipping tonnage declines, charterer interest in period contracts is expected to grow, bringing the shipping business ever closer to its inflection point.

The company’s six operating FSRUs have reached 99.3 percent availability during the quarter, Golar LNG said.

FLNG Hilli on schedule

Golar LNG said that the FLNG Hilli conversion project remains on schedule with all heavy equipment is on-board.

The mooring system is on schedule and limited testing of systems has started.

The company adds that due to other stranded gas reserves in the area neighboring the Kribi field in Cameroon as well as additional reserves within the field itself it has started discussions with the Government and Perenco and is soliciting interest from independent third parties with the target of increasing utilization of the FLNG Hilli.

The company expects that further utilization of the FLNG Hilli will be achieved after it starts up.

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