INTERVIEW: Stena Bulk targeting small scale LNG market

Gothenburg-based shipping company Stena Bulk, owner of three liquefied natural gas tankers, said it is interested in investing in the small scale LNG market.

Stena, which entered the LNG market in May 2011 by buying three carriers from TMT Taiwan, is planning to grow the business by investing in “not only conventional-sized tankers but also in the developments in small scale LNG,” Göran Hermansson General Manager, LNG and Business development at Stena Bulk told LNG World News in an interview.

The company has just chartered its LNG carrier Stena Blue Sky for a period of three years to Woodside-operated North West Shelf project in Australia. In addition to the 145,500 cbm Stena Blue Sky, Stena Bulk owns two Tri-Fuel Diesel Electric vessels, the 173,000 cbm Stena Crystal Sky, which is on a medium term charter until this autumn and its sister vessel, Stena Clear Sky, which was recently redelivered from a three-year charter.

LNG shipping market

The drop in crude oil prices is having big impacts on LNG prices and the shipping market all over the globe, and is causing a slowdown in LNG developments.

Some players have already postponed or even cancelled their developments.

“Current LNG shipping market is very much a function of the low oil price,” Hermansson said.

However, “we have just recently seen the oil price bounce back with brent above 60$/bbr. This is good news for LNG demand.”

“In addition we see more volumes coming to market in Q3-Q4 from Australia and that requires shipping capacity,” he added.

Asked about how these fluctuations will affect Stena’s LNG business, Hermansson said that the company has decided to grow its business against contracts and not to add to the speculative book.

“Today’s environment is likely to temporarily delay projects and their tenders for shipping,” he added.

LNG as fuel

Liquefied natural gas as fuel for ships is gaining more and more momentum, as shipowners are finding ways to reduce CO2 emissions.

There is a rising number of LNG-fuelled developments, from tugs, ferries, containerships, tankers to land-based transport.

Stena Bulk is confident that LNG will have its role as a marine fuel in the future, “especially when/if  IMO’s Nox rules come into play,” Hermansson said.

“However, given current market conditions: oil price, the lack of infrastructure for LNG bunkering and for shipowners in general, we think it will take some time until we see owners investing into newbuildings with LNG propulsion,” he concluded.

LNG World News Staff; Image: Stena Bulk