LNG Shipping Sector: The Worst Is Over

After very challenging times in the liquefied natural gas (LNG) shipping sector driven by vessel deliveries ahead of projects coming on stream, the worst seems to be over.

There is a general consensus that the market will be 30 to 40 vessels short by the end of this decade amid volume increase-one of the largest volume increases in the modern shipping history.

“Things are looking a lot better. There are more than 100 million tons of LNG hitting the water over the next three years. There is a restrained order book and I think that is going to continue until charterers start bitting the bullet and taking long-time charters,” Jon Skule Storheill, CEO of Awilco LNG said while speaking at a panel held within Capital Link’s 10th Annual Shipping, Marine Services & Offshore Forum in London.

“So, the oversupply of tonnage with which we struggled over the past few years looks to be diminishing, and this will likely lead to stronger rates.”

The ordering activity is expected to remain low, at least for the upcoming two years, despite newbuilding tonnage prices being at their lowest over the past eight years.

With respect to the trains that don’t have committed vessels yet, Jonathan Cook, CEO of Flex LNG said that as it would be very difficult to get a 2019 delivery for a newbuild vessel at the moment, owners would have to tap into the existing order book.

“Quite a few charterers that are going to need vessels within the 2019 timeframe, will have to draw from the existing orderbook of non-comitted vessels or the existing fleet,” he pointed out.

“From that perspective, there is definitely going to be a mix of vessel types that get chartered on a shorter term as a bridge to a newbuilding.”

As concluded by Cook, there is excess demand for vessels based on the supply that is coming on stream.

World Maritime News Staff