Teekay: LNG trade to show growth to 2020

Global liquefied natural gas trade is expected to grow to 2020, Teekay’s Research Projects Manager, Nicholas Schneider said in the company’s marine market gas update.

However, low energy prices are having an impact on LNG export projects that are currently in the planning phase, with several projects that were scheduled to take their final investment decision in 2015 likely to delay the call to 2016 or later, the report shows.

LNG trade during the first nine months of 2015 grew 3 percent compared to the same period in 2014, due to mild weather and weaker demand in Asia. Recently, exports have started to increase as new projects in Asia Pacific start up

Recently, exports have started to increase as new projects in Asia Pacific start up pushing the exports up year-over-year in the third quarter of 2015, Teekay’s report shows.

World LNG Fleet

LNG fleet grew 5 percent in total cubic meter capacity in the first ten months of 2015, the report shows.

Currently the LNG carrier fleet consists of 395 vessels with 139 newbuildings on order, without counting the regasification vessels and small LNG carriers.

Contracting for the new LNG vessels slowed in 2015 as well as new orders. Following 63 orders for new LNG vessels in 2014, only 24 orders have been placed during 2015, with no new orders placed since October 2015, Schneider said.

The number of vessels available on the spot market has ranged between 30 and 40 vessels for several months now according to Fearnley LNG, which is higher than the 10 – 15 vessels that were available throughout 2014.

Higher availability of spot vessels is due to several factors: the delivery of uncommitted vessels in 2014 and 2015, project outages in Yemen and Angola, the delivery of ships in advance of Australian export project start-ups, and less Atlantic to Pacific arbitrage trade, Teekay’s report reveals.

Short-term LNG charter rates for diesel-electric vessels stood at US$28,000 – US$35,000 per day as of early November 2015, according to Affinity LNG.

Outlook

LNG fleet utilization is set to increase gradually through 2016 with nine separate LNG projects are scheduled to start or further ramp-up in 2016.

While LNG vessel demand will increase next year, so will fleet supply; 46 newbuild LNG vessels are scheduled to deliver by the end of 2016. Any further export project delays or startup problems could cause vessels to deliver in advance of cargos, which could keep short-term rates near current levels through 2016, the reports says.

In the longer-term, there is approximately 140 million tons per annum (MTPA) of export capacity currently under construction. According to the International Energy Agency, this will increase LNG trade to approximately 350 MTPA in 2020, roughly a 45 percent increase over 2014 volumes.