More LNG ships on the spot

 
Project delays and falling global demand for gas led to a growing fleet of unused LNG carriers, with up to 30 available on the spot market.
According to LMIU’s Global LNG tracking service, 77 LNG carriers have remained at anchor since the start of this month.
That included 25 delivered from yards in the past 16 months at prices of US$200m-US$300m per ship.
Among idle vessels are six 260,000 cu metre capacity QMax and 14 of the 210,000 cu metre Q Flex vessels, the largest in the global fleet of 325, according to Lloyd’s MIU.
The fleet is set to rise to at least 344 in the next few months with a further 19 on sea trials or waiting to leave yards.
“According to the Lloyd’s Inactive Vessel report, 25 LNG carriers have not moved in the last month.
Of these, 13 are off Khor Fakkan,” an LMIU analyst said. Seventeen were modern LNG carriers awaiting LNG projects to begin. Around 20m tonnes of LNG production capacity is set to start up this year, including BP’s Tangguh project in Indonesia and plants in Yemen and Qatar.
Of the 77 unmoved carriers, 18 are assigned to Qatargas, eight to RasGas projects, eight with Korea Gas, six with Shell and four with GDF Suez.
London-based brokers said most of the idle LNG carriers were not available for short-term charter, including the Q Max vessels and those considered too old to trade.
But 30 LNG carriers were operating on the spot market. This is down from 34 last month, with 27 expected to be available in June.
Brokers expected LNG carrier availability on the spot market to remain around 30 through to the end of 2011.
“There is not much LNG produced on the spot market and only a few tenders. Around 5%-12% of LNG is traded on the spot market,” the London broker said.
Charter rates on the spot market are around US$28,000 per day-US$30,000 per day.
“We are seeing low utilisation for the spot fleet and low rates are hurting some owners,” Timothy Nash, managing director of LNG carrier owner Dynagas said.
“Not all of our ships are chartered all of the time, so we have some waiting time.”
His company gained a charter this month from Russian gas monopoly Gazprom for its ice-class, 2007-built Clean Power for six months.
The vessel, one of three Dynagas trades on the spot market, will be used to load cargoes from the Sakhalin plant in eastern Russia.
“Owners are getting hammered as these rates are just enough to cover operating expenditure, but capital expenditure is not being paid off,” a London broker said.
“Charterers should remember that long-term low rates mean owners are not investing in LNG. Nothing has been ordered since April 2008 and without new investment all the spot ships will go on to project work.”
He predicted that rates would more than double in the next two years.
Mr Nash said he expected rates to rise by the fourth quarter.
“We are optimistic for the end of the year, as there will be more LNG available and more cargoes will move into the Atlantic. In the next 18 months there is the potential for 18m tonnes per annum from Qatar, another 28m tpa from other projects and a further 3m tpa of new volumes from existing plants,” Mr Nash said.