Recently in the 2013 China Offshore Oil & Gas Service and Transportation Tech Congress, William Hung, the Vice President of Strategic Development from Teekay Shipping (Canada) Company has received an interview from CNSS, sharing his viewpoints of LNG shipping market.

How do you find the replacement from LNG to oil as the vessels’ fuel?

I think the replacement from LNG is much more to the coal rather than oil. It is coal that has all the emissions and dirty aspects of energy, and China replaces coal burning with more clean products which is LNG. I don’t think LNG is so much taking away from oil. I believe LNG market is an exciting part, and the world energy is really moving forward to LNG. We believe that in the short term, LNG growth is still weak from now to 2015. But we see many projects are coming online post 2015, and international companies are buying their supply of LNG, right now primarily from Australia. You need a period of 18-24 months to build the ships. So many people now are looking at the logistics part of LNG market.

What’s Teekay’s plan of adjusting the fleet construction considering tankers and LNG carriers?

We have four publicly listed companies on the New York Stock Exchange. Teekay is the parent company, and we have one daughter company called Teekay Tanker which focuses on tanker aspect. Another company called Teekay offshore partner focuses on FSO and PSO, and the last company we have is Teekay gas partners which focuses on LNG. Before Teekay was just one company and we had to decide to invest on LNG projects of PSO projects or tankers. By creating this construction, we are able to do both the LNG projects and tanker projects. Over last 5 years, we raised approximately 2.6 billion on Wall Street instead of going to the banks. We are able to really create a lot more projects. With four companies we can create multiple projects at a time.

Is there any problem with LNG ships’ financing like other parts of shipping market?

Not so much on LNG I think. How the LNG sector works is that company orders ships against a specific project and the project will give you a ten-year time charter. So when you go to the bank and you have the ten-year project contract, as long as the customer has good credit, the bank has no problem to support the project. Right now the banks have more problems of supporting you if you have no contract and you just want to place orders. Even though LNG part is significantly more expensive, it is much easier to finance than other parts of the market.

As more and more LNG carriers’ orders are placed, do you worry about oversupply in LNGmarket?

We do a little bit. But if you look at the projects come online in 2015, we actually have a shortage of LNG ships. Based on the number of projects, the industry is still short of 60-100 LNG ships. Even though the orderbook has increased, there is still shortage when compared with demand.

Does Teekay have any plan to use LNG as fuel to replace bunker?

We have two newbuildings ordered right now, and we are using the technology called MEGI engine. MEGI stands for marine electric gas injection. We believe so much in LNG as fuel, and we are the first people in industry to order LNG carriers with this MEGI engine. If you look at the benefits of LNG as bunker fuel, it not only reduces the emissions, but also brings us about 30% savings in fuel consumption, that would be approximately $20000 savings per day. With this we can attract customers.

Teekay is a successful business, do you have any experience of winning the bidding that can share with us?

What we have learnt from the pass is that it is very important to have a good reputation. You have to have track records and the reputation of being on time and on budget. Especially for LNG sector, it is so important to have reputation and creditability. Industry now in LNG part, people are looking for those who have experience. That’s the thing Teekay can offer for Chinese shipping companies as partnership. Now it is easier for domestic companies to gain opportunities, but they don’t have the experience and history building LNG ships. So we join together. We share the technical expertise and give the creditability, and they have the backing of Chinese customers and government. With this partnership Teekay can add value to China.