Rates to ship liquefied natural gas will be lower than previously forecast through 2014 because of slowing growth in production of the fuel, according to RS Platou Markets.

Short-term charters for the vessels will average $138,000 a day next year and slump to $84,000 in 2014, lowering last quarter’s estimates of $142,000 and $104,000, the Oslo-based investment bank said in an emailed report last week. First-half output of the fuel trailed industry expectations and a lack of export facilities due for completion in 2014 will further curb fleet usage, Jorn Bakkelund, an analyst at RS Platou Economic Research, said in the report.

“With a phenomenal amount of investments taken to build more liquefaction capacity worldwide, the demand for LNG shipping looks bright,” Bakkelund said in the report.

Japanese power plants are drawing cargoes from the Atlantic to compensate for lost nuclear power in the Asian country, constraining vessel supply, Bakkelund said in the note. The anticipated slide in rates in 2014 may encourage longer-distance shipments, the note said.

Increasing transport distances lifted rates amid slower volume growth, according to the report. Shipping demand rose almost 7% in the year’s first half as voyages lengthening 9% offset a 2% decline in cargoes, Platou estimates.

The trend may reverse as new projects are built closer to importers and Qatar, the world’s largest exporter, sells volumes to Asia on medium-length contracts, reducing the need to divert cargoes from the Atlantic, Bakkelund said in the report. With Japan gradually phasing in nuclear power plants and few export facilities in Asia until 2015, average transport distances will remain high in the coming two to three years, he said.

Source: Gulf Times