LNG shipping spot market showing first signs of recovery say ship owners


Prospects for the LNG shipping sector have been looking ever so positive over the course of the past few weeks, as ship owners active in this market segment have been reporting. For instance, according to Golar LNG, “the LNG carrier spot market is now showing the first real signs of recovery on the back of new production capacity starting up and the very welcome acceptance by the market of the Cool Pool. The speed of this recovery will in part be a function of how trade patterns evolve over the coming months. The market for FSRU’s has clearly entered into a new phase. Whereas, previously, potential new FSRU projects were frustrated by the inability to secure LNG supply, we now find holders of uncontracted LNG supply motivated to accelerate FSRU projects in an effort to reduce their exposure. Based upon current customer inquiries the company is very confident that the available uncontracted FSRU capacity will be absorbed shortly”, Golar said in its latest release.

Similarly, GasLog said in a recent note that “there have been a number of positive developments within the LNG sector despite weaker market conditions. The Santos-backed Gladstone facility shipped its first gas cargo earlier this month with Korean Gas taking the first commissioning cargo. BG’s Curtis Train 2 also started up during the period following the successful launch of its first train at the end of 2014, where GasLog took the first cargo. The Australia Pacific project, backed by Origin,ConocoPhillips and Sinopec, is also expected to come online by the end of 2015. Chevron indicated first LNG from its Gorgon project may be delayed to early 2016 due to non-market related issues”, GasLog noted.

Meanwhile, according to the ship owner, “in the US, those projects that have taken final investment decision (“FID”) continue to make positive progress with Sabine Pass, the first US LNG export project, expected to start up by the end of 2015. After the quarter end, there was also news of the new $11 billion “G2” project in Louisiana, which is intending to file for Federal Energy Regulatory Commission (“FERC”) approval, having already received Department of Environment (“DOE”) approval to export gas to countries with free-trade agreements with the US. The project will have a nameplate capacity of 14 million tonnes per annum. We expect LNG liquefaction projects that are under construction, have firm offtake agreements and committed financing to come online in a lower oil and gas price environment. Projects that have reached FID stage, but are yet to start production, represent over 100 million tonnes per annum of new LNG capacity”, GasLog said.

The ship owner added that “Henry Hub is currently trading below $3 per million British Thermal Units (“mmbtu”), making US natural gas an attractively-priced fuel source for countries and companies looking to diversify away from dirtier fossil fuels such as oil and coal, often to comply with newly introduced carbon emission targets. With the price of LNG declining over the last year, particularly in Asia, we are seeing new demand centers emerging and growing requirements from existing importing nations looking to take advantage of cheaper gas, such as India. The number of importing countries is expected to rise rapidly as the next wave of LNG supply starts to gather momentum. We remain confident for the long-term supply and demand outlook for LNG and LNG shipping”, GasLog concluded.

Source from : Hellenic Shipping News Worldwide