London: GasLog is to charter three of its large LNG carrier newbuildings to Methane Services (MS), part of BG Group, plus up to six more as options.
The newbuildings are uncontracted 174,000-cbm vessels, two of which are currently under construction at Hyundai Heavy Industries and another at Samsung Heavy Industries, South Korea.
The three charters will commence in mid-2018 and early 2019 for average initial terms of approximately 9.5 years at what GasLog says are “attractive rates”.
The Monaco-based owner says the contracts combined will add around $845m of fixed-rate revenue to the company’s existing contracted revenue backlog. This is equivalent to a daily rate of around $81,240 per vessel, based on a 9.5-year charter.
MS has the option to charter an additional six of GasLog’s 174,000-cbm newbuildings for average initial terms of around 10 years. This would generate an additional $1.8bn of fixed-rate revenue for GasLog, or $82,192 per vessel per day (based on a 10-year charter).
If MS chooses to exercise this six-vessel option, it must be agreed before the end of 2015, although this period could be extended. The charters would commence when the vessels are delivered in 2017.
In addition to these newbuilding deals, MS has modified its existing charters of three of GasLog Partners’ large LNG carriers: GasLog Shanghai, GasLog Santiago and GasLog Sydney (all 155,000 cbm, built 2013). Two of the existing charters will be extended by approximately four months, and one contract will be cut short by eight months.
These existing contracts could be further shortened by up to 31 months if MS elects to charter GasLog’s six newbuildings. MS aims to redeliver the three existing ships to coincide with the six newbuild deliveries in 2017.
“This would be at a time when management believes there will be a tightening of the supply-demand balance for LNG carriers, as currently indicated by new vessel orders and prospective LNG projects,” GasLog explained in a statement today.
MSL still has extension options of two consecutive periods of three or four years on GasLog Shanghai, GasLog Santiago and GasLog Sydney.
If MS does not choose to extend, and if GasLog Partners does not enter into a third-party charter on the three vessels, GasLog and GasLog Partners intend to enter into a bareboat arrangement that they say “is designed to guarantee the total cash distribution from each vessel”.
Alternatively, GasLog says it could timecharter the vessels to GasLog Partners on equivalent terms to the existing MSL timecharters for any period of shortening.