Gas

LNG carrier rates on a charge

Rates for gas carriers are shooting up, passing $100,000 a day on the spot market this week in both the Atlantic and the Pacific, and they are even more firm for one-year contracts.

According to investment bank Jefferies as of Monday LNG carrier rates remain on a strengthening trend with activity levels picking. Jefferies assesses MEGI and TFDE rates at $171,000 a day and $106,000 a day respectively, a year-to-date high for both segments. Steam turbine ships are assessed at $54,000 a day, a significant discount due primarily to their higher boil-off gas rates which are magnified in the current high-LNG price environment.

What’s more, time charter rates are in excess of the spot market as authorities around the world are desperate to secure long term alternative supplies with Russia being phased off the energy map for many western nations following its invasion of Ukraine in February.

Total supplies of Russian pipeline gas to Europe including via the TurkStream pipeline have slumped about 80% to 70m to 80m cu m per day from about 380m cu m per day in September 2021, according to data from Rystad Energy. Russian gas supplies now account for less than 10% of European gas imports.
The European Union’s decision last week to impose a price cap on Russian gas imports may result in gas supplies from Russia halting altogether, Rystad suggested in a new report.

The increased shuttling of gas from North America to Europe has been one of the main commodity shifts in the 203 days since Russia invaded Ukraine. MarineTraffic data today shows there are currently 75 LNG carriers in the middle of the Atlantic, nearly 20% more than this time last year. 

Latest data from Banchero Costa shows in demand gas ships are travelling nearly 4 knots faster than the average for the previous 12 months.

A presentation given by Clarksons Securities earlier this week painted a bullish picture for the LNG seaborne trades this decade suggesting that in the ongoing global energy transition LNG trade might reach 700m tons by 2030, up from 400m tons presently, which would need considerably more ships in the water, helping explain the dramatic buildup in the backlog of LNG carriers under construction at yards in Asia. However, massively inflated prices for these newbuilds will require ships to get above average rates for the coming years to break even, Clarksons warned.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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