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LNG Shipping Market Annual Review and Forecast 2010

Related Publications:

R0912 LNG Shipping Market Annual Review and Forecast 2010

With the LNG market witnessing increasing supply and demand, market stakeholders have been in a state of perplexity. With LNG a very capital-intensive industry and decisions once made not easily reversed, LNG market participants have been stuck in the middle, requiring a choice between equally unfavorable options.

The report includes analyses and advice on:

• The gas market and LNG trade
• The LNG fleet
• LNG fleet employment and markets
• LNG costs and economics

After a lull noted in 2008, the market bounced back in 2009 with nearly 180 million tonnes of LNG traded. Even though there is not enough production capacity expected to come online in 2010, plants that were commissioned in late 2009 and early 2010 could start ramping up production to their optimum or even maximum levels, thus providing the required impetus for healthy trade growth.

On the supply side, the LNG industry has been facing the ‘problem of plenty’ for the last three years. The fast pace of ordering in the past few years has ensured that there will be a large fleet of modern tankers in the years to come, which will weigh heavily on operators’ profitability.

In the report, Drewry notes that many of the LNG vessels delivered were uncommitted to any project. Also, many were delivered before the commissioning of the projects for which they had been ordered. Short term freight rates have been negatively impacted by excess tonnage. Nevertheless, short term trade increased by 36% in 2009 from the previous year, garnering an 18% share of the total trade in terms of volume.

Another key issue that Drewry’s report touches upon is the increased interest of shipowners to convert their vessels for employment as an FSRU (floating storage and regasification unit). Golar LNG has pioneered this concept and has already converted three LNG carriers into FSRUs, and has gainfully employed them for 10-year periods.

Drewry’s report also identifies best practices in understanding and making key management decisions and focuses on cost and contractual issues, including unemployment risks faced by shipowners in a market faced with excess tonnage.

The report is designed as a reference guide for current and potential players involved in LNG shipping and trade, including both LNG shipowners and senior executives in charge of procurement strategy

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