Despite elevated prices, historic orderbook nears 50% of global LNG fleet

“Almost 50% of the LNG fleet as an orderbook – something we have never seen, which is brilliant”, said Howe Robinson Partners senior broker Debbie Turner.

The current orderbook stands at 319 LNG carriers (of 100,000 m³ and above), with the current operational fleet tipping 670 vessels.

Providing a high-level overview of the LNG market, Ms Turner drew a sharp contrast between the current market and 2022 when Europe was scrambling to fill its LNG ’bucket’ at elevated prices. “Prices have changed considerably,” she said. Last year, LNG was selling at US$60 per mmbtu, and now is selling in Europe at around US$15 mmbtu.

Heavily dependent on pipeline gas for its energy, Europe pulled off “an amazing transition” she said, in pivoting from Russian supplies following the outbreak of the Ukrainian war, and quickly building LNG import infrastructure. Europe’s current LNG storage capacity stands at 99% but global demand for LNG remains buoyant as economies recover from Covid and energy demand increases.

Speaking at LNG Shipping & Terminals Conference 2023 in London, she told delegates Russia is still producing LNG and countries are taking Russian natural gas, particularly India and China, where stringent sanctions do not exist.

Shipping rates are at half the levels they were last year, and prices for LNG have changed considerably since the elevated rates of 2022 as Europe pushed to raise its storage levels and compete for cargoes.

Global LNG production has stabilised at around an average of 80% to 82% of capacity, although some plants “go up and down like yoyos” she said, noting outages.

Some of the concerns for the market are the limited number of FIDs for new liquefaction capacity, tight shipbuilding capacity and rising newbuild prices. Yard demand remains strong, she said, with limited slots available at South Korean yards in 2027. Qatar is in its second phase of ordering.

“Prices have gone up phenomenally, we’ve gone from US$170M and US$180M a couple of years ago to now around US$260M to US$262M for a newbuild (in South Korea), with China only slightly lower, but the demand continues,” said Ms Turner. 

Commenting on the energy transition, Ms Turner urged taking a pragmatic approach, saying, “We need to move forward in a sensible way. People fail to realise it is all very well throwing millions and millions and millions of dollars at technology that is not there… yet. It will work in the future”.

She concluded, “We must have LNG as a transitional fuel to get to green fuels”.