LNG shipping leaders say a new world of optimised operations and remote surveys is coming in the wake of the global coronavirus pandemic
These were among the key takeaways from the ’LNG Shipping Leaders’ webinar, which is part of Riviera Maritime Media’s Maritime Leaders webinar week.
Attendees gained timely and practical insights on how the LNG industry’s leaders are positioning themselves to withstand today’s unprecedented trading challenges.
These leaders explained how their companies are staying robust and resilient in a shifting energy market; rightsizing their business and operations for a sustainable and viable future; and re-invigorating the supply chain and crewing.
Presentations and discussions during the webinar came from Howe Robinson Partners LNG senior broker Debbie Turner, BW LNG head of operations Riju Cherian and AEX LNG operations and commercial director Sachin Mohan.
Ms Turner kicked off the webinar with a summary of the current market conditions and a forecast of future trading conditions. She anticipates volatility in LNG shipping markets going forward as global economies and energy companies adjust to changing demand and storage requirements. “There is low demand for [gas] volumes and this is affecting LNG shipping,” she said, when describing the current market.
Gas prices have been at historic lows, LNG land storage is full and cargoes are being held on gas carriers for deliveries stretching into end-August.
However, Ms Turner anticipates a rebound in Q4 2020 and into Q1 2021 as gas demand returns and replaces coal and oil for energy generation. “We are coming out of a dreadful situation and will recover slowly,” she said.
“Shipping is resilient. There will be new business models and [energy] companies will re-evaluate how they look at their shipping,” said Ms Turner.
LNG shipping companies are facing a new world with volatile market forces and digitalisation technologies enabling remote operations, said BW’s Mr Cherian. “Our industry has been resilient while operating in tough times,” he said. “We have seen demand disruption and cargoes cancelled, but the long-term fundamentals are strong.”
Mr Cherian said LNG shipping companies need to differentiate through investment in crew, supply chain and digital technologies, including enabling remote SIRE inspections.
“There are opportunities to re-imagine what we do in a new world,” Mr Cherian said. “A lot of learnings will take us to a new normal.”
Mr Mohan agreed LNG shipping will need to review operations for the long term, but ensure crew remain motivated to maintain safety and procedures. “As leaders, it is up to us to provide the way forward, specially from the opportunities that are in place today,” he said. “The industry will rebound for sure; we will come back. But, with new imagination and new thinking.”
Mr Mohan said this will require ways to reduce operating expenditure through optimising shipping operations. “There needs much more operational efficiency. The ways of working in the LNG industry, especially in shipping, has changed forever.”
Attendees of the webinar agreed with the speakers over how the LNG shipping sector had been disrupted by the global coronavirus pandemic.
In a poll, 64% said Covid-19 had a severe and disruptive impact on business, another 34% said it had a moderate impact, while just 2% said it had no impact on their business.
In another poll, 83% of attendees agreed laden LNG carriers are taking unusually long journeys in search of better prices, while 17% disagreed.
They were then asked whether digital technologies will open opportunities for remote SIRE inspections and when they expect these will be the standard. 37% expect remote SIRE inspections will be standard in the next 12 months and 20% in the next 24 months. Another 20% did not expect remote SIRE inspections will be standard requirements ever, but 10% think they will within 60 months and 13% think it will take longer than that.
In a fourth poll, attendees were asked to forecast charter rates for gas injection in the northern hemisphere winter season of Q1 2021. Around 47% thought it would be US$70,000 per day, while 50% forecast it would be US$80,000 per day and just 3% thought it could jump to US$100,000 per day.
This is compared with current charter rates, which Ms Turner said were around US$40,000 per day in current tenders.
You can view the webinar, in full, in our webinar library.
And you can sign up to attend upcoming webinars on our events page
(l-r) Howe Robinson Partners LNG senior broker Debbie Turner, BW LNG head of operations Riju Cherian and AEX LNG operations and commercial director Sachin Mohan