Recent transactions indicate a tightening of availability in the small-scale LNG carrier market, Small LNG Shipping principal, Eduardo Perez Orue
Transactions involving small-scale LNG carriers have been trending. Taken separately, these reports are notable, but on further analysis, when you put them all together, you realise that the small-scale LNG shipping market has undergone massive changes in the last few months.
First is Titan’s acquisition of two small-scale LNG carriers, which will be retrofit for bunkering. The two small-scale LNG carriers, Seapeak Unikum and Seapeak Vision, were acquired from Seapeak. Each of these ships has a capacity of 12,000 m3.
Second, Dutch owner Anthony Veder, has a received a charter to provide three LNG carriers to support DRG’s floating LNG terminal. The multi-purpose gas carriers Coral Furcata, Coral Favia and Coral Fraseri, each with a capacity of 10,000 m3, will be deployed for the charter.
And, finally, Seapeak has completed the acquisition of Evergas from Jaccar Holdings, for US$700M.
Each one of the stories is important on its own, but put all three together, and you can see that some of the old tonnage that was once available for charter has disappeared from the market.
Among the ships discussed above, five of them are old ex-Norgas ships. Some of you will remember that Norgas built six multi-gas carriers that were delivered in 2010 and 2011. Four of them have capacities 10,000 m3 and two 12,000 m3. They are important because they were real multi-gas carriers able to transport LNG, ethylene, butadiene and other products, making them a great fit for several petchem trades in the market.
“Any new development that requires small-scale LNG ships will be obliged to build specifically for the project”
Five out of those six ships have been fixed in long-term deals, therefore putting more pressure on the rest of the small-scale LNG fleet.
Reading the tea leaves, the transaction between Evergas and Seapeak could mean that this small LNG fleet might continue trading in ethane and will not be focusing on LNG in the foreseeable future. This is conjecture, based on market reports.
So, while none of these ships was actually unemployed or waiting for charterers to show up, it suddenly puts more pressure on the market because they are simply not there as a potential option anymore, and any new project means that you will be more likely to be forced to build a ship for it.
Am I reading too much into these press releases? Maybe so. In any case, while it was already clear that the global fleet of small-scale LNG carriers was small, it is now growing very slowly, and the few available ships are getting less and less.
By my last count, there are 107 small LNG carriers with capacities below 40,000 m3 globally in the market, both operational and under construction, and the immense majority of them are locked in long-term deals.
This means that any new development that requires small-scale LNG ships will most likely be obliged to build specifically for the project.
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