Strong international partnerships underpin Nakilat’s success

Nakilat also has a 55% interest in one floating storage and regasification unit (FSRU) and four very large gas carriers (VLGCs) jointly owned with its major shareholder Qatari maritime and logistics company Milaha for the LPG trade.

In describing the company’s gas shipping strategy in February, Nakilat head of investor relations Fotios Zeritis said: “I would like to emphasise that we have chartered our fleet on multi-year fixed contracts with first-class charterers to mitigate any seasonality or volatility in short-term charter rates.” Added Mr Zertis: “Our consistent commercial strategy enhances the fleet utilisation and eliminates the current volatility of spot rate earnings across quarters. It is worth mentioning that our company’s long-term fundamentals have not changed due to the coronavirus outbreak and remain robust.”

For Q1 2020 ending 31 March, Nakilat had a net profit of Qr279.5M (US$76.8M) compared to Qr236M (US$64.8M) during the same period in 2019, an increase of 18.3%. Overall, revenue was up 13.2% to Qr1,022M (US$280.8M) for the quarter as compared to Qr902M (US$247.8M) for the same period year-on-year.

The strong Q1 2020 results follow in the wake of Nakilat’s record performance in 2019, when it posted profits of QR1Bn (US$275.5M) for the year ended 31 December, an increase of 12.4% year-on-year as compared to QR892M (US$245M) in 2018.

“Nakilat will effectively control about 12% of the world LNG carrier fleet capacity”

Nakilat also noted in its results the second phase of its fleet management transition from Shell International Trading and Shipping Company Limited (STASCo) to its own ship management for seven additional vessels.

Nakilat added a 55% stake in the FSRU Exquisite in 2018 through a joint venture with US-based Excelerate Energy. Exquisite has been operation at Pakistan’s Engro Elengy terminal at Port Qasim since 2015. As Pakistan’s first LNG import terminal, the facility has a regasification capacity of 690 MMscf/d.

In January, Excelerate Energy and Engro Elengy Terminal reached a heads of agreement to expand the send-out capability at the Port Qasim LNG import terminal to 150 MMscf/d. This will be accomplished by swapping out the Exquisite with Hull 2477, a newbuild FSRU under construction at DSME for Maran Gas. Excelerate was expected to take delivery of Hull 2477 in April, with expanded operations beginning in Pakistan in H2 2020. In September 2019, Houston-based Excelerate signed a five-year bareboat charter that contains an option to buy the FSRU from Maran Gas.

Q vessel conversions

One of the major projects that has not yet moved forward is the conversion of the Q-Max and Q-Flex vessels to two-stroke, dual-fuel, gas injection (ME-GI) propulsion. The conversion work will significantly reduce emissions when compared with marine diesel oil (MDO) or heavy fuel oil (HFO) in terms of CO₂, NOx, SOx and particulate matter (PM).

Only one of the vessels has been converted thus far. Conversion of the two MAN B&W S70ME-C HFO-burning engines to the dual-fuel ME-GI concept on the Q-Max LNG carrier Rasheeda took place in 2015.

Nakilat joint venture manager Bader Al Mulla presented on the lessons learned from the ME-GI conversion for the Q-Max LNG carrier Rasheeda at Riviera Maritime’s LNG Ship/Shore Interface Conference in November.

He explained: “The project team, led by Qatar Petroleum, Qatar Gas and other international oil companies, evaluated different options and focused on different elements of the regulation requirements: either do nothing; make minor modifications for compliant fuel; or go with scrubbers. Given the uncertainties of accepting open-loop scrubbers, we looked at using LNG as a fuel as the most viable option.”

He ticked off several ME-GI conversion benefits, among which were flexibility of fuel supply, allowing optimum reaction to market changes and reduced bunkering activities.

The modification took place over 45 days at the Erhama bin Jaber Al Jalahma Shipyard in Ras Laffan, operated by Nakilat-Keppel Offshore & Marine (N-KOM).