More open ships won’t weigh on LNG charter rates

Source: Heren


LONDON (ICIS)--A slight improvement in LNG vessel availability expected in late November and December will not weigh on charter rates, shipping sources said.

Around three ships could become available in the Far East later this month and four more in December and early January, with a number of sub-charter options also on the market.

“I can’t see reasons for the rates to drop,” a source at an Asian ship owner said. “There could be some competition [for charter out opportunities] but there will also be competition from charterers for those ships, as there are cargoes that will have to be lifted. I don’t think owners in such conditions will agree to reduce their offers.”

One European LNG trader said he expected rates to remain strong until at least summer 2019, which is pushing the trader to look for cargo swap options this winter to reduce shipping costs.

Pacific market

A bullish shipping market and a lack of available tonnage prompted charterers to keep quiet about deals done in the past two weeks, shipbrokers in London said. But between three and seven deals were done last week, according to various sources.

This week, energy trader Gunvor concluded a deal for a one-year charter of the 157,000cbm Seri Balqis starting in January. The rate was at $95,000/day.

US producer ExxonMobil has continued chartering in ships actively. Its latest deals include the 217,000cbm Al Khuwair which loaded at Australia’s Gorgon on 7 November and is expected to deliver to India’s Dahej, according to a shipbroker. The rate was around $175,000/day.

ExxonMobil also chartered in the 159,800cbm Kita LNG for loading in Australia in December.

The company also concluded a long-term charter for three years at $82,500/day. Sources disagreed about the vessel and the month the charter will start. One source said ExxonMobil will start a three-year charter with a Maran Gas Maritime vessel from August 2019, with the producer also taking a six-month subcharter from Cheniere at $90,000-100,000/day for February delivery to bridge the gap before the three-year charter starts.

With soaring rates, more companies are looking for sub-charter options for their vessels. Trader Trafigura, as well as Woodside have available vessels. Owners Awilco, Flex and Sinokor will have open vessels soon too.

An expensive charter market has led some companies in the Pacific to cancel their shipping requirements and sell cargoes on a free on board (FOB) basis, however. Brunei and BHP are among those who cancelled their requirements, according to a Singapore-based shipbroker.

Atlantic market

In the Atlantic, Russian producer Gazprom cancelled its requirement for Cameroon loading. But the company is short on vessels and would need to charter in around three, a shipping source said. Atlantic activity remains subdued on a lack of available ships, but it could rise once some of the companies looking for swap deals between Atlantic and Pacific volumes sell their Atlantic cargoes on a FOB basis.

South Korea’s KOGAS and Spain’s Naturgy are looking to sell US-sourced cargoes on a FOB basis. In the Middle East, British major BP may be looking for a vessel, two sources said.

In terms of availability, France’s Engie has prompt vessel length in the Atlantic and may be looking to subcharter a ship. Apart from that, the 159,800 Corcovado LNG is expected to leave dry dock and become open by 1 December.