Global LNG import growth has been weak so far in 2015, Teekay’s Research Projects Manager, Nicholas Schneider said in the company’s marine market gas update.
Total year-to-date imports are 1% lower than during the same time last year, the report shows.
While imports have increased strongly in Europe, this has been offset by lower imports in Asia due to mild weather, weaker economic growth, and increased competition from alternative fuel sources.
World LNG Fleet
The LNG fleet increased 3% in total cubic meter capacity in the first half of 2015. The LNG carrier fleet now consists of 390 vessels and 136 newbuildings on order, not including regas vessels and small LNG carriers. Contracting for newbuild LNG vessels has slowed in 2015. After an all-time high of 63 orders in 2014, there have been only 16 orders to date in 2015.
The number of vessels available on the spot market was slightly lower in Q2 2015, but remains higher than in 2014. Higher availability of spot vessels is due to several factors: the delivery of uncommitted vessels in 2014 and 2015, project outages in Yemen and Angola, the delivery of ships in advance of Australian LNG project start-ups, and less Atlantic to Pacific arbitrage trade.
LNG Charter Rates
As of the end of July 2015, short-term charter rates for DFDE vessels were $25,000 – $32,000 per day according to Affinity LNG.
Outlook
With sufficient tonnage available on the spot market, Teekay expects short-term charter rates to remain weak throughout 2015. However, vessel utilization should start improving as Australian projects ramp-up and Angola LNG resumes production. This will add new LNG supply to the market and remove long-term committed vessels currently trading on the spot market.
The total capacity of LNG export projects currently in construction is almost 140 MTPA. As a result, LNG trade is expected to increase 50% by 2020, which will require a substantial increase in the size of the LNG fleet over the next 5 years, with further orders needed on top of the current orderbook. In addition, customers are showing a preference for securing fuel efficient newbuilds for their future LNG shipping requirements; almost half of new LNG vessel orders since Q4 2014 have been for MEGI powered newbuilds.
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Image: Teekay