Twofold increase in LNG vessel orders playing out against the backdrop of elevated newbuilding prices

With the energy transition movement’s decarbonization push in full swing, many offshore energy and maritime players are turning to liquefied natural gas (LNG) to curb their greenhouse gas (GHG) emissions footprint. As a result, the number of LNG newbuilding vessel values is perceived to be at a record high with twice as many newbuild orders in 2024 as there were last year.

While the positive sentiment for the LNG sector remains strong, earnings are currently said to be stable but at low levels, which is not unusual for this time of year. Even though LNG spot rates are up by around 12% month-on-month, year-on-year earnings are down slightly by about 1%.

Rebecca Galanopoulos Jones , Senior Content Analyst at Veson Nautical, underlines that the newbuilding demand for the LNG sector is still firmly in place arising from a push towards newer, greener vessels, geopolitical uncertainties, and a rise in the amount of LNG being delivered to the European Union (EU) ports as a replacement for the Russian gas formerly shipped by pipeline.

Recent data from Veson Nautical, a maritime freight management solutions provider, highlights a jump of about 129% in the number of LNG newbuilding orders which reached 78 in the first five months of 2024. This is more than double the amount seen in the same period last year when 34 orders were placed.

Furthermore, values for LNG vessels are on the rise across all sub-sectors and age categories since the start of the year, with 20YO large LNG vessels of 140,000 cbm up by around $10 million from $62.85 million to $72.40 million, equating to approximately 15% hike since January 2024.

With the order book for the large LNG sector of 174,000 cbm standing at about 64% compared to the live fleet, newbuilding prices are said to be at an all-time high of $269 million, up by around 6.1%, as the majority of orders placed so far this year are in the large LNG sector, representing approximately 74%, followed by QMAX with around 23%.

From a historical perspective, the only other orders taken for the QMAX sector were in the 2000s, indicating that the recent orders could be part of a fleet renewal program. Qatar has spearheaded orders in 2024 with a share of about 44%, followed by the UAE with around 13%, and China with approximately 9%.

According to Veson Nautical, significant new orders include ten large LNG vessels of 174,000 cbm by ADNOC scheduled to be built at Samsung and Hanwha Ocean , which are set to be delivered in 2028, with a value of $2.7 billion.