The number of unemployed LNG carriers has been growing as the spot shipping market stays stagnated.
Vessel-tracking data from IHS Maritime’s Market Intelligence Network shows that as many as 40 LNG carriers have been idle in Malaysia and off South America.
Idling LNG carriers could cost their owners as much as USD2.5 million per ship every month, due to fuel, operating expenses and capital expenditure.
Spot and short-term timecharter rates surged in 2011 and 2012, with peaks of USD150,000 per day in the first half of 2012, sending shipowners into a newbuilding frenzy.
Believing that a spot market would emerge for LNG shipping, some shipowners that were not involved in the business made their entry into this market.
More than 30 LNG carriers were ordered speculatively since Japan’s post-quake Fukushima nuclear crisis in 2011 caused the country’s LNG demand to surge as all nuclear reactors were shut.
The oil shock also caused oil-linked LNG prices to plummet. A year ago, a cubic metre of LNG was priced at about USD265.50. Today, the same amount of LNG is worth USD88.50, hampering trades.
IHS Maritime’s Sea-web.com data shows that 16 LNG carriers were delivered in the first six months of 2015 out of a total of 41 expected in the full year. The trading fleet is expected to expand by 9.4% in 2015. The current orderbook stands at 155 units, totalling 24 million m³, 90% of which is sized between 120,000-199,999 m³.
Delays in the completion of new LNG projects in Australia has also meant that ships not tied to long-term shipping contracts have had difficulty securing cargos.
IHS Maritime’s Sea-web data shows there are currently 419 LNG carriers in service, meaning that about 10% of the active fleet is unemployed.
LNG shipowners told IHS Maritime that they have no choice but to wait out 2015, keeping their fingers crossed that once new LNG projects begin operations in earnest from 2016-2017, more cargos would emerge.
A Golar LNG manager said, “Back in 2011, when we decided to invest in more ships, the spot market was tight … Several other shipowners did the same, resulting in over-tonnaging, which wasn’t helped by the oil shock and delays in new projects coming online.”