US-listed Dynagas Partners, GasLog and Golar LNG have created an innovative pooling arrangement amid a depressed spot-rate environment.
The arrangement, called The Cool Pool, will debut next month with 14 vessels: three each from Dynagas and GasLog plus eight from Golar. The pool will be run by Tony Lauritzen, with Morten Nielsen serving as pool manager.
The pool will exclusively focus on employment of 12 months or less. Each owner will remain responsible for manning and management of their respective vessels, and for charters in excess of one year in duration.
The co-operative arrangement “provides the opportunity to delivery benefits, including COAs and other contract forms not previously executed in LNG shipping”, said the three owners in a joint statement.
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According to Evercore ISI analyst Jon Chappell, “It would not be unfair to categorise the current LNG spot market as terrible, with rates right around USD30,000/day, well below breakeven, and that is if an owner is lucky enough to actually get a cargo to move.
“With utilisation of the spot LNG carrier fleet tracking at close to 50% through the first seven months of the year, the effective rate earned by vessels not under fixed-rate contracts is about USD15,000/day, compared to a cash breakeven level of USD50,000-60,000/day,” said Chappell.
“This downturn is likely the impetus for this unique marketing arrangement,” Chappell explained, noting that “as long as overcapacity remains in the LNG shipping market, every little bit of enhanced utilisation and cost efficiencies will help the bottom line”.
“Pools are frequently utilised in commodity shipping, including tankers and dry bulk, but to our knowledge have never been employed in an LNG segment,” continued Chappell. “This downturn is likely the impetus for this unique marketing arrangement. As long as overcapacity remains in the LNG shipping market, every little bit of enhanced utilisation and cost efficiencies will help the bottom line.”