The latest semiannual worldwide shipping report from Clarkson Research Studies, current through Mar. 1, predicts 2004 will be a "year of strong [LNG] fleet growth."
This growth will be driven by the continued strong natural gas demand growth that in 2003 added more than 10 million tonnes/year (tpy) of LNG production capacity.
This growth is poised to continue in 2004 and 2005 with an estimated 12.5 million tpy and 14 million tpy, respectively, due to come on line, says the study.
As of Mar. 1, LNG shipping capacity was set to jump by 43% as 56 vessels were on the orderbook representing 7.84 million cu m of transportation capacity. In the prior 6 months, 14 new contracts had been placed, compared with only 6 in the 6 months before Sept. 1, 2003.
The Clarkson report predicts the LNG carrier fleet will expand by 17.4% this year and 15.1% in 2005.
New supply
In 2003, says the report, several new sources of LNG supply came on line.
In May, Atlantic LNG Co. of Trinidad and Tobago brought its Train 3 into production with 3.3 million tpy of capacity, and in May and October, respectively, Malaysia LNG Tiga started up two trains of 3.4 million tpy each.
During March of this year—as the world's LNG community convened for LNG14 at nearby Doha —Ras Laffan Liquefied Natural Gas Ltd. brought on stream its Train 3 with 4.7 million tpy, the largest so far in the world.
Later this year, Egyptian LNG will start up its first train at 3.6 million tpy, while Northwest Shelf will begin production from its Train 4 with 4.2 million tpy of capacity.
This total of 12.5 million tpy of capacity shows "just how quickly the LNG industry is growing. The year 2005 should not disappoint either as RasGas 4, Nigeria LNG Plus, and Egypt's Damietta plant" will add another 14 million tpy, says Clarkson.
New vessels, trade patterns
On Mar. 1, the world's LNG fleet numbered 160 vessels comprising 18.3 million cu m of shipping capacity. In January and February, owners took possession of 6 new vessels. 5 of which were the larger, 138,000-cu m size.
Another 18 vessels are due for delivery in the remainder of 2004, says the report, representing additional capacity of 2.44 million cu m. Next year, another 22 vessels will be delivered, adding 3.13 million cu m.
The Clarkson report says "A high level of [shipping] contracting has also been maintained thus far in 2004, with six new contracts reported placed, U up by an annualized 140%" over 2003.
As of the end of the study period (Mar. 1), only eight shipbuilders had on their books all the LNG carriers being built, with South Korean builders by far the most active at 37 vessels and 5.2 million cu m on order. Japan's yards were working on 15 vessels, 2.1 million cu m.
Clarkson says that the vessels on order were distributed among 24 owners with Mitsui OSK Lines Ltd., Golar LNG Ltd., and Bergesen dy ASA each having 5 vessels built.
"An interesting and fairly recent development," says the report, is that "about a third of the ships on order are not committed to a specific LNG project.
"This reflects [owners'] confidence U that future demand growth will be sufficient to absorb the relatively strong supply growth projected over the next few years, but also a trend away from industrial shipping to a more mature and competitive shipping market similar to other bulk shipping sections."
Combined with a building frenzy that will double the world's LNG fleet in a short time is that fact that no LNG carrier has been scrapped since 1997, says the Clarkson report.
Average age in the fleet is 14 years, with 45 vessels older than 25 years. And, since the candidates most likely for scrapping, those older than 30 years, comprise vessels of less than 87,000 cu m, "the impact of a pick-up in demolition will primarily depend on the need for replacement in the short-haul trades such as cross-Mediterranean."
The movement towards larger vessels (see cover photo) is acknowledged in the report. "LNG ships of 200,000 cu m to 250,000 cu m capacity continue to be investigated by some project sponsors, and it seems possible that we will see vessels of this size ordered during 2004."
