By OGJ editors
HOUSTON, Nov. 19 -- The LNG shipping business has seen an unprecedented boom in the past 30 months in a time when most other sectors of the shipping industry are suffering, said Drewry Shipping Consultants Ltd., London.
A new report, "The Drewry Annual LNG Shipping Market Review and Forecast," noted accelerated levels of ordering activity for new vessels along with escalating interest in new supply projects along with new or expanded terminals.
With a growing fleet and more trading opportunities, the traditional structure of LNG shipping gradually could become more flexible, with more spot and short-term contracts, encouraging speculative ventures and new entrants, Drewry said.
New technology
New technologies are lowering costs and making previously uneconomic projects viable. In ship design, new propulsion systems aim to replace the traditional steam turbine engines with smaller, more efficient units that will reduce fuel costs and increase cargo carrying capacity.
The first LNG floating production, storage, and offloading vessel coming closer to realization, which promises to open new areas for LNG export. Several new ships have been ordered with on board regasification facilities, enabling new areas to the possibility of LNG imports and helping overcome environmental objections to new LNG receiving terminals.
Regarding LNG shipbuilding, South Korea is gaining pace with the traditional Japanese and European rivals given the recent new orders, but South Korea might be about to face a low-cost challenge with China poised to join the ranks of LNG shipbuilders.
LNG markets
China also provides a huge market for LNG, and two contracts have been signed this year.
CNOOC Ltd. agreed to buy as much as 2.6 million tonnes/year of LNG from Indonesia's Tangguh LNG project that will be delivered to a planned LNG terminal at Fujian, China, beginning in 2007 (OGJ Online, Oct. 2, 2002, p. 9).
Previously, CNOOC Ltd.'s parent—China National Offshore Oil Corp.—and Guangdong LNG partners selected Australia's North West Shelf venture to supply China's first LNG imports terminal planned at Guangdong, China (OGJ Aug. 19, 2002, p. 9).
"The potential in China seems to be on a far firmer footing than the previous predicted mega-market of India," Drewry said in a news release.
Spain continues to rapidly expand LNG imports and smaller countries, such as Greece and Portugal, are becoming LNG importers.
Numerous announcements have been made regarding proposed LNG receiving terminals in North America.
The Sept. 11, 2001, terrorist attacks in Washington and New York brought a temporary halt to LNG imports in the US while the collapse of Enron Corp. also disrupted several LNG projects.
Since April, US import levels have risen and spot cargoes also have resumed, Drewry said.
Industry growth
It's been widely forecast that LNG trading volumes will grow about 7-8% annually for the next decade, Drewry said.
Ship demand is likely to grow faster as long-haul movements from the Middle East and other remote areas, coupled with increased spot and short term trading, fuels the demand for more shipping capacity.
Short-term problems could emerge in mid-decade with new shipping capacity becoming available faster than LNG liquefaction or regasification capacity. The worldwide fleet is expected to expand to 193 vessels by 2006, Drewry said.
A worldwide fleet of 250 vessels will be needed to accommodate the anticipated trade and another 50-60 vessels will have to be ordered in the next few years, Drewry adde
