Major charterers have started moving on their requirements for LNG newbuildings but there are still options on the table for independent owners.
South Korea’s big three Hyundai Heavy Industries, DSME and Samsung Heavy Industries have berth slots open for 2022, although the picture at SHI could be getting tighter after the yard snatched the bulk of this year’s orders.
Yard bosses report continued interest from independent owners on the back of anticipated demand for modern LNG tonnage from major charterers like Total, Shell and Spain’s Repsol, which have trading volumes to shift from new and upcoming projects.
Competing demands
Shipbuilders will then have to balance their existing customers' demands with those of chartering giants like Qatargas and its potential 80-ship order for delivery dates spread through 2023-2026, and others like ExxonMobil, Mozambique LNG and Russia’s Novatek.
Demand from large projects could complicate order discussions with owners who are sitting on optional slots or who are looking to lock in berths for vessels to offer in on future chartering requirements from the majors and others.
Over 30 LNG carriers have been contracted to date this year, including a number of small-scale vessels largely intended for LNG bunkering.
Among the recent surprise entrants are JP Morgan, Nisshin Shipping and Sinokor Merchant Marine, with industry players watching to see if they will extend their newbuilding positions beyond their original contracts.
As of the end of August, no floating storage and regasification units had been contracted, which brokers believe reflects the perceived oversupply in that sector and a move to convert existing LNG carriers into FSRUs.
| LNG newbuilding orders to end of August 2019 |
| Shipyards | No. of ships |
| DSME | 7 |
| HHI | 9 |
| SHI | 11 |
| Hudong-Zhonghua | 2 |
| Zvezda | 1 |
Mixed views
When asked whether more LNG orders will flow in during the rest of the year, yard chiefs had mixed views.
“All the time my expectations are not correct,” one senior shipyard official says.
Throughout the year shipyards have worked to inch up the price of LNG newbuildings, with a rash of new technological features and slightly larger capacity ships pushing levels over the $190m threshold for owners who selected these specifications.
One marketing chief says that in the absence of a revival in orders for other types of vessel, which have been in particularly short supply this year, price rises will be largely dependent on term charter rates that owners can secure for their vessels.
In a reference to a major with something of a reputation for its tough negotiating position on LNG ship chartering, he adds: “Please ask Shell to raise their rates.”
