Norway’s Awilco LNG believes a shortage of gas carriers from 2026 will boost charter rates.
But some short-term pressure is coming as independent owners do battle with trader sublets, the Oslo-listed owner of two LNG carriers warned.
In its annual report, the company said spot fixing activity was high during 2023, although most fixtures were “sublets from traders and portfolios, as very few independent owners had open vessels”.
Towards the end of 2023 and so far this year, some of these owners have shown open positions as vessels fixed one to three years ago are redelivered, Awilco said.
These units will be in competition with quite a few sublets from charterers that have had very good earnings over the past couple of years.
Ship availability will be for 2024 into 2025, when new LNG production is starting up, putting pressure on short-term charter rates, Awilco LNG said.
Current broker quotes are $60,000 to $65,000 for a one-year time charter for a tri-fuel diesel electric propulsion vessel, which is up from lows in February, it added.
“Fewer vessels are available from 2026 and beyond, leading to higher rates for longer-term fixtures.”
Awilco LNG has one of its own vessels coming free from charter in the third quarter this year.
“We are well positioned for the next winter period, when rate levels should improve,” the owner said.
Red Sea still having an effect
The focus on energy security eased during 2023 as gas storage levels were high following a warm 2022-2023 northern winter, ample LNG supply and a relatively warm winter just past, the report said.
Most US LNG has gone to Europe, although US to Asia trade has picked up lately on lower gas prices, it added.
The negative tonne-mile effect of the shorter Europe trade is somewhat mitigated by a reduced number of transit slots through the Panama Canal, as well as attacks on ships in the Red Sea, leading to vessels avoiding the Suez Canal and taking the longer route around South Africa.
This in effect doubles the time for a Qatar to Europe voyage, and if the situation persists will increase demand for LNG vessels, Awilco LNG said.
The company’s net profit was its best ever at $14.9m in the fourth quarter, against $4.9m a year earlier.
