US-listed GasLog Partners will convert one of its older steam turbine LNG carriers into a floating storage and regasification unit for the Venice Energy project in Adelaide, Australia.
Speaking on a fourth-quarter result call, chief executive Paolo Enoizi said the company has “agreed in principle” to convert one of its 145,000-cbm steamships for the job.
Enoizi said the conversion will cost over $100m and take about eight to 10 months. The presentation referenced “attractive project returns”.
The CEO detailed that a 10-year charterparty on a vessel for the project was “under negotiation”.
He said further information on the project and its final investment decision is expected in May 2023.
In July 2021, Venice Energy entered into a head of agreement with GasLog to supply an FSRU for the import terminal. Japanese trader Marubeni has since joined the project.
At the start of the briefing call, Enoizi said he and chief financial officer Achilleas Tasioulas would not be taking questions and answers as a result of Wednesday’s offer by parent GasLog to take GasLog Partners private.
The partnership said in its results statement that it had instructed the committee, which consists of only non-GasLog affiliated directors, to review, evaluate, negotiate and accept or reject the proposed transaction.
Enoizi said the LNG carrier spot market peaked at nearly $450,000 per day in the fourth quarter of 2022 on the back of congestion, floating storage and unwillingness by charterers to sublet their ships.
He said since then milder temperatures have cut the need to refill storages, resulting in falling LNG prices and the release of floating storage.
In addition, low output from Nigeria LNG and the continued outage at Freeport LNG have cut exports and have increased the number of spot ships available in the Atlantic.
But he said the term shipping market remains strong and the number of uncommitted vessels keeps falling.
Enoizi said Russian gas pipeline flows to Europe has been down by nearly 90% following its conflict with Ukraine.
He said higher LNG flows to Europe are likely to continue in 2023.
The chief said the deficit of LNG will likely continue until new liquefaction and regasification facilities come on stream.
He highlighted that 25 million tonnes of new LNG production was sanctioned in 2022 and said this is expected to double this year.
He said this will create additional demand for LNG carriers to match the robust LNG newbuilding orderbook.
GasLog Partners owns 12 LNG carriers and lists two more bareboat vessels in its fleet.
The company has four scheduled dry-dockings in 2023 and estimates the total cost for these, including the fitting of ballast water systems, at $15.5m.
Enoizi also touched on the new incoming environmental regulations that will apply to shipping.
He said GasLog Partners is developing “dedicated plans” to improve its ships’ efficiencies, and reduce emissions, cooperate with its customers and develop digital tools.
It plans to give more details in its 2022 environmental, social and governance report.
