Shipowner GasLog said there remains “significant uncertainty” on near-term LNG demand and shipping requirements as a result of the Covid-19 pandemic.
Announcing second quarter results, GasLog said the group’s charter coverage for the remainder of 2020 is 82% with contracted time-charter revenues of approximately $295m. But the company warned of greater volatility on rates for its spot trading vessels.
GasLog said it recognised a non-cash impairment loss of $22.5m on four of its steam-turbine vessels — the GasLog LNG Partners-controlled 145,000-cbm Methane Rita Andrea (built 2006), the Methane Shirley Elisabeth and the Methane Heather Sally (both built 2007) and GasLog’s sistership Methane Lydon Volney (built 2006).
The company said the impacts of the pandemic has reduced its estimates for the rates that could be secured for these vessels in the near-term spot market.
Hold-ups
GasLog detailed that the scheduled dry-docking of its 155,000-cbm LNG carrier GasLog Savannah (built 2010) has taken over four months due to delays caused by the Covid-19 outbreak. The vessel is due to return to service after around 150 days off-hire at the end of this month after entering a Singapore yard on 9 April.
The company said it is delaying by six months the conversion of its 155,000-cbm GasLog Singapore (built 2010) into a floating storage unit for Smarter Energy LNG Power Co’s planned facility in Panama as a result of the Covid-19 hold-ups for the project.
GasLog reported an increased second-quarter loss of $13.3m, up on the $10.5m recorded in the same three months of 2019 which the company said was mainly attributable to the impairment losses on vessels.
Revenue rose slightly year-on-year to $158.9m, from $154.3m on the back of newbuilding deliveries.
Office closure
The company said it would be extending the organisational changes it has made, which saw staff at its London and Monaco offices shift to Piraeus in Greece, to GasLog Partners and its Stamford office to make fresh operational efficiencies and cut overheads.
GasLog said that as a result of the relocation to Greece, GasLog Partners chief executive Andrew Orekar is stepping down from 15 September. GasLog CEO Paul Wogan will take on his role.
“In addition, we will reduce the size of the partnership’s board of directors from seven to five members and will close our Stamford, Connecticut office,” GasLog said. The company added that this would make savings of $3m per annum from 2021 in addition to the $6m per annum from the London and Monaco office changes.
Chairman Peter Livanos said the quarter had demonstrated the group’s “resiliency” in the face of the pandemic, adding that “great progress” had been made in reducing operating and overhead expenses along with debt service costs following the recent refinancings.
After the end of the second quarter, GasLog said it had refinanced the group’s debt maturing in 2021 with four new credit facilities representing around $1.1bn. The company said this delivers $30.2m of extra liquidity to the group.
Crew-change problems
Wogan described the year-on-year performance as “stable” despite the current operating and commercial challenges. But he highlighted the ongoing problems with crew changes.
The company said it has been able to rotate approximately 80% of its officers and a smaller percentage of the other ranks, adding that the difficulties faced are largely due to continued lockdowns in Singapore and the Philippines.
“Although we have made progress in crew changes since the Covid-19 outbreak began, progress is slower than we hoped as many countries remain reluctant to allow crews to embark and disembark through their ports,” Wogan said.
“As our seafarers are delivering vitally needed energy to the world I believe they should be recognised as key workers with their health and well-being acknowledged and respected by all maritime nations and with their passage from and to their vessels recognised as a priority.”
GasLog took delivery of two LNG newbuildings during the quarter and a third in July all of which are fixed on long-term charters.
The company said it has four LNG newbuildings on order at Samsung Heavy Industries, which are on schedule and within budget.
