Teekay Gas Group president and chief executive Mark Kremin believes the company now ranks as third in the independent LNG shipowner stakes, just behind two of the major Japanese outfits.
The company’s 80-vessel gas fleet includes 49 LNG carriers, some of which are 100%-owned vessels with others in joint venture. Kremin says joint ventures are something the outfit would continue to welcome in the future if there are good partners.
The fleet also includes LPG carriers and tankers, although it is Teekay’s intention to phase out the tanker tonnage over the next few years.
Two of Teekay’s LNG newbuildings are in the process of delivering but the company has a further seven to be handed over.
“We are really focused on executing what we have already done,” Kremin says. “For a long time, we had the world’s largest LNG orderbook and we were focused on financing it. We have done that and done it without raising any common equity.”
Some of the time charters on Teekay’s LNG carriers — specifically those for the Yamal LNG project — run to 2045.
Kremin says he thinks long-term charters are probably every LNG shipowner’s preference if they admitted to it, but he says they are difficult to find.
“If we can get long-term time charters, that’s our preference,” he says. “But we recognise it is not always possible.”
But Kremin is wary of what currently stacks up as mid-term period business in the LNG sector.
“Right now, we are not seeing risk reward on five to seven-year time charters,” he says. “I think we would rather go short term than these. But if we can get long term, we’ll take it.”
Teekay is not a huge player in the LNG spot market. The company has just one vessel trading spot at present, with a second that may become available later this year.
In addition, it also has two LNG ships that are chartered long term to the currently mothballed Yemen LNG project. Kremin says that while these are fixed throughout this year until Yemen restarts, the company is currently looking at the sub-chartering possibilities for those.
“We do have some [spot trading] opportunities and we keep a close eye on this,” he says.
Like many owners, he is bullish on the market in the near term.
“We think that the end of '18 and '19 should be good years,” he says. “2020I think we are a little less enthused about with all these newbuildings coming out. Certainly, we think that short term rates should exceed long-term rates into 2020.”,
Kremin says Teekay weighed up whether to order more LNG newbuildings earlier this year but he points out that while the yard prices might still be “OK”, there have been a large number of speculative orders placed in the interim.
“So, no, for this year, we are not looking at ordering more speculatively ordered LNG carriers,” Kremin says. “I’m not sure what the tipping point was for us, but at some point we decided to sit back and focus on other project business.
“There will be other projects that will come up that will not require speculative newbuilds and we will focus on those.”
Russian built
He does not see any big change in LNG carrier design on the immediate horizon. But he adds that some of the ships required for the Arctic LNG-2 project are likely to be built in Russia, which he says “will be a first for the industry”.
At the smaller end of Teekay’s LNG fleet, Kremin says the company might look to trade some of its multigas vessels — the ones that also have LNG capability — in the chemical tanker market to try to optimise their earnings.
He says Teekay has previously looked at LNG bunkering and small-scale shipping, but these projects have tended not to materialise.
Kremin says the company does not think it needs a presence in LNG bunkering. He insists this tends to be relatively small capital-expenditure investments and adds that the company would have to execute many of these to equate to a Yamal-type project.
“This would really change our organisation to more of a service one rather than a capital-intensive one,” he says.
