BP is widely reported to have paid a record spot charter rate of $350,000 per day for an LNG carrier as charterers juggle limited ships to cash in on rocketing Asian gas prices.
Chartering sources said the energy major has paid the eye-popping rate on Nigeria LNG’s 174,900-cbm LNG Abalamabie (built 2016) for a round-trip voyage from the US to Europe.
One source said BP has likely chartered in this vessel to lift a US cargo to free up an existing LNG carrier in the Atlantic that can lift a shipment to Asia.
Insane
He explained that with the Asian Japan/Korea Marker (JKM) LNG price benchmark shooting up to over $20 per MMBtu this week, this provides an opportunity for huge profit on a cargo which anyone is able to deliver into this market.
With these economics, the cargo value is between $60m to $70m and it easily makes sense for BP to charter in a vessel at this rate, he said.
“If I had a ship available in the Atlantic, that’s what I would do,” he added. “[LNG] Prices are going insane.”
In recent days, trader Trafigura's marine logistics arm was seen offering $350,000 per day for a 160,000-cbm to 180,000-cbm LNG carrier able to lift a cargo in the US between 5 and 9 February. The charter period was for 15 to 16 days.
A year ago, JKM was at below $6 per MMBtu. It bottomed out at $2 per MMBtu before rising steadily through the rest of last year to hit its latest six-year highs.
One LNG shipbroker described today's market as "absolutely flying".
Cold weather in Asia has boosted gas demand and LNG imports into the region.
US cargoes are being drawn east on the back of the higher prices, particularly as some of the Asian producers have experienced outages. Inventories are also being drawn down.
The shipments have increased the tonne-mile demand picture for LNG carriers — a situation exacerbated by ongoing delays for vessels wanting to transit the Panama Canal.
Brokers spoke about a frantic search for ships with charterers showing little interest in their specifications over availability. One said at least $150,000 per day had been paid on a steam turbine vessel this week.
Charter rates for LNG carriers were already riding in December and are showing no signs of weakening this month or into February as strong pricing and demand continues in Asia.
But market players said they expect the rate bonanza to start to slow from March as weather improves.
