Qatar has reserved its berths for its large haul of up to 151 LNG carrier newbuildings at a competitive price that should help reduce the risk to shipowners bidding on the business, according to Teekay LNG Partners.
Answering analysts questions on a first quarter results briefing, Teekay Gas president and chief executive officer Mark Kremin said the company has expressed interest in Qatar Petroleum’s tender for LNG newbuildings.
Kremin said there were “a lot of shipowners” invited – TradeWinds has reported that at least 37 received documentation – and ultimately the market may see many of them bidding as consortiums.
He added that not all invitees will likely bid resulting in a more selective number of offers.
Unbeatable
Kremin said the tender is “interesting” describing the landed cost of Qatar’s LNG at around $5 per MMBtu as “almost unbeatable”.
He said this cost comes a “really carbon conscious” process in the production of the LNG. “The carbon capture and sequestration of the project looks good,” he said.
Kremin highlighted the Qataris buying power and their timing.
“It looks like the Qataris have reserved [LNG newbuilding] slots at a decent price,” he said.
“If they do novate those to successful bidders at that price it should reflect in reduced residual risk to the owners.”
He added that the bids will not be due for a couple of months.
Carve-out
Kremin went on to answer on how the IMO's incoming Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII), which are both measures to cut greenhouse gas emissions, might affect the company’s fleet.
But he said that when the IMO delegates meet in June the industry might see “a carve-out” for LNG.
He explained that slowing the vessels down, which is one option for compliance with anticipated regulations, will result in burning cargo boil-off gas without using it as fuel.
Kremin said: “Perhaps the LNG space will get a some type of exemption or dispensation from starting [in] 2023 for anything steaming below boil-off or service speed rate."
But he even if LNG was not exempted the affects of the new rules are going to be “relatively insignificant” for the company given the fixed portfolio it currently has on its steam turbine LNG carriers.
Kremin, who sounded upbeat on the prospects for LNG demand, also referenced the company’s upgrade program for some of its fleet which is just getting underway during scheduled dry dockings.
This will include improving the reliquefaction on certain vessels and will run through this year and next.
