Tor Olav Troim is bullish about the prospects for the rest of 2019 as newbuilding order books empty and the incoming IMO 2020 regulations threaten to disrupt markets.

In an exclusive interview with TradeWinds and sister magazine TW+, the Golar LNG chairman said: “I am very excited about the second half of this year. Quite frankly, for the last 10 years, ­nobody made any money in ­shipping.”

But he added: “Inefficiency is created by IMO 2020, and newbuilding backlogs look pretty low in most segments.”

Troim hinted that his frustration with the business lies with shipbuilding and specifically the tripling of yard capacity between 2004 and 2009, which reduced construction lead time for vessels.

Yard capacity

“That’s the problem I have with the shipping industry,” he said.

He is also bullish about LNG shipping’s prospects for 2019.

This week, Troim and Golar confirmed the company would be moving ahead with what is expected to be called “Cool Company” — the planned tie-up on tri-fuel diesel-electric LNG carriers between Golar, TMS Cardiff Gas and Awilco LNG.

Stepping in to speak on Golar’s results call, Troim said: “For [the] next two years, we know that LNG production coming on will outstrip the amount of new shipping capacity coming from the yards and thereby should lead to a tighter market in the two years to come.

“There is time now if any time to create a pure play LNG shipping company.”

He said LNG carriers will always be a core business for Golar, which has diversified upstream and downstream in LNG, but it is probably not the one that gives the company a good return.

“It is the core of our competence, and we will keep it, and we will keep the seafarers, and we will keep the operations, but I don’t think we need to own that much of it,” he said.

“You are going after the highest-­return business. You are not going after the lowest-return business. That is not typically what I would do, at least.”

He is less positive on the LNG carrier order book.

“I think it is ­crazy when people order 120 LNG carriers," he said. "If they are doing it at 10 times the Ebitda, I think it is the wrong type of business model. It is not proper return for proper risk.

“I’m talking as a kind of burned child here,” he added, reminding that Golar LNG ordered 13 vessels in 2010 to 2011.

“I think we learnt shipping the hard way. So while everybody is excited about ordering [LNG] ships these days, we are not.”

Golar's journey

Chronicling Golar’s journey from LNG shipping into floating storage and regasification units and on into floating LNG and ­power, Troim praised another shipowner for ­advancing technologies.

“The guy we have to thank a lot for this is [Exmar chief executive] Nicolas Saverys,” he said. “He was first with the FSRUs, FLNG and ship-to-ship transfer. He has done a lot of pioneering work for this ­industry.”

While Golar might not be heading for conventional LNG ship or FSRU orders, it remains engaged on FLNG, where Troim said it has an option on a second floater for BP and is talking to other ­developers.

On Avenir LNG, Golar’s venture into small-scale shipping with Stolt-­Nielsen and Hoegh LNG, he said this sector is growing at 15% to 20%, faster than the rapidly ­expanding LNG business overall at 10% — and he believes it is the time to invest.

This week, Golar revealed it is planning to develop small-scale distribution using an Avenir vessel from its FSRU, Golar Nanook, in Brazil.

And for anyone out there wanting to join the Avenir party, he said: “We are looking for a strategic partner on the gas side. If anyone is interested, please call [Avenir chief ­executive] Andrew Pickering.”

Asset insight

Troim also gave passing insights into other aspects of his Magni Partners businesses.

Of his newcastlemax venture, 2020 Bulkers, he called it “more of an asset play”, adding: “We bought ships at $44m. It is hard to lose money if you buy at that price.”

He described Borr Drilling as “a fantastic organisation”, saying it went from nothing to 16 rigs in ­operation within 18 months against contracts with energy majors and 99.4% up-time.

Magni’s access to capital is one of its key attributes, according to Troim.

“We raised $2bn to go after rigs,” he noted, when the banks were not ­interested in lending for the first two buys. “If you don’t have the reputation or credibility, you can’t get that money and you can’t do those deals.”