Energy security concerns raised by the Ukraine war are pushing charterers to look into locking up LNG carriers on multi-year deals.
During the LNG carrier owner panel at Capital Link’s International Shipping Forum, held online on Tuesday, Flex LNG chief executive Oystein Kalleklev said charterers are asking to fix ships for longer and longer durations, given the sector’s high rates.
“When we get elevated term rates for 12 months, then, of course, people are asking, ‘What if I do three years?’ Maybe they don’t like that number either these days, so we’re getting to five,” Kalleklev said.
“We’re seeing more inquiries this year for time charter durations of five, even up to 10, years. Usually, that’s not something you see in a spot market, where spot markets are at, let’s say, $60,000 and you can more than double that for a 12-month time charter.”
Rates hit $300,000 per day in December, panellists said, before crashing to around $30,000 per day ahead of the seasonally weak northern hemisphere spring and summer.
But Russia’s invasion of Ukraine on 24 February has pushed European buyers to look elsewhere for cargoes, bolstering rates and pulling in investors.
“The scramble toward energy security and securing capacity from the few independently owned ships this year has caused term rates to be significantly higher,” said Karl Fredrik Staubo, chief executive of Golar LNG.
He said the drive for period charters is helped by the lack of independent shipowners and that the incoming Energy Efficiency Existing Ship Index and Carbon Intensity Indicator environmental regulations are pushing some to grab high-quality tonnage.
