US LNG-producing giant Cheniere Energy has taken up the two one-year optional periods on three LNG carriers owned by John Fredriksen’s Flex LNG, extending the ships charters through to 2027 as charterers move to snap up tonnage in an ever-tightening market.
In addition, Flex and the arm of US company Cheniere Marketing International (CMI) have agreed new firm and optional periods on two of the vessels, which give the charterer the ability to extend the hire into 2033.
Detailing the agreement, Flex said CMI has declared the original one plus one-year optional periods on the 173,400-cbm Flex Endeavour (built 2018) and the 174,000-cbm Flex Vigilant (built 2021) and Flex Ranger (built 2018).
For the Flex Endeavour, the minimum firm extension period on the charter is 1,300 days from the first quarter of 2027 through to the third quarter of 2030.
CMI also has a 500-day extension option, which is declarable in the second quarter of 2024, that covers the period from the third quarter of 2030 to the first quarter of 2032.
Flex said: “In the event this 500-days option is declared, CMI will also have the option to extend Flex Endeavour for a further one-year period from Q1-2032 to Q1-2033.”
For the Flex Vigilant, the minimum firm extension period is 1,600 days, which would take the charter from the second quarter of 2026 to the fourth quarter of 2030.
CMI also has a 200-day extension option on this vessel, which is declarable in the third quarter of 2023.
This covers the period from the third quarter of 2030 to the second quarter of 2031 and if declared will give the charterer a fresh option to extend the hire beyond this to the second quarter of 2033.
There are no additional firm or optional periods for the Flex Ranger. But after the original options were declared under the agreement, the vessel is now due to be redelivered to Flex in March or April 2027.
No charter rate details on the option extensions being taken up by Cheniere were given.
Flex said the new agreement with CMI extends the aggregate remaining firm charter period on the ships from six years up to an additional 19 years in total.
Company chief executive Oystein Kalleklev, who pointed out that Flex has a total of five ships on charter to CMI, said: “With this agreement, CMI will continue to charter these three ships for an aggregate period of up to 25 years with a minimum period of around 20 years.”
In addition, he said there is about 6.5 years of minimum backlog from its 174,000-cbm Flex Volunteer (built 2021) and Flex Aurora (built 2020) with CMI, with an additional four years of optional backlog for these two ships.
The CEO said Flex is further increasing earnings visibility and following this agreement with CMI the company’s minimum contractual backlog will be about 63 years or about five years on average per ship.
The Flex Ranger becomes the company’s first open ship. “This means we can market Flex Ranger for new business opportunities as this ship has an earlier redelivery than the delivery slots that yards today can offer for a newbuilding,” Kalleklev said.
Corey Grindal, Cheniere Energy executive vice president for worldwide trading, said: “This extension will help us to continue to safely meet growing global demand for the cleaner, reliable energy provided by LNG.
“These large Flex LNG vessels are some of the most efficient available on the market and align with our efforts to continue to lower overall fleet emissions.”