First-half LNG newbuilding orders surprise as options trickle in

At least 30 LNG carrier newbuildings were ordered in the first half of 2021, in a market that is seeing rising gas demand and an increasing number of dual-fuelled ships ordered.

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Of the 30 ships reported ordered by TradeWinds — and logged by those following this sector — almost all were confirmed against contracts with major charterers including French major TotalEnergies, US producer and trader Cheniere, Malaysian giant Petronas and Spanish utility Repsol.

The first quarter saw no speculative ordering but the number of LNG carriers contracted was more than expected by analysts, who forecast a quiet year on what is a relatively full orderbook and busy delivery schedule.

Of the first-half tally, one-third were for small-scale vessels or the so-called Medmax ships.

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Seven LNG bunker vessels (LNGBVs) were contracted during the previous six months, coinciding with what has been a long-anticipated rise in the number of LNG-fuelled vessels ordered.

Classification society DNV said 128 LNG-fuelled newbuildings have been inked this year alone.

Big names in LNG bunkering, such as Shell, were behind at least two of the orders for LNGBVs, but a further three appear to be speculative, reflecting the expected rise in demand for this specialist tonnage.

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In addition, Chinese traders Jovo and Shenzhen Gas ordered Medmax ships of about 80,000 cbm, best suited to the companies' short hop trades and their draught-restricted receiving terminals.

Speculative vessels

Towards the end of the second quarter, a fresh uptick in speculative ordering emerged, albeit for either optional vessels or those where contract prices were likely agreed in advance of the recent jump in prices.

Greek shipowner Dynagas added four of its specially designed 200,000-cbm LNG carriers at Hyundai Heavy Industries and compatriot Capital Gas is understood to have confirmed three outstanding optional ships.

Brokers pointed out that the vessels are options held by the owners. They are currently pricing LNG newbuildings at more than $210m, depending on their specifications, making optional slots priced in the mid-$190m compelling.

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A question mark still hangs over the 17 LNG newbuilding slots for the TotalEnergies Mozambique LNG project that has been delayed.

The second half has also started buoyantly with Celsius Shipping going on its second LNG order spree, snapping up three open berths at Samsung Heavy Industries, which are believed to have been negotiated when prices were lower. Other companies including Minerva Marine are said to have been tyre-kicking on LNG berths.

Options for energy major Shell and Petronas, along with the results of newbuilding tenders for LNG carrier tonnage for Adnoc Logistics & Services and Novatek are also expected to be decided.