GasLog has secured long-term employment for another of its LNG carrier newbuildings, this time from a Spanish utility company.
Endesa has booked the 180,000-cbm GasLog Warsaw for a firm period of eight years, commencing in May 2021, plus two optional extension periods of six years each.
The newbuilding is expected to be delivered from Samsung Heavy Industries in July this year, when it will begin trading in the spot market.
“Before commencing its long-term charter to Endesa in May 2021, the vessel will be available during a period when we expect the spot market to be strong, especially during the 2019/2020 and 2020/2021 winters,” said Paul Wogan, GasLog’s chief executive, in a release.
“The combination of the vessel’s size, highly efficient LP-2S propulsion and industry-leading low natural boil-off rate of 0.07% all combine to produce an extremely competitive transportation cost that should make it particularly attractive to potential charterers,” Wogan said.
The shipowner did not disclose the rate of hire for the charter, but said it is “in line with mid-cycle rates”, which the company puts at $70,000 to $75,000 per day, a spokesman told TradeWinds.
Mike Webber, an analyst at Wells Fargo, said given the eight year charter, plus options, and the the advantageous forward start, the contract "looks like a very good deal for GasLog".
“If the rate is really in the $70s, we think Gaslog is effectively, and preemptively, top-ticking the expected 2020/2021 peak in LNG without really having to pay for it," he said.
“In that sense, we're a bit surprised competition for this kind of deal didn't drive the rate into the high $60,000s, although there's enough ambiguity at actual economics may be more pedestrian than they appear.”
Once GasLog Warsaw commences its charter to Endesa, GasLog Partners will have the right to acquire the vessel.
This will increase GasLog Partners’ potential dropdown pipeline to 12 LNG carriers with charter lengths of five years or longer.
Earlier this month, Warsaw’s sister ship GasLog Gladstone commenced a 10-year charter to Shell when it was delivered from the Samsung yard.
AIS data shows the vessel is currently en route to Gladstone, Australia, from where LNG is exported from the Shell-operated QGC liquefaction plant on Curtis Island.
These new charters leave GasLog with one uncommitted vessel remaining in its newbuilding programme, Hull 2274, which will be delivered from Samsung in Q2 2020.
A spokesman for GasLog told TradeWinds the company intends to secure employment commitments for the vessel before it is delivered, and said the recently reported charters demonstrate its ability to do so.
Ben Nolan of Stifel says the company has eight newbuildings for delivery up until 2021, of which only one does not have a time charter in place.
He suggests the company could potentially seek time charters for some of its five semi-modern TFDE vessels currently trading in the spot market.
This story has been updated to include comments from analysts.
