Flex LNG has fixed one of its newbuildings to Gunvor for up to 10 years, which marks the first long-term charter for the John Fredriksen-controlled shipowner.
The charter with Clearlake Shipping — the shipping arm of the commodity giant — includes a firm five-year period for the 173,400-cbm LNG carrier.
Financial terms were not disclosed, but New York and Oslo-listed Flex LNG said the time charter will have “elements of variable rate of hire” across the charter period.
The charter is due to start following delivery of the vessel — to be called Flex Artemis — from South Korea’s DSME in August 2020.
Flex LNG Management chief executive Oystein Kalleklev noted that Gunvor is a top-tier trader and the market’s most active LNG carrier spot trader.
"This charter is also in line with our strategy of delivering incremental higher level of backlog as we are growing our fleet of vessels on the water," he said.
Kalleklev told TradeWinds the newbuilding was made for these type of contracts.
“On this ship, we decided to invest $6m in a full reliquefaction system, which can cool down the boil-off gas and put it back on the tank instead of burning it as fuel,” he said.
"This gives the charterers huge operational flexibility and can be very valuable."
"During the last year we have built a first class organisation which received Document of Compliance certificates last month. On Saturday, we took over the technical management of our first ship, Flex Enterprise, and during the next couple of months we will also take over management of our remaining ships."
He said the company is pleased to see the fruit of that labour with its first long-term charter deal.
Utilisation secured
Fearnley Securities said it expected the base rate to be $40,000 per day, not far from Flex’s cash break-even of $47,000 per day, and the ceiling to be $120,000 per day, linked to spot rate assessments.
"The main benefit with this deal is we see it is securing utilisation," analysts Espen Landmark Fjermestad and Peder Nicolai Jarlsby said.
"This year, spot utilisation has been below 50% in Q1 to Q3, and with the LNG market looking structurally tougher in 2021 and onwards, firm utilisation remains key."
Flex remains its top LNG pick.
“Gunvor is continuously searching for ways to meet our customer’s requirements in a safe and efficient manner,” said Kalpesh Patel, co-head of LNG at Gunvor.
“This charter builds on our already deep and successful relationship and we look forward to taking delivery of one of the most technologically advanced LNG vessels in the world to serve our long-term portfolio.”
The Norwegian shipowner signalled a focus on long-term time charters for its next newbuildings during its recent third quarter conference call.
Flex LNG has four LNG carriers operational, with five 174,000-cbm ships due from DSME and Hyundai Samho Heavy Industries in South Korea next year, then two more in 2021.
Last week, the LNG carrier owner sealed a huge new vessel financing deal with firm commitments from a syndicate of 11 banks and the Export-Import Bank of Korea (Kexim) for a $629m facility to fund five of its newbuildings.
During 2017 and 2018, Flex LNG raised $629m in equity to finance its fleet growth from two to 13 LNG carriers.
