Major players in the booming LNG market have called upon shipowners to slow speculative orders in the sector.
Executives from Teekay LNG and GasLog urged restraint at the end of a year which has seen 40 to 50 new LNG vessels contracted.
Mark Kremin, chief executive of Teekay LNG, told Nordea’s shipping and offshore conference in London: “Shipowners are like miners.
“Once they find a little bit of gold they dig a big hole.
“I’m not sure if the 50 ships we have on order this year is big enough to be that hole, but I think we need to slow the pace.”
Paul Wogan, chief executive officer of GasLog, said the LNG market was set fair for a strong period in the next two and a half years.
However, given a lack of final investment decisions on new LNG projects during the past years, demand would plateau from 2021 for a period.
Drawing parallels with the order rush in 2012, which killed the last upcycle, Wogan said history could repeat itself.
Wogan told the event he relayed his concerns to an industry veteran, who warned him: “‘Paul, unless 75% of the world’s shipowners have had a brain transplant they are going to overbuild it’.”
He explained: “If we continue to order speculatively into this market we are going to kill it.”
Jon Skule Storheill, chief executive of Awilco LNG, agreed on the danger of overbuilding.
He said: “We are going to build it to pieces eventually. But we will have a good few years ahead of us.”
