The 2012 World Gas Conference in Kuala Lumpur has heard that more than 80 percent of new LNG output coming on stream from now until 2017 is already under long-term contract, while short shipping capacity is the main constraint in the LNG value chain.
"Quite a few new LNG contracts were agreed in 2011, particularly for the Australia projects," according to a report on the natural gas business presented at the WGC gathering by the International Energy Agency.
The IEA report also pointed out that LNG production in Algeria is now not tied by "any long-term contracts and is likely to be looking for the high-priced markets, to the extent that shipping capacity allows it."
The IEA report said that while there were 380 LNG carriers in the world fleet, and another 70 vessels were under construction, there was a shortage of shipping capacity leading to very high charter rates.
"The daily chartering rate of LNG tankers has been skyrocketing, indicative of the shortage of spare tanker capacity.
“Rising rates were mainly driven by the higher spot LNG demand in Asia after the Fukushima disaster and reached a peak in the first quarter of 2012, with charter rates as high as $150,000 per day.
"While the rise in LNG spot prices slowed towards the end of 2011, market players were eager to secure near-term LNG tanker capacity in preparation for the foreseeable tight freight market in 2012," the IEA said.
