LNG

Seatrium of Singapore, a leading global company in repairing, upgrading or refitting LNG carriers, has signed another favoured customer contract - this time with Teekay Shipping in Australia.

Seatrium said that this latest Teekay agreement was its first with a leading ship management company for the repairs and upgrades of a fleet of vessels under its Australia Defence Maritime Support Services Program (DMSSP).

The contract, which includes the refit of a series of vessels over the next two years, will see Seatrium collaborating closely with Teekay in joint planning, information sharing, and leveraging mutual experience to facilitate the successful execution of these projects.

The Singaporean company earlier in July 2024 signed an FCC with the Angelicoussis Group, the largest shipping line in Greece and one of the world’s largest privately-owned fleets with 141 ships operating under Maran Gas, Maran Tankers and Maran Dry.

Seatrium said that two-year contract with a one-year renewal option included the refit of 10 to 15 vessels per year comprising LNG carriers, tankers and bulk carriers.

Korean accord

This followed a previous FCC in May 2024 with a South Korean shipping company, Hyundai LNG Shipping, marking the first long-term strategic partnership agreement with a Korean LNG transporter for the repairs and upgrades of its LNG carriers.

That contract included the refit of a series of LNG carriers over the next two years.

The Teekay Australia accord was signed between Tony Armstrong, Managing Director of Teekay Australia, and Alvin Gan, Executive Vice President, Repairs and Upgrades at Seatrium.

Seatrium is attracting global shipping and energy companies because of its offering of one-stop repair and upgrade solutions for all types of vessels and offshore structures.

We develop strong relationships with our clientele to offer vessel owners highly customised and proactive solutions for all vessel repairs and upgrades, including energy efficiency.

Strategic partnership

Peter Iuliano, Head of Operations of Teekay Shipping Australia, said this strategic partnership marked a significant move for the company.

“By collaborating with Seatrium, we aim to enhance our operational efficiency and instil the highest standards of quality, safety, and environmental sustainability in the maintenance of our specialised vessels,” explained Iuliano

“Our first vessel under the Favoured Customer Contract agreement scheduled for repairs in Seatrium’s Admiralty Yard in Singapore is in July 2024, with six more dockings planned. We look forward to a fruitful and successful partnership with Seatrium,” he declared.

Seatrium executive Gan said that his company was delighted to be chosen as the strategic partner for Teekay’s Australian operations.

“This agreement not only highlights our expertise in specialised repairs for naval and maritime security related projects, but also demonstrates our dedication to delivering excellence and customised solutions to our partners,” Gan stated.

Seatrium of Singapore, a leading global company in repairing, upgrading or refitting LNG carriers, has signed a favoured customer contract with the Angelicoussis Group, the largest shipping line in Greece and one of the world’s largest privately-owned fleets with 141 ships operating under Maran Gas, Maran Tankers and Maran Dry.

Moody’s Investors Service, the US ratings agency, said in a report into liquefied natural gas that Chinese demand in 2024 will be similar to last year and while European gas markets remained resilient the region’s reliance on LNG could increase price volatility.

QatarEnergy, the leading global LNG producer and with three growth projects being developed has signed time-charter party (TCP) agreements with Qatar Gas Transport Co. (Nakilat) for the operation of 25 conventional-size LNG vessels as part of the second shipowner tender under Qatar’s LNG fleet expansion programme.

The agreements were signed in Doha by Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs and President and Chief Executive of QatarEnergy and Abdullah Al-Sulaiti, the CEO of Nakilat.

A statement said that 17 of the 25 LNG vessels are being constructed at the Hyundai Heavy Industries (HHI) shipyard in South Korea, while the remaining eight are being constructed at Hanwha Ocean, formerly Daewoo Shipbuilding and Marine Engineering, also in South Korea.

“These agreements firm up last month’s selection of Nakilat as the owner and operator of up to 25 conventional-size LNG carriers, underscoring our continued confidence in Qatar’s flagship LNG shipping and maritime company,” said Al-Kaabi.

“This is a testament to Nakilat’s world-class capabilities as well as to the significant contributions of Qatari listed companies to our country’s national economy,” he explained.

“The agreements we signed today play an important role in implementing QatarEnergy’s historic LNG shipping programme, which will cater for our future requirements, as we move forward with the expansion of our LNG production capacity to 142 million tonnes per annum by 2030,” Al-Kaabi stated.

Each of the 25 vessels will have a capacity of 174,000 cubic metres and will be chartered out by Nakilat to affiliates of QatarEnergy pursuant to the 15-year TCP agreements.

Liquefaction surge

Qatar announced at the end of February 2024 that it was going ahead with a third huge expansion called the North Field West (NFW) project to take overall output to 142 MTPA by the end of the decade.

The NFW joint venture will add to production expansions already under way with the North Field East (NFE) and North Field South (NFS) LNG projects.

The current NFE ramp-up of QatarEnergy’s liquefaction capacity will take production from 77 MTPA to 110 MTPA by 2027.

The second phase, called the NFS venture, will further increase the LNG output capacity from 110 MTPA to 126 MTPA.

The new NFW project will be developed to take production to 142 MTPA.

Overall the three expansions will put into production a total of eight LNG mega-Trains, each with nameplate capacity of around 8 MTPA and total additional nameplate capacity of just over 64 MTPA.

Hanwha Ocean, the South Korean shipbuilding company formerly known as Daewoo Shipbuilding & Marine Engineering, is said to be considering a move into the offshore platforms and drilling sector while continuing to increase its LNG carrier newbuild backlog.

Korean regulatory information shows that Hanwha Ocean has registered two new trademarks, suggesting expansion into the maritime energy drilling sector as the nation’s companies seek more profitability.

The registrations concern “Hanwha Drilling” and “Hanwha shipping”, though the Group has yet to disclose its intentions.

Hanwha Ocean, formerly DSME, was acquired by the Korean conglomerate, the Hanwha Group, in 2022 and was rebranded as Hanwha Ocean in May 2023.

Two Japanese companies have just filed an order for an LNG carrier to be built at Hanwha Ocean’s Geoje Shipyard in South Korea.

Tokyo Gas, the utility company and LNG importer, said its Tokyo LNG Tanker Company concluded a long-term charter contract with Mitsui OSK Lines (MOL) for this newbuild vessel ordered by MOL.  

MOL LNG fleet

MOL has a growing energy shipping business with a fleet including over 150 tankers for oil and other products and about 90 LNG carriers.

Tokyo Gas said that the charter agreement meant that the company had 11 LNG carriers fixed under a long-term charter.

The utility said that the MOL-owned newbuild would have 174,000 cubic metres capacity and be delivered in 2026.

The carrier will have a service speed of 1.5 knots and would be 295 metres in length and a beam of 46.4M.

“The Hanwha Ocean-built vessel will be equipped with the state-of-the-art MAN Energy Solutions engine (ME-GA) with improved fuel consumption efficiency and is expected to significantly reduce greenhouse-gas emissions compared to conventional LNG carriers,” said the utility.

“From 2026, the vessel will be utilised for TG Group’s LNG procurement and LNG trading,” it added.

“With this charter contract, the TG Group will continue to promote stable energy procurement while giving further consideration to the environment amid the changing surroundings of the global LNG market,” it added.

Flex LNG, the Norwegian shipping company with a fleet of 13 vessels and several chartered to some of the largest market players, reported a halving of fourth-quarter net profits and forecast a challenging next two years for the sector with more ships in the global fleet.

“We see a somewhat more challenging freight market as there are more ships for delivery compared to the expected new export volumes,” said Øystein Kalleklev, Chief Executive of Flex LNG Management whose charterers include Cheniere of the US and UK major BP.

“Hence, we think Flex LNG is very well positioned as we have 94 percent charter coverage for 2024 and 50 years minimum firm charter backlog, which may increase to 71 years if all charterer’s options are extended,” Kalleklev explained.

Fuel savings

“Additionally, our fleet consists entirely of large LNG carriers fitted with the most modern two-stroke propulsion system resulting in significant fuel savings compared to older generation tonnage,” the CEO added.

Flex earnings showed a halving of fourth-quarter net income to $19.39 million from $41.47M in the same three months of 2022.

Annual net profits dropped to $120.04M from $188.04M in the 2022. Vessel operating revenues in 2023 came to $371.02M versus $347.91M in the previous year.

“The increase is due to a higher proportion of our fleet on improved longer term fixed-rate contracts as well as a relatively stronger spot market compared to 2022,” said Kalleklev.

“This is offset by scheduled dry-dockings of the vessels ‘Flex Enterprise’, ‘Flex Endeavour,’ ‘Flex Ranger’ and ‘Flex Rainbow’ in 2023, resulting in 77 off-hire days,” the CEO said.

Vessel expenses for the fourth quarter came to $97.2M compared with $94.6M for the third quarter 2023.

Average Time Charter Equivalent (TCE) rates amounted to $81,114 per day for the fourth quarter versus $79,207 per day for the third quarter 2023.

Revenues

“We guided that our revenues would increase from $348M in 2022 to approximately $370M in 2023 and we delivered revenues of $371M in 2023, while revenues for the fourth quarter came in at $97.2M in line with quarterly guidance,” Kalleklev stated.

In an overview the LNG fright market, Flex noted that there were 630 live ships in the fleet at the end of 2023, with 210 steamers still in service.

“An additional 33 newbuilds were added to the fleet last year while 68 newbuild orders were placed, representing a significant decrease from the 145 orders in 2022 and 69 newbuilds are scheduled to be delivered in 2024, with seven uncommitted for long-term contracts,” Flex said.

Flex also stated that newbuild prices for the base specifications have “somewhat tapered off” from the peak of $265M, with ship brokers quoting $258M to 262M as of early February 2024.

The London-based Joint War Committee, which advises Lloyd’s marine insurance underwriters on risk, has expanded the portion of the Red Sea that is considered to be part of the riskiest waters for insurance purposes following continued attacks by Iran-backed forces on global shipping traversing the Suez Canal after passing Yemen.

Shipping analysts said that the cost of insurance cover has surged almost 10-fold since the missile attacks from Iran-supported Houthti rebels in Yemen first began as a show of support for the Hamas terror group by Iran using its proxies in Yemen.

The latest liquefied natural gas prices are largely unaffected by a market currently experiencing a supply glut because of mild weather in Europe and ample storage levels and global supplies.

The Dutch Title Transfer Facility price was quoted at around $11.185 per million British thermal units on December 19, its lowest level since 2021 and with the UK National Balancing Point price at $11.240 per MMBtu.

The Japan Korea-Marker price for spot cargoes sold to North Asia was at an unchanged level of $15.197 per MMBtu, a bit less than last week. The JKM was also moving to the February front-month with new lower values of $12.372 per MMBtu.

Analysts said that with Iran leading Yemen’s Houthi rebels in their missile attacks on shipping, the greatest price risk for LNG, oil and other fuels is an attack by Iran on shipping in the Arabian Gulf that could lead to the Shaat-al-Arab waterway route in and out of the Gulf being closed.

This would lead to the cut off of about one-fifth of global LNG supplies that is currently supplied by Qatar and the United Arab Emirates.

Possible outcomes

The analysts added that a Gulf shipping shutdown could happen if Iran sucker-punches an innocent vessel in the Gulf or Iran is itself is sucker-punched by Israel.

Iran is also heading for severe sanctions for its proxy war on global shipping that is proceeding because part of the Iranian armed forces in the Revolutionary Guard has apparently gone rogue. Analysts stated that the overthrow of the Tehran regime and the freeing of the long-suffering Iranian people may be nearer that most people currently could imagine.

A missile fired by the Iran-backed Yemeni Houthi rebels has just hit another cargo ship in the Red Sea near the strategic Bab el-Mandeb Strait leading to and from the Suez Canal, following other attacks in previous days against various vessels and where Iranian ships posing as legitimate cargo vessels were confirmed as acting as command ships for the attacks.

The containerships and tankers owner Maersk, the world’s biggest shipping company, and Germany’s Hapag-Lloyd as well as BP Shipping of the UK and many other companies, have stopped their fleets from taking the Bab el-Mandeb Strait past Yemen to or from the Suez Canal.

The BP LNG and tanker fleet would be particularly vulnerable as they mostly have the word “British” in their names which would be seen to attract terrorism unless there was a Royal Navy vessel nearby.

Among the BP LNG fleet, the “British Listener” was lifting a cargo from the Mozambique FLNG hull “Coral Sul” offshore the southeast African nation so is well placed to deliver into Asia far from the Red Sea and would be likely heading for South Korea.

Other basins

The BP LNG vessels are mostly doing shuttle deliveries from Mozambique to Asia as BP has purchased all of the offtake from very first but not the last Mozambique project. Some of BP's LNG carriers are operating in the Asia-Pacific market.

The “British Contributor”, for example, is scheduled to discharge a cargo on December 25 at the Sendai import terminal in Japan after lifting it from the Northwest Shelf plant in Western Australia.

One of the few LNG carriers in the East Mediterranean on December 19 was the “BW Tulip” that had just delivered a shipment to the Marmara Ereglisi import terminal in Turkey and was heading through the West Mediterranean into the Atlantic and with the destination given as the Freeport plant in Texas, according to shipping data.

Another LNG carrier in the West Med off Gibraltar was the “Diamond Gas Metropolis”, with 174,000 cubic metres capacity. This ship was now heading for the UK Isle of Grain LNG import terminal near London with a cargo lifted from the Cameron plant in Louisiana on December 8.

Most carriers using the Suez Canal would come from Qatar on the East-to-West route for Europe while those going West to East would be rarer and carrying cargoes stored off a port like Gibraltar and delivered to Italy, Spain or Turkey and very unusually now India via the Suez Canal or further afield via Suez.

That’s as the norms of LNG carrier and other energy and container shipping navigation have been upended by a year of chaos and sky-high tariffs at the Panama Canal caused by the drought in the region and low water levels in the Gatun Lake that is part of the Canal water system.

Gunvor Group, the Swiss-based global commodities firm and liquefied natural gas trader, has expanded its shipping fleet by chartering four modern LNG carriers being constructed in China for Celsius Tankers.

GasLog LNG Partners with an operational fleet of 12 vessels reported annual profit of $119 million on revenues of $379M amid a strong charter market with signs pointing to very positive prospects for the rest of 2023.

South Korean LNG shipbuilder, Daewoo Shipbuilding and Marine Engineering (DSME), said it cancelled the last of three LNG carrier orders from 2020 to serve the Yamal LNG export facility in Arctic Russia, operated by natural gas company Novatek.