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05 June 2023 - Year XXVII
Independent journal on economy and transport policy
15:59 GMT+2
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FORUM of Shipping
and Logistics


The LNG shipping market
in 2000

 
A new millenium

top

A new millennium arrived and a new era in LNG began. As a company that depends on shipping for its livelihood we do have a natural bias towards shipping and, for this, we make no apology, but the year 2000 saw the LNG industry recognition that LNG shipping is the most important tool in the modern LNG industry. Let us not forget that the only reason that US$ 4 billion are invested in liquefaction plants, is to facilitate the transportation of methane by sea.

Our final comment in our review last year recommended the move to build speculation ships. It happened that two first class owners, Bergesen and Exmar, did just that: we thank them for such a move. The fact that two independent shipowners (i.e. non project-related) made these decisions, is a clear indication that this industry is changing.

 

Flexibility

top

We have long advocated that flexibility is the keyword for LNG in the modern world. Deregulation in the various energy sectors that produces immense competition has attracted new players. These new players however, are energy traders who like to trade, but this word "trade" has not really existed in the traditional LNG dictionary. Trading demands flexibility: flexibility in quantity, timing, destination, client, and shipping. LNG shipping also needs a flexible approach and, for this, we mean departure from the attitude that LNG is synonym of high risk. Perhaps it was a little risky in its infancy (every new idea is), but at the young age of 35 it is no longer a baby and certainly not high risk. In today's energy sector, gas is the sexy commodity that everybody want to go with !

 

Pricing top

The oil price has risen this year to US$ 35 per barrel (but has settled back to US$ 25-27) and this rise had an impact on gas prices, as if it was linked to the oil price. Hence the Japanese market saw its LNG price rise to a high level of US$ five to six m.btu(1). However, the new "American" market has seen the Henry Hub price peak at US$10, with a diurnal variation of US$ 1. This is a market that traders yearn for but one that LNG players (and here we include the financiers) don't understand.

 

(1) btu = British thermal unit (0.252 kcal)
 

Shipping top

We want flexibility. Pricing indicates that trading is viable but where are the ships? Our brave shipowners, who ordered in speculation, have subsequently secured traditional 20 years charters and thus there was no "breaking the mould". Traders need a supply of ships and production plants need to know that there is a supply of ships that will arrive to lift the cargo. This scenario will sound familiar to the oil and coal industry, who are after all the competitive fuels in the energy sector.

There are several traditional shipowners, located in the Mediterranean, who are taking a close look at this industry and it is our opinion that they will not have to spend too much time on this subject before realising the tremendous opportunities that exist. Their main advantage will be flexibility, their experience with traders and their ability to do what they know best: running ships.
 

Projects top

There was one new project that started this year, Oman LNG but no contracts were signed for proposed plants. However, we have seen renewed activities in Iran, Yemen, Norway, Egypt, Venezuela and Angola so that 2006 could be a very interesting year, as this is the time when these are expected to be on stream.

Atlantic LNG (Trinidad) confirmed the next phase of expansion with two new trains whilst North West Shelf (Australia) and Malaysia LNG are very close to finalising their expansion programmes.

The USA will soon have four receiving terminals in operation (by 2002) and no doubt will have expansion plans approved for the two to be re-opened, Cove Point and Elba Island. Everett in Boston was sold by Cabot to Tractebel, whilst Cove Point was sold to Williams which raises the question whether Duke sold their LNG interests at Lakes Charles too soon to CMS energy in 1999.

Europe has been attracting interest with its main activity focused on the Iberian Peninsula. The Spanish market has been opened up and it looks as if there will be two new terminals, one in Bilbao and the other at El Ferrol. Portugal is constructing a new terminal near Sines which should ultimately free up some capacity at Huelva and this news should interest traders.

Turkey will have a second receiving terminal, in Aliaga, ready by September 2001. But as yet there is no information on where the LNG will come from or where the gas will be sold. This terminal is under construction independently from Botas, the state owned energy monopoly, and how it will be utilised is still uncertain. However, what is clear is that the Turkish market has a need for the new facility.

India continues to test the patience of many LNG sellers as the year 2000 has passed without a decision on where their second LNG terminal will be sited (Enron has the first receiving terminal in Dabhol that should receive its first LNG in 2001).

Nigeria LNG is actively marketing sales from its next planned expansion of trains four and five. The market in the Atlantic Basin would clearly seem to be the most attractive one at the moment. There is also a rumour that Nigeria may get a second LNG project (start up +2006) that will have partners different to those involved in the first project, most likely Exxon, Chevron and others. This second plant will probably be located offshore.

Indonesia has had a quiet year with life basically reverting to normal, now that Korea is once again lifting its required quota. The price of the product has also returned to pre-1997 prices well assisted by the rise in crude prices. TotalFinaElf continues to seek buyers for its gas to enable a new train to be built but for the moment there are no developments. Perhaps they are looking forward to the idea of a new receiving terminal on the West Coast of North America that would bring the US market into the commercial reach of South East Asia.

Qatar, with its two plants of Qatargas and Ras Gas in full production still hopes to be the biggest LNG production plant in the world with expansion plans in an advanced stage. No doubt the pressure of a green field plant starting in Iran using the South Pars field will hasten some decision making.
 

The fleet top
lng fleet

There were 113 ships at the end of 1999 but with 14 ships delivered in 2000 there were 127 in December 2000. The total capacity is 13,569,049 cbm comprising of:

Six new "Moss-type" ships were added and eight 'membrane-type', bringing the fleet distribution to 67 "Moss design" and 54 'membrane type'.

Although 2000 was a busy year for ship deliveries, there was significant activity in ship orders. A total of 22 ships were ordered and there are a further seven optional vessels. Perhaps what is really interesting in this orderbook is that there were only five ships ordered by sellers, comprising one for Nigeria LNG ordering its third ship from Hyundai Heavy Industries and Malaysia ordering a further four. All of the others were private shipowners or gas buyers. Tokyo Gas has ordered two ships from Kawasaki, and Tokyo Electric one ship from Mitsubishi. Shell and BP also entered the market with orders for two ships each plus options for a further three each. However, the real event of the year was the speculative orders placed by Exmar and Bergesen (nice to know someone read our report last year!). Exmar have since found employment of their first ship with Enron, whilst Bergesen recently fixed their ship to Tractabel (ex. Cabot). Both of these charters are for 20 years.

2000 saw the arrival of three new LNG owners in Spain. Elcano, Tapias and Marpetrol / Knutsen who have ordered new ships from a new group formed by the merger of Bazan and AESA (now re-branded as Izar), to add to the list of 13 yards able to build LNG ships. The first Spanish ship is due in 2003 and will be a "membrane type" ship. The list of yards building ships is set to grow again next year but we will have to wait to see how negotiations develop.

The not so good news (from the shipowners point of view) for 2000 was that the wave of new orders for all types of vessels has resulted in the ship prices rising again. The new LNG ship price hit a floor of about US$ 143 million in March 2000, but it has now returned to about US$ 165 million for vessels built in Korea. If prices can stabilise around this level we should see some more ships ordered over the next year, speculative maybe, but if 2000 is an example, anyone who orders a firm ship does not need to wait long to find employment for it.

The 'Mystic Lady' was renamed the 'Hoegh Galleon' and was fixed to Enron for 17 years. With this firm business the owners embarked upon major refurbishment work on the ship and it should have been ready by November. Unfortunately, it has been delayed until March / April 2001 following a fire in one of the void spaces whilst undergoing repairs in Singapore.

The Osprey ships that are under charter to British Gas have been performing well and are under great demand. The high gas prices in the USA have resulted in spot charter rates reaching as high as US$ 150,000 per day, rates which must be pleasing some shareholders.

The oldest vessel in the world LNG fleet is now 35 years old (still on charter to Enagas) and there are 46 ships over 20 years old.
 

The spot market top

Well it has still not truly arrived but the number of transactions on short term deals has increased significantly. The CMS terminal in Lake Charles is set to have received a total of 55 cargoes in 2000 alone. CMS, Duke, Enron and El Paso (although their first cargo arrives Jan 1 2001) have all moved cargoes into the United-States. Coral Energy have again been active but Gaz de France is perhaps the surprising entity this year which has seen it moving cargoes on the 'Edouard LD' from Qatar : this a vessel that has spent its entire life trading between Algeria and France. In December the same vessel crossed the Atlantic with a cargo sold to El Paso and will perform a second soon after.

The high gas prices in the United States have encouraged activity in the longer hauls away from the traditional fixed routes. However, even without the high prevailing prices the sellers are now firmly aware that there is a good market where excess volumes can be moved. As the other terminals in the United States open up the opportunities to continue to move gas in that direction will improve. Where there is volatility in the pricing we will see the energy traders desperate to participate with LNG cargoes. At the moment we are not aware of any gas buyer who has not onsold his LNG cargo, as soon as he has signed the purchase contract. However, where we have seen the volatility in the Henry Hub price, it will not be long before we see some LNG cargoes changing hands en route. LNG does pose a problem here, in that you never know how much cargo you will receive due to boil-off, but this can be addressed by only trading some of the molecules and not the entire cargo.

If the trade can develop along these lines the true spot market will arrive, but the shipping will need to be created. Could we have a pooled fleet offering coa-type contracts? Perhaps and we would like to see it happen, although who will participate remains to be seen. We are aware that some large shipowners are looking at this scenario and we would certainly like to encourage large operators such as A P Moller to reassess their view on LNG shipping. A real challenge would be to convince some of the other old pioneers such as P&O and Geogas to re-enter this arena, although their memories may be too good to take such steps.

The LNG market is truly global with cargoes moving east and west. Australia, and Malaysia have sold cargoes into the United-States with Oman and Qatar selling into Europe. Whether buyers obtain full flexibility on destination is perhaps the biggest challenge for the future, but if they do it will greatly assist the spot market for the traders. Imagine a trader buying a cargo from Oman and taking his ship through the Suez Canal. He can try to sell to Turkey, continue west and tempt Greece, whilst still talking to Italy. France is the next opportunity followed by Spain and then if still no luck in the Mediterranean just keep checking the Nymex price in the United-States. If successful in selling in the Mediterranean his vessel can then be well placed to lift a cargo from Algeria or Egypt before returning to the Middle East Gulf area.

There are certainly some interesting years ahead.
 

Conclusion top

We have been tempted to repeat our conclusion from last year which is still valid, especially our view on speculative ships, but that is not in keeping with the innovations in this industry.

Instead we would suggest that as the industry is going through a transition period that will leave a permanent mark. We believe that time is right to try and move away from the staid, and thirsty, steam turbine technology as propulsion. Diesel electric has been discussed for many years but now that the passenger ship industry has embraced gas turbines the LNG industry should perhaps do likewise.

There have been brave decisions made this year with speculative ship orders and a speculative terminal (Turkey). New players are arriving into this industry and at least one 'old' one has re-entered (El Paso) so that LNG is constantly hitting the headlines.

This industry should no longer be considered as specialised but should in fact be recognised as "special" and with this re-branding more new players will be encouraged rather than discouraged as was the case when "specialised" was the brand name.

And last but not least, with a re-branding perhaps our friends in the financial institutions will reassess the financing risks on our speculative new gas turbine vessels, which will truly be "special ships". LNG Shipping Solutions(2) will be the way for the future developments in this industry.

 

(2)j/v between BRS and Clarksons

 




Shipping and Shipbuilding Markets in 2000

I N D E X

›››File
FROM THE HOME PAGE
Fraudulent mechanism for tax evasion and tax evasion implemented by a paved logistics company
Pavia
Employees 138 irregular workers and VAT evasion and direct taxes for more than 1.6 million
Japan's ONE took delivery of its first 24,000-teu container ship
Kure
Another five ships of the same capacity built by Imabari Shipbuilding and Japan Marine United Corporation will follow.
Switzerland will subsidize the travelling motorway between Fribourg and Novara until 2028
Bern
Measures will be introduced to make the Swiss merchant naval flag more attractive
FEPORT discussed the effects on ports and terminalists of EU climate rules
Saintes Maries de la Mer
Highlights the need for European governments to transpose the minimum corporate tax directive to avoid distortions caused by tonnage tax
In 2022, combined European transport marked a slight decline.
Brussels
Historical record of national volumes, while international traffic has decreased by -0.5%
An engine failure of an oil tanker in the Suez Canal has not stopped traffic in the waterway.
Ismailia
The "Seavigour" transports crude from Russia to China
Renewed the national contract of the mowers and barcaioli
Rome
Average economic increase of 175 euros
Renewal of the concession to PSA Venice
Venice
It will have a duration of 25 years. A planned investment of 78.6 million euros and a traffic growth of up to 500mila teu. Concession to Veneta Cementi
For its own decarbonisation, shipping does not have to rely too much on e-fuel
For its own decarbonisation, shipping does not have to rely too much on e-fuel
Copenhagen
The Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping warns to take into account the future availability and prices of electro-fuels
EU Commission presents five legislative proposals on maritime safety and prevention of marine pollution caused by ships
Brussels
The aim is also to align European standards with international regulations
A quarter of Russian companies are in danger of disrupting production for the difficulty of receiving goods from abroad
Moscow
The first vice president of the Center for Strategic Research in Moscow
Truckers denounce the blocking of actions to improve the operation of trucks in the port of Spezia
The Spezia
Perhaps-they accuse the trade associations-it is the will to maintain the status quo
L'ultima lettura del Goods Trade Barometer della WTO segnala una ripresa che però potrebbe essere assai accidentata
The latest reading of the WTO's Goods Trade Barometer signals a recovery, but one that could be very bumpy
Geneva
Positive signals come from export sales orders
L'ultimo rapporto di AGCS evidenzia la notevole diminuzione della perdita totale di navi
The latest GATS report shows the significant decrease in the total loss of vessels
Johannesburg/London/Madrid/Munich/New York/Paris/Rotterdam/Singapore
In 2022 the number dropped by -36%. Sinking, fire/explosion and collision are the most frequent causes of accidents
Port of Livorno, interdicted four entrepreneurs and three companies
Livorno
Seized more than 8mila euros to a port authority official
Le Aziende informano
La Ant. Bellettieri & Co., presente da più di 140 anni nel Porto di Civitavecchia, opera nella logistica portuale e nell'intermodalità mare, ferro, gomma
L'elvetica Accelleron ha acquisito Officine Meccaniche Torino
Switzerland's Accelleron has acquired Officine Meccaniche Torino
Baden
The Rivoli-based company is a leading manufacturer of injection systems for marine engines
Grimaldi orders two more new Pure Car & Truck Carrier Ships from 9,000 ceu
Naples / Rome
Affirmed the reliance on Grimaldi Euromed of maritime territorial continuity on the Civitavecchia-Arbatax-Cagliari route
European Commission's OK to refinance the Italian Marebonus
Brussels
Aid programme worth EUR 125 million authorised, running until 2027
Assarmatori, good EU approval of Italian aid for road-sea intermodality
Rome
Messina; now the aim is to be able to use the resources as quickly as possible
I porti cinesi stabiliscono un nuovo record storico di traffico quadrimestrale delle merci
Chinese ports set new record for four-month cargo traffic
Beijing
New peak in containers alone
The handling of the freight traffic at Genoa airport was entrusted to the city's freight forwarders
Genoa
Giachero (Spediport) : It is essential to relaunch the cargo sector
At the end of the month APM Terminals will leave the management of the Itajaí terminal container
Itajaí
Superintendência do Porto will try to implement a new transitional solution pending the tender unopened by the federal government
GEODIS has bought Swiss Transport & Shipping helvetica
Levallois-Perret
In 2022, it recorded a turnover of 58 million Swiss francs
Conference in Genoa on the State of Implementation of the National Logistics Platform
Genoa
Organized by Federlogistics and Conftransporto-Confcommerce, it will be held next Monday
Livorno, air quality monitoring campaign in neighboring city areas to port
Livorno
The discovery campaign will last 240 days
Fincantieri agreement in Canada to propose "Vigilance" patrolman for the Royal Canadian Navy
Trieste
Two initiatives to commemorate Giuseppe Bono
On June 30 in Genoa, the second edition of the Youngster Shipping Summer Party will take place
Genoa
The event is promoted by Assagents
Fincantieri will build the third NFS submarine of the Italian Navy's Navy
Trieste
The first two batons will be delivered in 2027 and 2029
ABB plans a whale tail for the propulsion of small and medium-sized ships
ABB plans a whale tail for the propulsion of small and medium-sized ships
Zurich
The first prototype will be available in 2025
Final free route to the link between the port of Ancona and the State Road 16
Ancona
Aquaroli : It is a fundamental work for the development of the port, Ancona and the Marche
SAILING LIST
Visual Sailing List
Departure ports
Arrival ports by:
- alphabetical order
- country
- geographical areas
CMA CGM has completed the acquisition of La Méridionale
Marseille
Next order for two new LNG ships announced
Venice Boat Show inaugurated
Venice
Over 220 exhibitors. 300 boats presented, 240 of which in the water
MSC Crociere ha preso in consegna la nuova MSC Euribia
MSC Cruises took in delivery the new MSC Euribia
Saint-Nazaire
In the ship yard of Chantiers de l'Atlantique also took place the coin ceremony of "MSC World America"
Agreement between the AdSP of the Central Adriatic and the regional agency of the Marches for environmental protection
Yang Ming orders to HHI the construction of five portacontainer from 15.500 teu
Keelung
Commitment worth $927.9 million
Port of Genoa, procedural errors in paperwork reduced by 70%
Genoa
this is the result of what was experienced during a course organised by the Harbour Master's Office and Assagenti
Confitarma expresses satisfaction at EU approval for road-sea intermodality support, but denounces lack of resources
Rome
Mattioli: We hope that the new government will open a concrete discussion with the armament industry on this issue in view of the next Budget Law
KHI and DNV will define a method to calculate the CO2 emissions of the liquefied hydrogen supply chain
Tokyo
Specific memorandum of understanding signed
The Spanish FENADISMER will start a new class action against oil companies
Madrid
They are accused of taking advantage of the effects of the conflict in Udrain to apply a surcharge to fuels
Eni Agreement - RINA for the energy transition and decarbonization of naval transport
Rome/Genoa
Among the purposes, the development...
Chinese investment in the Suez Canal Economic Zone
Beijing
Production activities will be installed
In the first trimester of this year the traffic of the goods in the Croatian ports has grown of +14,9%
Zagreb
The increase is determined by the rise of the bulk volumes
Event in Genoa for the relaunch of the economy of the sea
Genoa
The sector - it has been emphasized - in recent decades has been dramatically underestimated in its potential
Assiterminal, Assologistica and Fise-Uniport Convention for Safety at Work
Genoa
It is by definition with the support of RINA
CMA CGM compra il quotidiano economico francese “La Tribune”
CMA CGM buys the French economic daily "La Tribune"
Marseille
The company is already active in publishing with the newspapers "La Provence" and "Corse Matin"
Next month Metrans will activate an intermodal link Rijeka-Budapest
Prague
The terminal of the Hungarian capital will be connected to the Serb terminal of Indija
Ok to a contribution of 2.2 million to the genoese harbour company CULMV
Genoa
Resolution approved by the Management Committee
ITA Airways, confirmed the agreement with Lufthansa
Rome
Uilt, important now to realize the objectives of development and growth of the industrial plan
German Schües is the new president of the BIMCO
Copenhagen
Subentra to Sabrina Chao who concluded his biennial term
PSA has acquired a minority share in the Vietnamese logistics company Sotrans
Singapore
It was ceded by Indo Trans Logistics Corporation
Inaugurated the second phase of the Vietnamese container terminal of Nam Dinh Vu (Haipong)
You have Phong
It has an annual capacity pairs to 1,2 million teu
In April the traffic of the goods in the port of Barcelona is dropped of -7.8%
Barcelona
The decrease has been determined by the decrease of the container, in particular by the ones in transit
TIL orders ZPMC nine cranes of quay for the TPO/TNMSC terminal of the port of Le Havre
Le Havre
They will be able to serve ships from 24,000 teu
GNV expands its support to the project for the protection of turtles and cetaceans in the Mediterranean
Genoa
The researchers, as well as on the Naples-Palermo route, are being housed on board the ships deployed on the Barcelona-Tangier and Valencia-Palma routes.
Positive the first quarter of MPC Container Ships
Oslo
The Norwegian company is concerned that supply growth in the segment of large container carriers could also have an impact on the fleets operated on intra-regional routes
PORTS
Italian Ports:
Ancona Genoa Ravenna
Augusta Gioia Tauro Salerno
Bari La Spezia Savona
Brindisi Leghorn Taranto
Cagliari Naples Trapani
Carrara Palermo Trieste
Civitavecchia Piombino Venice
Italian Interports: list World Ports: map
DATABASE
ShipownersShipbuilding and Shiprepairing Yards
ForwardersShip Suppliers
Shipping AgentsTruckers
MEETINGS
On May 25 in Genoa, a conference will be held on the programming, operation and management of transport networks
Genoa
It is organized by the International Institute of Communications and CIFI
On May 26 in Genoa, the first Mare Global Forum will take place
Genoa
It is organized by the Strategic Advisory Centre "Giuseppe Bono"
››› Meetings File
PRESS REVIEW
Budget proposes to cut tax on containers used in shipping
(The Daily Observer)
Exclusive: Malaysian tycoon weighs selling a stake in $2.7 bln port business -sources
(Reuters)
››› Press Review File
FORUM of Shipping
and Logistics
Relazione del presidente Daniele Rossi
Napoli, 30 settembre 2020
››› File
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