LNG Market Could See Vessel Oversupply

by Ship & Bunker News Team
Friday December 7, 2012

Despite the anticipated big growth in demand for natural gas in the coming years, the liquefied natural gas (LNG) market may have a glut of tankers in 2014 and 2015, Oslo listed LNG shipping company Hoegh LNG AS [HLNG:Oslo] predicts.

The company, which operates seven LNG carriers, said that despite natural gas's projected growth as a global energy source, new orders of ships may exceed production growth in the short term.

There are currently 78 new LNG carriers on order, representing a 21 percent increase from the existing fleet.

"Some of the new transportation capacity may be available before the projected production capacity increases, and may lead to market volatility, but the long-term LNG transportation market is expected to remain strong," the company said.

Hoegh said the LNG market is constrained by available liquefaction capacity, although production of LNG is expected to rise from 242 million tonnes in 2011 to 330 million tonnes in 2017 as new projects in Australia and elsewhere come online.

The company said about 11 percent of natural gas now traded is transported as LNG, and that portion is expected to grow to 19 percent by 2030.

LNG projects in Angola, Algeria, and Australia were delayed this year, keeping the supply of LNG available for transport down, and rates for short-term contracts are likely to fall from $150,000 per day this year to $110,000 in 2013, Bloomberg reports.

Nations worldwide are building new LNG terminals for the import of natural gas, including in Singapore and Sweden.

Ship & Bunker News Team
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