Integr8 Reports Increase in LNG Bunker Spot Trading Activity

Container ships used to take up the majority of LNG bunker demand. Image Credit: TotalEnergies Marine Fuels

Bunker procurement firm Integr8 Fuels has seen an increase in spot LNG bunker trading activity in recent months, driven by volatility in global gas prices.

The firm has recently traded several spot LNG bunker stems, it said in a statement on its website on Thursday.

The majority of the LNG bunker market so far has been delivered on a contract basis while this market was maturing, and the emergence of an active spot market is a sign of the market reaching a more advanced stage.

"A highly volatile and competitive market presents new opportunities for traders to get involved, particularly as the global LNG-capable fleet is set to more than double from just over 400 vessels now to more than 800 by 2028, according to data from classification society DNV," the company said in the statement.

"Container vessels used to make up the vast majority of vessels bunkering LNG.

"We have recently seen more dual-fuel tramp vessels bunkering. These typically require greater flexibility in timing and location, especially for tankers. Oil and chemical tankers now make up the biggest LNG-capable vessel type, with 116 vessels in operation and another 85 on order, according to DNV data.

"Price references vary between suppliers and geographies. It is quite common to link LNG stem pricing to established wholesale oil and gas benchmarks like TTF, JKM, Henry Hub and Brent to cover some exposure to price swings.

"There are longer-term Brent or fuel oil price linkage options for LNG, but they will typically come at a premium for buyers.

"By locking in the delta on a linked price of a certain percentage, LNG prices will have a partial ceiling based on conventional fuels and buyers can pay down the premiums they paid for investments in dual-fuel engines.

"The rate of payback on dual-fuel vessels is expected to pick up after 2026 as global LNG supply is set to be boosted by huge new volumes from Qatar and the US, according to multiple industry forecasts."