Bloomberg News

LNG Tanker Rates Gaining on Trinidad Cargoes, Lorentzen Says

November 15, 2011

(Adds U.S. LNG imports data in seventh paragraph.)

Nov. 14 (Bloomberg) -- Demand for tankers that haul liquefied natural gas is set to climb as much as 3 percent as Trinidad and Tobago ships more cargoes to Europe and Asia amid rising U.S. shale-gas production, Lorentzen & Stemoco AS said.

About 7 million metric tons of Trinidadian LNG will travel three or four times farther as imports into the U.S. decline, creating demand for up to 12 more ships a year, Knut Stangebye Olsen, a gas analyst at the Oslo-based shipping consultant, said by phone today. A fleet of about 350 tankers carries 217 million tons of the fuel a year, he said.

The longer distances will support single-voyage charter rates for LNG carriers, which now exceed $100,000 a day, according to Stangebye Olsen, a former manager at tanker owner BW Gas Ltd. The percentage of ships at work, or fleet utilization, is at least 95 percent, he said.

“When you go past 90 percent utilization and you have some extra demand generated, the impact on the spot market rate is very substantial,” Stangebye Olsen said. “That’s why you get so much effect out of this.”

Trinidad and Tobago, the largest exporter of LNG to the U.S., is now sending 25 percent of its shipments to the country, down from 75 percent three years ago, Energy Minister Kevin Ramnarine said yesterday. Cargoes previously shipped to the U.S. are going to South America and Asia, Ramnarine said. The Caribbean nation exports 15 million tons of the fuel a year.

Japanese utilities imported 20 percent more LNG in October than a year earlier as operating rates at nuclear plants fell to the lowest levels in at least 34 years.

Annual U.S. LNG imports fell to 431 billion cubic feet last year, down 44 percent from the 2007 peak, according to the Department of Energy.

LNG is natural gas that’s been chilled to minus 260 degrees Fahrenheit (minus 162 degrees Celsius) to put it in a liquid state for shipping by tanker.

--Editors: Dan Weeks, John Deane.

To contact the reporter on this story: Isaac Arnsdorf in London at iarnsdorf@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net


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