Teekay confirms Yamal six

Teekay has confirmed market expectations about its involvement in the Yamal project with an order for six LNG newbuildings.

Teekay LNG says it has teamed up with a Chinese partner to pen the vessels via a joint venture.

Chief executive Peter Evensen said: “Upon finalization of the contracts, these six icebreaker LNG carriers will further complement Teekay LNG's existing pipeline of growth projects scheduled to deliver between 2014 and 2018, which includes 11 LPG carrier newbuildings, through our Exmar LPG joint venture, and five MEGI LNG carrier newbuildings."

In its first quarter results statement, Teekay LNG says the newbuildings were booked in late March.

This fits the timeframe laid out by TradeWinds, which reported at the time Teekay was one of three shipowners to slip representatives onto the DSME stand at the Gastech meeting in South Korea to pen deals for 15 vessels.

Mitsui OSK Lines (MOL) and SCF Group (Sovcomflot) were the other two parties identified.

Wells Fargo analyst Michael Webber predicted ahead of the results the Yamal ships would bring $15m in annual extra cash flow for Teekay LNG and take its distribution growth rate from 3% to 4% to 7% to 8%.

Today Teekay LNG reported first quarter distributable cash flows of $60.1m, up from $53.7m a year earlier helped by its joint venture with Exmar.

"The partnership's portfolio of long-term fixed-rate contracts generated stable cash flows during the first quarter," said Peter Evensen.

"With 100 percent of Teekay LNG's on-the-water LNG carrier fleet operating under fixed-rate contracts with an average duration of 12 years, the partnership is largely insulated from short-term shipping rate fluctuations and well-positioned for expected future growth.

He added: “We expect short-term volatility in the LNG shipping market to continue through 2016, prior to the expected start-up of several new LNG liquefaction projects.”

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