LNG charter rates nudge up as cargo picture brightens

Owners hopeful of more trading action as east-west arbitrage starts to open

Charter rates for LNG carriers are showing signs of strengthening as shipping availability thins, particularly in the Atlantic basin region, and demand picks up in other areas.

Shipowners report that charterers are now paying full roundtrip voyages for intra-basin business compared to sporadic contributions to back-hauls previously. They say daily rates for modern dual and tri-fuel diesel electric ships are in the mid-to-high $40,000s.

One says charterers looking to lift a cargo in the Atlantic basin will “have to pay up” for an LNG carrier in the current market, due to the lack of available tonnage.

Others point out that it depends on where cargoes are loading.

Owners looking to fix their vessels for shipments out of the Middle East Gulf region or the Far East are certainly asking for round-trip payments on fixtures, one chartering chief says, but it depends on the details of each voyage as to whether they will achieve this.

Several market players highlight the lack of cargoes but point to the newly opened arbitrage between the Atlantic and the Far East, which was starting to emerge early this week as something that could increase trades.

“The [market] trend is rising,” one said.

South Korean utility Korea Gas (Kogas) came under the spotlight as being particularly active in the past few weeks. The state-run outfit is reported as fixing up to three vessels at daily rates in the mid-to-high $40,000s.

Charterers say Kogas needed to take large LNG carriers, which brokers list as technically trading at premium levels in the $50,000-per-day range, for cargoes lifting out of Sabine Pass in the US. One says he believes owners could have asked for higher levels on these.

On the term business side, LNG carrier owners and operators are waiting to see the result of a requirement floated by China National Offshore Oil Corp (CNOOC). The Chinese energy giant is understood to have homed in on one ship but is not fully fixed as yet.

CNOOC had been seeking a vessel for delivery from mid-October to the end of November, to take on charter for six months, with options to extend the hire by two periods of the same length.

Elsewhere Gail (India)’s search for time-chartered LNG tonnage is expected to rumble on. LNG carrier chartering sources say the Indian gas buyer is due to emerge with a fresh requirement to charter in an LNG carrier for a period of up to three years.

But Gail’s continuing LNG swap deals, as the company rejigs its US LNG purchases, are resulting in it rethinking its vessel needs.

Gail finally concluded a charter of one LNG ship in the last few weeks. The company fixed a Total Norge sublet, Teekay LNG's 165,772-cbm Meridian Spirit (built 2010), for three years, with an option to extend the hire for one year. A rate close to $45,000 per day was reported in the Indian press.