Dynagas sees gap in LNG ship capacity and forward demand

George Procopiou-led Dynagas LNG Partners sees the growth in LNG production outstripping the rise in available LNG tonnage in the period up to 2022.

Speaking in a results briefing for Dynagas LNG Partners, chief executive Tony Lauritzen said LNG production was set to grow 50% in the period, both from new and existing projects, outpacing a 22% increase in LNG shipping capacity in the same timeframe.

Lauritzen said that with the bulk of new LNG carriers due to be delivered before the end of 2019, subsequent years would result in “an improved and increasingly healthy shipping market”.

He highlighted the growth in LNG production particularly from the US, Russia and Australia.

Focusing on US LNG exports alone, Lauritzen said analysis showed Cheniere Energy’s Sabine Pass LNG terminal required about 1.76 vessels for every million tonnes of LNG produced.

He said Sabine Pass — at full production — was expected to produce 27 million tonnes per annum over the plant’s six liquefaction trains.

“This means that one would require about 47 vessels fully utilised per annum to serve this terminal alone,” Lauritzen said. “If we conservatively estimate that US exports would produce 69 million tonnes of energy per annum within 2021, US volumes may require about 121 vessels alone that is equivalent to 25% of the current world fleet.”

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On the upcoming expansion in global production, Lauritzen said: “The world LNG carrier fleet appears too small to carry those additional volumes in the long term, and there are too many small and old technology vessels,” explaining that around 30% of the world fleet is below 140,000 cbm in size.

“We expect that most of these undersized and aged vessels will fade out of the market and be replaced with larger and younger tonnage.”

Lauritzen said around 81% of the existing orderbook was already committed for employment.

“This means that there are very few newbuildings that may be available to replace undersized and aged tonnage, and to carry expected incremental LNG production,” he said.