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New regulations put older LNG carriers at risk: Golar

  • Märkte: Natural gas
  • 20.05.21

Potential new energy efficiency regulations approved by the International Maritime Organisation (IMO) for existing vessels could threaten the viability of older steam turbine (ST) carriers, Norwegian shipowner Golar said today.

The Energy Efficiency Existing Ship Index (EEXI) was approved in November as part of an amendment to MARPOL annex IV. The new rules will be discussed at the 76th session of the IMO Marine Environment Protection Committee (MEPC) next month. If adopted, the rules will come into force in 2023, and could force older, less efficient vessels to sail at slower speeds to meet new efficiency standards.

Golar expects this to have a significant impact on steam turbine carriers within the global LNG fleet — 254 of a total of some 600 vessels.

Steam turbine LNG carriers are the oldest and typically least efficient of the three main groups in the global LNG fleet. Rates for such carriers almost always hold at substantial discounts to the more modern dual-/tri-fuel diesel-electric (D/TFDE) vessels and most modern two-stroke carriers. That said, steam turbine carriers are still favoured by some charterers, primarily because their smaller capacities fit better with smaller cargo sizes.

Sailing at slower speeds could bring into question the economic feasibility of many of these steam turbine carriers, particularly with a large part of this fleet scheduled to exit long-term charters in the coming years, Golar said.

The resulting increase in sailing days for spot journeys would probably weigh on spot day rates — so as not to increase the total journey cost borne by the charterer — and owners' returns would probably slip.

And with steam turbine spot charter rates often falling below operating costs in recent years, further falls in returns could spur some owners to scrap carriers facing long-term unprofitability. Limited vessel scrappage — typically remaining in the single digits each year — coupled with recent years' quick newbuild additions, has swelled the global LNG fleet.

But the global LNG carrier orderbook through to the start of 2024 is unlikely to substantially change in size, Golar said, with yards filling up with containership orders. Most recent LNG carrier orders have been for late 2023 onwards, suggesting that there could be little opportunity for shipowners to order new carriers for late 2022-early 2023 if steam turbine carriers do exit the market and vessel availability tightens.


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