News
08/04/26
Ceasefire to have limited impact on LNG for now
London, 8 April (Argus) — The global LNG supply-demand balance is unlikely to be
substantially altered by the announcement of a two-week ceasefire between the US
and Iran, because of expected continued uncertainty over shipping insurance,
security and production facilities. Just under 1.2mn t of LNG across 15 carriers
remains trapped west of the strait of Hormuz, data from vessel tracker Kpler
show ( see table ). One vessel, the 155,000m³ Gaslog Skagen , has delivered to
Kuwait's 24mn t/yr Al Zour LNG import terminal three times since the war in the
Middle East began, and is charting a course for Al Zour at present. It is likely
that these stranded cargoes will attempt an eastbound transit through the strait
of Hormuz during the ceasefire, traders said, but it is still unclear how
transits will be accomplished. Two of these cargoes had attempted to transit the
strait on 6 April, but were turned away, based on vessel-tracking data. It is
unclear how many vessels could transit during this ceasefire period, and which
vessels or commodities would be given priority. An average of 11 vessels/day
transited the strait in the past five days, way below pre-war levels of around
125 daily transits. There are around 800 vessels carrying crude oil, refined
products, metals and other goods trapped west of the strait of Hormuz. It will
be difficult for all these carriers to exit the Mideast Gulf, traders said.
Commodities destined for countries deemed "friendly" to Iran may be prioritised
— including China, Russia, India, Iraq and Pakistan — market participants said,
but nearly all cargo owners and shipowners are still awaiting instructions on
how to transit the strait at present. Transit levels have not increased since
the announcement of the ceasefire. Iran's reported demand for a $2mn toll fee
for vessels transiting the strait will add to costs, with larger LNG carriers
able to spread the cost more broadly across a larger cargo. Higher insurance
costs from additional war risk premiums (AWRPs), higher calls from protection
and indemnity clubs, as well as the potential need for kidnap and ransom cover
are likely to prevent ballasting LNG carriers from westbound transits through
the strait of Hormuz at present, traders said. It is also unclear which firms
would be willing to provide cover for transits through the strait. A ballasting
transit into the Mideast Gulf for loading a cargo would be likely to incur the
$2mn fee twice, once on the way in and again on the way out, traders said. AWRPs
for transits through the strait of Hormuz are only offered on a case-by-case
basis, market participants said. War hull coverage for LNG carriers could be as
high as 5pc of the vessel cost, compared with 0.2pc before the war, traders
said. State-owned QatarEnergy (QE) is reported to have started mobilising
workers in anticipation of resuming LNG production at the now 64.2mn t/yr Ras
Laffan terminal. But it is unclear how quickly this could be achieved, and most
market participants have allocated at least several weeks if not several months
for production to fully ramp up at Ras Laffan. With most LNG shipowners unlikely
to allow their vessels to transit the strait of Hormuz to load at Ras Laffan, QE
could utilise its own fleet to load cargoes, but the company would still need to
secure insurance cover. By Bonnie Lao LNG cargoes stranded in Mideast Gulf $/mn
Btu Vessel Assumed cargo (t) Additional transit fee Rasheeda 117,000 0.33 Al
Sahla 95,000 0.40 Al Kharaitiyat 95,000 0.40 Al Ghashamiya 95,000 0.40 Umm Al
Amad 92,400 0.41 Mihzem 78,200 0.49 Patris 76,500 0.50 Lebrethah 76,500 0.50
Mraikh 76,500 0.50 Gaslog Skagen* 68,000 0.56 Al Daayen 66,700 0.57 Mubaraz
62,500 0.61 Fuwairit 60,700 0.63 Disha 60,000 0.64 Al Rayyan 45,500 0.84 *likely
for Kuwait — Argus, Kpler Send comments and request more information at
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