Norwegian shipowner Flex LNG has secured a new long-term charter agreement for its 173,400m³ Flex Freedom LNG carrier, starting in the first half of 2022.
The charter agreement — signed with an unnamed portfolio firm — will last for either three or five years, with the charterer to declare the duration in the third quarter of 2021. The agreement also has charterer's options for an extension for a further two years.
The Flex Freedom is due to remain employed through to the first quarter of 2022 under a charter that started in April with an Asian firm, after the vessel operated on the spot market following its delivery from South Korean shipbuilder Daewoo Shipbuilding and Marine Engineering in January.
Flex LNG has steadily been ensuring long-term employment in recent months for the bulk of its fleet, which has grown rapidly over the past few years on newbuild additions.
The owner currently only has a single carrier — the 174,000m³ Flex Volunteer — operating on the short-term market, and is happy to hold the vessel there, it said today. The 173,400m³ Flex Resolute and 174,000m³ Flex Aurora could also be offered on the spot market later this year as their respective term charters come to an end, Flex LNG said, adding that they may be well positioned to take advantage of seasonally-higher spot rates through the winter period.
The Flex Aurora could be tied to a long-term charter from the third quarter of 2022 though, providing that US operator Cheniere Energy exercises its charter options on the vessel. Cheniere is already due to receive the same-sized Flex Courageous under the existing agreement. But Flex LNG has the right to nominate alternative vessels, depending on availability.
Flex LNG echoed sentiments shared by fellow Norwegian owner Golar yesterday that potential new regulation on vessel efficiency would impact steam turbine LNG carriers from 2023, and questioned their continued viability. Flex's carriers all have two-stroke propulsion, putting them towards the top of the LNG vessel merit order, in which the older steam turbine carriers typically occupy the lower rungs.
The shipowner also noted that there are few uncommitted newbuild carriers remaining on the global LNG carrier orderbook, which is almost entirely populated by two-stroke carriers. This suggests that the volume of two-stroke tonnage due to operate on the spot and short-term markets over the next few years may not increase substantially, with the exception of sublets, leaving the older and less-efficient dual/tri-fuel diesel-electric carriers to continue to make up the bulk of the spot fleet.
