Shell has signed term charters for four LNG carriers starting from mid-2024, in its latest in a series of tonnage acquisitions.
South Korean shipowner Pan Ocean is set to supply two carriers, while Norwegian owner Knutsen and an unnamed firm will each supply a single vessel.
Pan Ocean only has a single LNG carrier on the water — the 153,000m³ LNG Kolt, under charter with South Korea's Kogas — suggesting that it may have to order new carriers to meet its letting obligations to Shell.
Shell's contracts are for seven years from September 2024, with two charterers' options to extend for six years. The total sales value is around $306mn, Pan Ocean said, suggesting that on a seven-year charter this would be equivalent to a charter rate of around $59,900/day for each of the vessels.
Knutsen ordered a newbuild carrier from South Korea's Hyundai Samho Heavy Industries yesterday, which will be chartered to Shell. The carrier, which was priced at around $186mn and is set to be delivered by November 2024, will be the seventh Knutsen LNG vessel under charter with the firm, the Norwegian firm said.
The fourth carrier will be supplied by investors being advised US banking firm JP Morgan's asset management arm. It is unclear whether an order placed with South Korean shipbuilder Hyundai Heavy Industries yesterday — also priced at around $186mn — by an unnamed Bermuda-based firm is related to this charter.
The four charters come after eight secured in December last year and a further six in August 2020 as Shell adds more LNG tonnage to its fleet. Knutsen will provide six of these 14 vessels, with South Korea's K Line providing four, Chinese banking firm ICBC two, and unnamed investors advised by JP Morgan awarded two charters. It remains unclear if these are the same investors that were awarded the two charters by Shell today.
Shell has recently begun to receive up to 4mn t/yr from the US' Elba Island liquefaction facility on a fob basis, and has a 2mn t/yr offtake agreement from the planned 27.6mn t/yr Rio Grande facility, which is scheduled to start up in 2024 but is yet to reach a final investment decision.
Shell may be seeking to secure tonnage ahead of the next wave of global liquefaction growth — expected in 2023-25. This is likely to buoy shipping demand as firms seek to deliver the additional production, and Shell may be looking to reduce its potential reliance on spot charters.
And with newbuild deliveries scheduled to hold quick through 2021 despite comparatively few additions to global liquefaction capacity, this supply to the spot charter market has weighed on forward spot charter rates through the year into 2022 in recent months.
