Atlantic LNG: TFDE day rates step higher

Spot charter day rates for tri-fuel diesel-electric (TFDE) LNG vessels climbed on Thursday, as fresh demand for short-term charters added to recent gains driven by tighter availability amid delayed deliveries from the US to Asia and Europe.

Wast of Suez rates increased to $125,000/d on Thursday, from $90,500/d a day earlier and $68,000/d as recently as 24 September. Tighter availability of LNG carriers may have also reduced discounts shipowners grant on the ballast leg, with charterers paying 100pc of the hire plus fuel costs for TFDE vessels in the Atlantic basin, market participants said.

US sanctions imposed on Chinese shipping firm Cosco could have reduced the number of Arc7 ice-class vessels available for loadings at Novatek's 16.5mn t/yr Yamal LNG project. The sanctions imposed on six Arc7 tankers, one of which was due to be delivered this week and the last was scheduled for late-November delivery, could require the restart of transshipments to provide additional shipping capacity in the coming months.

Novatek was "considering short-term agreements" for additional capacity, the firm told Argus earlier this week.

Novatek plans to perform transshipments in Murmansk in the Barents Sea, as well as Honningsvag in Norway, where it had exclusively carried out ship-to-ship transfers since last winter. Only Arc7s can load at Yamal during the winter months, and so more lower ice-class vessels such as Arc4 and Ice-2 tankers will likely be required to take cargoes into Europe from Murmansk and Honningsvag.

Murmansk is slightly closer to Sabetta when sailing through the Kara Strait than Honningsvag, but it was still expected to be feasible to reach for lower ice-class vessels. And Novatek expects the Northern Sea Route (NSR) to close by late-October-early November, similar to when transit along the passage became unavailable last year.

And a steeper contango in European gas hub prices could increase the incentive for firms to delay deliveries to the continent and boost tonnage demand. The Dutch TTF November contract was at a 65¢/mn Btu discount to the December market at Thursday's close, out from 64¢/mn Btu a day earlier and 54¢/mn Btu at the start of this month.

But a tighter differential between the Argus northeast Asian des (ANEA) and TTF front-month prices could reduce the incentive for US offtakers with uncommitted cargoes to deliver to northeast Asia, further paring tonnage demand in the coming weeks. A journey to northeast Asia via the Panama Canal takes about a month, while routes to European terminals typically take half this time.

The ANEA December market was at a $1.29/mn Btu premium to the corresponding TTF contract on Thursday, in from $1.33/mn Btu a day earlier although still out from $1.06/mn Btu on 1 October.

The sharp rise in charter rates could also discourage firms delivering US-loaded cargoes outside of the Atlantic basin and slow sailing, at least for those that would need to secure shipping capacity on a spot basis.