LNG newbuild orders to slow: Gaslog

Orders placed at shipyards for new LNG carriers are set to slow, Bermuda-based shipowner Gaslog said today, citing a plateau in technological development.

The global LNG vessel orderbook in recent years has been buoyed by advancements in propulsion and technology curbing boil-off, prompting owners to update their fleets, Gaslog said. And low prices at shipyards have reduced the cost of these new orders.

But advances in propulsion have slowed following the introduction of two-stroke engines and the wide uptake among contracts on the order book. The new engines are the result of significant developments in steam turbine propulsion to dual-fuel and tri-fuel diesel-electric (TFDE) vessels before the more efficient two-stroke emerged.

And with cargo boil-off on the new vessels almost at parity with shore-side levels, there remain few further developments that could support orders, Gaslog said, given the high volume on the global order book, which the firm estimates at about 48 vessels. Most of these projects will be above the average 160,000m³ capacity on water at present. And the market has coalesced around the 174,000m³ capacity size — currently the most common size ordered — for long-distance transport, deciding that the larger Q-Max and Q-Flex vessels favoured by Qatargas are too large, the firm said.

But developments in reliquefaction could encourage firms to invest in new vessels, Gaslog said.

Firms may also be concerned with carbon emissions limits contained within the IMO's 2050 targets that would make LNG unviable as a fuel, Gaslog said, noting that LNG vessels have a greater lifetime — 30-35 years — than other transportation vessels.

This means that firms seeking to order vessels for large planned projects — such as the Ras Laffan expansion, Mozambique LNG and the multiple US facilities — would likely have to consider their working life at about 25 years instead of 30-35.

Gaslog, which is not seeking to increase the number of vessels on its own order book, previously said that it envisages high vessel availability in 2021-23 because of ordered newbuilds coming on to water.

The firm has seven vessels on order, all of which are tied to term charter agreements. Five of the vessels are scheduled for 2020 delivery, with one — the 180,000m³ Gaslog Windsor — soon to start sea trials before commencing a term charter with UK utility Centrica. Gaslog also has five TFDE vessels that are operating in the spot market, with three in the Pacific basin and two in the Atlantic.

Alexandroupolis ambitions

Gaslog remains hopeful that it will be awarded the floating storage and regasification unit (FSRU) tender for the planned 4.2mn t/yr Alexandroupolis import terminal, the firm said today.

Project owner Gastrade said in January that it was planning to launch the tender this month.

Gaslog has already been awarded the operator contract for the terminal, the shipowner said, and is prepared to "sell" one of its own vessels into the project.

Gaslog is also involved in the provision of its 155,000m³ Gaslog Singapore as an FSRU to Sinolam's LNG-to-power project in Panama, but will remain focused on LNG transportation, the firm said, instead of furthering its downstream ambitions.

By Samuel Good