Flex LNG secures new term charters

Norwegian shipowner Flex LNG has secured new term charters for at least four of its carriers, with all but one of its six current term charters set to expire in 2021-22.

The new charters, pending any further agreements, are not set to significantly change the proportions of Flex LNG's 12-strong fleet that operates on the spot and term charter markets, with the owner historically keeping a large section of its fleet on the spot market. All of the firm's carriers have two-stroke propulsion and capacities of around 173,400-174,000m³, putting them in the top echelon of the carrier merit order.

Flex LNG has signed the charter agreements with US operator Cheniere, which will receive two carriers from the owner in the third quarter of this year and another in the third quarter of 2022, with an option to take a fourth in the third quarter of 2022. Cheniere will also take Flex LNG's sole remaining undelivered newbuild — the 174,000m³ Flex Vigilant — when it is delivered by South Korea's Hyundai Samho Heavy Industries in May. The four firm charters are for 3-3.5 years, with charterer's option to extend each by up to two years.

The shipowner has two carriers under long-term charters that are set to expire in the third quarter of 2021 — both with Spain's Naturgy — though it is unclear whether these carriers will be used for the new charters starting in that same period with Cheniere. Flex LNG also has six carriers operating on the spot market, which could potentially be used to fulfil these obligations instead.

Cheniere has been picking up under long-term charter a significant portion of the recent newbuild additions to the global LNG fleet. Since April 2020, the firm has received under term charter at least six new carriers, and is slated to receive at least a further four by August this year, on top of its Flex LNG newbuild.

The charterer has in recent years had to rely heavily on spot additions to its fleet, as the volume of LNG marketed by itself has grown substantially with the buildout of liquefaction capacity at its 25mn t/yr Sabine Pass and 15mn t/yr Corpus Christi liquefaction projects on the US Gulf coast. Tonnage demand from firms marketing US cargoes on a des basis can vary greatly according to the inter-basin des price differential and prevailing spot charter rates, with delivery to northeast Asia via Panama requiring around twice as many days of sailing as delivery to Europe.

By Samuel Good