LNG newbuild orders to slow: Gaslog

With advances in propulsion slowing, Gaslog expects fewer new orders, writes Samuel Good

The pace of orders placed at shipyards for new LNG carriers is poised to slow, according to Bermuda-based shipowner Gaslog, which blames a plateau in technological development.

The global LNG vessel order book has been buoyed in recent years by advancements in propulsion and technology curbing boil-off, prompting owners to update their fleets, Gaslog says. 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 their 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, according to Gaslog, given the strength of the global order book, which the firm estimates at about 48 vessels. Most of these will be above the average 160,000m³ capacity on water at present. And the market has coalesced around the 174,000m³ 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 company says.

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

Firms might also be concerned with carbon emission limits associated with the IMO's 2050 targets that would make LNG unviable as a fuel, Gaslog says, noting that LNG vessels have a greater lifetime — 30-35 years — than other vessels.

This means that firms seeking to order vessels for large planned projects — such as the Ras Laffan expansion in Qatar, Mozambique LNG and the multiple US facilities — would probably 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 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 them are scheduled to be delivered this year, with one — the 180,000m³ Gaslog Windsor — soon to start sea trials before commencing operations under a term charter with UK utility Centrica. Gaslog also has five TFDE vessels that are operating in the spot market — three in the Pacific and two in the Atlantic.

Alexandroupolis ambitions

Separately, Gaslog says it 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 in northeast Greece.

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

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

Gaslog is also providing its 155,000m³ vessel Gaslog Singapore for use as an FSRU for Sinolam's LNG-to-power project in Panama. But the company says that it will continue to focus on LNG transportation, rather than furthering its downstream ambitions.