ECSA - The Tramp Shipping Market Mar 2015

A2.6 LNG Market Profile
World
EU-28
No. m. cu.m m. GT No. Owners No. m. cu.m m. GT No. Owners
Fleet (Feb-2015) 419 61.1 42.3 62 97 13.8 9.3 18
Orderbook (Feb-2015) 164 24.9 16.2 44 51 7.2 4.7 11
O'book as % of fleet 39.1% 40.8% 38.2% 71.0% 52.6% 52.4% 50.5% 61.1%
Top 20 Owners' Fleet (Feb-2015) 284 43.7 30.1 20 97 13.8 9.3
% of fleet 67.8% 71.6% 71.2% 32.3% 100.0% 100.0% 100.0%
Ownership Type (Feb-2015)
Public Listed 172 23.5 16.4 16 32 4.8 3.1 4
Independent Private 107 15.5 10.5 26 40 6.0 4.0 9
Cargo Interests 61 11.3 7.7 8 2 0.1 0.1 2
Oil Company 47 6.1 4.4 7 23 2.9 2.1 3
State Interests 20 3.0 2.1 3
Financial
Other 12 1.6 1.1 2
NB Contracts (2014) 75 11.2 7.2
% of fleet 17.9% 18.3% 17.0%
S/H Sales (2014) 11 1.6 1.1
% of fleet 2.6% 2.6% 2.5%
Entry Conditions*. Asset costs are extremely high - current NB prices are $200m. LNG transport by sea also requires substantial investment in
liquefaction and cargo handling facilities. More specialised technical knowledge to operate.
Type of Cargo, Charters. LNG (Methane). Typically newbuildings built against long term contracts but a small spot market has
developed, and average contracts have reduced in length.
Cargo Volumes 2007 2008 2009 2010 2011 2012 2013 2014
Global Imports, m.tonnes 171 173 183 221 247 242 244 248
growth 1% 6% 21% 11% -2% 1% 2%
EU Imports, m.tonnes 36 39 48 59 63 45 34 31
growth 7% 24% 23% 5% -28% -25% -7%
Asian Imports, m.tonnes 112 119 114 133 154 167 174 178
growth 6% -4% 17% 16% 8% 4% 2%
Source: Clarkson Research, February 2015. Vessels designed to carry liquefied natural gas.
LNG Sector Overview
The problem of moving “stranded” gas to points of demand is that it is a highly capital intensive,
technologically sophisticated and expensive. That much of the surplus of natural gas supplies is also
in remote and lesser-developed parts of the world has merely compounded the problems. The supply
chain involves: Gas field production and pipeline, Liquefaction plant and storage, Shipping, Regasification
plant and storage, Distribution and marketing.
Natural gas liquefies at –162C (-260F) at atmospheric pressure, with a volume 1/600th of its gaseous
state. Transportation and storage of the LNG is then viable in insulated cryogenic tanks. After transportation
the LNG has to be re-gasified before being marketed. In a typical split of the costs of such
an LNG supply chain, the biggest costs are the development of the gas field and building the liquefaction
plant (each around 40%); shipping, re-gasification and marketing having nearly equal shares
of the balance.
The LNG industry has traditionally been tied to long term contracts of 20 years or more. Due to the
cost of building facilities, finance was only available if banks could see long term guarantees of a
project’s viability. The supply chain was characterised by fixed contracts with destination clauses to
prevent cargoes being diverted into alternative markets. Specific import terminals serviced specific
contracts, with shipping capacity contracted for specific routes. Whilst this is still the dominant
structure, the growth of the industry has led to a rise in excess capacity above that demanded by long
term contracts. As a result, a growing proportion of trade is now done on ether the spot market or
Clarkson Research Services 58 March 2015