Small-scale LNG projects are expected to gain momentum driven by strong demand for LNG from small importers coupled with reduced risk and lower investment cost when compared to mega LNG export projects, according to Drewry.
As a result, the UK-based shipping consultancy expects an increase in ordering of small LNG carriers (less than 50,000 cbm) in 2019 and beyond.
Small projects, defined as facilities with production and regasification capacity of less than 500,000 tonnes per year, are an attractive investment opportunity for countries with low LNG consumption such as Gibraltar, which has already set up a small LNG import terminal with a total storage capacity of 5,000 cbm.
Asian countries such as Indonesia, Philippines and China, along with some European countries will also see growth in the number of small-scale LNG imports terminals, Drewry predicts.
“On the export side, the list of LNG exporters will continue to diversify in the future as countries with moderate gas reserves develop opportunities to export LNG. In the near term, we expect countries in Africa to follow the lead set by the US by investing in small-scale LNG export projects. In turn, this will generate demand for appropriate shipping capacity,” the consultancy said.
The existing fleet of small LNG vessels consists of 27 LNG carriers and 17 LNG/LPG carriers, plus some LNG bunkering units, with majority of ships engaged in petchem gas trades, posing no competition to small scale LNG export projects..
“In order to achieve first mover advantage, some shipowners have already started ordering small LNG vessels. Five small-scale LNG carriers were in fact ordered in 2018 and in 2019 and beyond we expect to see more orders for small LNG carriers. Small is therefore likely to become the new big for the LNG shipping market,” Drewry concludes.
The most recent order saw Hyundai Mipo Dockyard secure an order to build 30,000 cbm LNG carrier for Norway-based Knutsen OAS Shipping.
Ordering of large LNG carriers, a highly complex and expensive ships, has been dominated by securing of long-term charters, with a duration ranging from 10 to 30 years. Nevertheless, the market has been experiencing some shifts in the ordering patterns in the recent years driven by the development of commercial flexibility and shorter-term transactions.
—–World Maritime News, Image Courtesy: LNG Carriers/Flickr-Kees Torn under CC BY-SA 2.0 license
