Annual LNG Shipping Market Review and Forecast 2007

Executive summary:

2006 highlights, LNG trade, LNG fleet, LNG contracts and fleet employment, LNG costs, LNG outlook,

LNG fleet:
Summary and development (1964-2006), Size and age profiles, Deliveries, neworders, orderbook, demolition, Types of LNG carriers and the yards building them, Ownership of the LNG fleet,

LNG outlook:
Gas demand, LNG supply and demand, Shipping demand

On the brink

This report provides key insights into the LNG shipping industry and future trends in this important market. Its independent data and analyses are essential reading for planning business strategies and include:

Comparative analysis of LNG demand, growth and production worldwide.
The burgeoning issue of ‘green’ energy and fuels and how liquefied gas, although fossil based, is seen as greener. How producers have regained the upper hand in contract negotiating for future supplies pushing up prices. Plus how on the project side, a rise in material and equipment costs has combined with a shortage of experienced personnel pushing up costs overall.

Main findings
The Drewry LNG Shipping Market Review and Forecast 2007/08 provides an independent assessment of the LNG sector – the big picture and the micro-detail. The strong growth since the turn of the century has meant expansion pains for more than a few companies.

LNG trade

This reports an average growth in LNG demand of 7.7% over the last decade with 2006 well above average at 11.8% to 211.1bcm. The focus has certainly shifted of late away from SE Asia-Far East and North Africa-Europe areas to new supply sources in the Middle East, West Africa and Caribbean. Japan and South Korea have both recently been sourcing cargoes from Africa and Trinidad. Following something of a slump, USA imports of LNG were restored to record levels during March and April of this year. Meantime, LNG demand remains strong in the booming markets with India and China receiving their first imports. Demand has also been amplified in more established markets eg. USA and UK, to replace declining domestic gas production or to reduce dependency on cross-border pipelines i.e. mainland Europe.
LNG fleet

The LNG fleet has been expanding rapidly since 2002 and will continue to do so until at least 2010. The LNG fleet saw record growth in 2006 with 27 new vessels delivered, expanding capacity by 16.6%. A further 14 deliveries in the first half of 2007 have added another 7.6% to capacity. Orders for new vessels have slowed from the heady days of 2004 but nevertheless 2006 saw the third highest LNG orders on record with 34 ships contracted. A further 13 vessels were ordered in the first half of 2007. South Korean yards continue to win the bulk of new orders and Qatari projects dominated LNG vessel-building in 2006 accounting for almost two-thirds of the orders placed – including the first order for Q-Max (> 260,000 cu.m). May 2007 saw the first vessel in more than a decade sold for scrap.
LNG outlook

Analysing liquefaction production under construction and planned, capacity could double by 2012 reaching 500 mtpa within a decade. Qatar is leading the expansion followed closely by Nigeria, Australia and possibly Iran and Russia. Demand is forecast to grow by 7.6% per annum up to 2015 with the most significant levels coming from the USA. France, Italy, Spain and the UK will account for most of the European demand. China and India remain sizeable although volume forecasts have been scaled back. In the short term, the LNG fleet will expand quicker than LNG trade owing to the planned vessel deliveries due over the next three years. Fleet owners will need to be increasingly creative to achieve maximum utilisation and will come under pressure to use ageing vessels for floating liquefaction, regasification or storage projects.

Employment

Despite record new deliveries, the increase in trade and the use of vessels as floating storage ensured the LNG fleet was well employed in 2006. The number of LNG carrier movements in 2006 was up by 3.6% over 2005 to more than 3000. The short term market took 13.4% of the total LNG trade during 2006 in terms of volumes delivered. Attractive gas prices in Europe and Asia saw spot cargoes diverted away from the USA. Meanwhile, contracts for future LNG supply have seen producers gain the upper hand with prices on the up.

Table of Contents :

Executive summary

2005 highlights
LNG trade
LNG fleet
LNG contracts and fleet employment
LNG costs
LNG outlook

The gas market and LNG trade

The gas markets
Natural gas
Liquefied natural gas (LNG)
Applications
World primary energy consumption
Natural gas consumption trends
Natural gas production trends
International natural gas reserves
The international natural gas trade
History of LNG
LNG exporters
Liquefaction plants
Regasification plants
LNG importing countries
LNG prices
Seaborne trade

The LNG fleet

Summary
LNG fleet profile and development
Development of the LNG fleet
Size profile of the LNG fleet
Age profile of the LNG fleet
Deliveries
New orders
Orderbook
Demolition
Types of LNG carrier
Yards building LNG carriers
Ownership of the LNG fleet

LNG fleet employment and markets

Summary
Contracts, existing, planned and potential
Short-term market
Vessel tracking analysis

LNG costs and economics

Summary
An introduction to ship costs
Capital costs
Operating costs
Voyage costs
Allocation of LNG shipping costs
LNG shipping revenues
Indicative fully built-up transportation costs
Transportation costs and overall project economics
Safety and security

LNG outlook

Gas demand
LNG supply and demand
Shipping demand

Appendices

Natural gas conversion factors
Natural gas consumption
Natural gas production
Natural gas reserves
Gas trade movements – by pipeline
LNG trade
LNG trade
Current LNG receiving terminals
Planned and proposed LNG receiving terminals
LNG current contracts
LNG future contracts
LNG fleet – commercial details
LNG fleet – technical details
LNG orderbook
USA LNG imports
LNG carrier – design
Tracking study
LNG charter fixtures
LNG vessels employed in the spot/short-term market

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