Tuesday, February 21, 2012

Shipping: Liquified Natural Gas Freight Rates Surge on Japanese Demand (GLNG; LNG)

From Bloomberg:

Billionaire Fredriksen Sees Golar LNG Rate Surge on Japan Demand: Freight
Rates for tankers hauling liquefied natural gas are rising for a third year as expanding Japanese demand for the fuel attracts cargoes from the Atlantic, extending voyages at a time of shipping capacity shortages.

Rising requirements from Japan mean Golar LNG Ltd. (GOL), which operates nine LNG tankers and is controlled by shipping billionaire John Fredriksen, will report a fourfold gain in 2012 net income, according to the mean of 11 analyst estimates in a Bloomberg survey. Golar is reactivating four-decade-old mothballed ships after rates doubled in 2011 and are forecast by analysts to advance another 58 percent in 2012.

Traders redirected 13 ships to Asia from Europe or the U.S. in the past month, data compiled by Bloomberg show. LNG from Nigeria, the largest exporter in the Atlantic, sold for 93 percent more in Japan than in the U.K. in January, up from 40 percent 11 months ago, according to New York-based Poten & Partners.
“This bottleneck cannot be corrected overnight,” said Fotis Giannakoulis, a New York-based analyst at Morgan Stanley. “It will take years, and it is an opportunity for a lot of LNG shipowners to generate premium returns.”

Shipments to Japan, the biggest LNG buyer, are swelling to a record after March’s earthquake and tsunami shuttered about 90 percent of the nation’s nuclear power. Gaps between LNG prices around the world will last five more years because production is growing fastest in the Atlantic while demand is being led by Asia, Morgan Stanley estimates.

$147,000 a Day
LNG tanker rates rose to $97,630 a day last year from $43,663 in 2010, according to Fearnley LNG, a unit of Norway’s second-largest shipbroker. Daily rents will average $147,000 in 2012, the median of six analyst estimates compiled by Bloomberg shows. Costs surged as shipowners failed to keep pace with an expansion in the supply of LNG, liquefied by cooling natural gas to about minus 160 degrees Celsius (minus 256 degrees Fahrenheit)....MORE
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