All aboard! Treasure on the high seas for gas dealers
In the booming market for supercooled natural gas, the most precious commodity is the ship.
A global quest for cleaner energy has fired up demand for liquefied natural gas (LNG), which produces less carbon dioxide than coal. But an abundance of supply has helped keep prices subdued, meaning the most profitable trade is in renting out vessels to transport it.
Reflecting the white-hot demand for ships, over a dozen different companies, including energy majors BP and ExxonMobil, trading house Trafigura and gas utility Centrica are already looking to charter boats for the winter, according to four shipping industry sources, months earlier than usual.
ExxonMobil, Centrica and Trafigura declined to comment. BP did not respond to requests for comment.
Energy firms are trying to avoid getting stuck without ships on charter for the winter, when cold weather typically drives up trade in LNG and, consequently, transport costs. They also want to profit off less nimble rivals.
Last winter, spot charter rates – the cost of renting a ship to transport LNG in real-time – soared to almost $200,000 per day in November compared to around $40,000 in May, squeezing those companies which had left it too late to secure vessels cheaply.
Currently, spot rates are around $40,000 per day while rates for charters covering next winter are between $70,000-$80,000 a day, two shipping industry sources said.
Energy groups including Shell, BP, China National Offshore Oil Corp (CNOOC),
Cheniere and Gazprom, utilities Naturgy and Centrica and trading firms such as Gunvor and Trafigura are renting vessels for months or years and sub-letting some of them to competitors, according to half a dozen sources.
None of the firms would comment.
The market for LNG freight trade is relatively new and many companies are reluctant to talk about trading strategies, which are still being developed....MUCH MORE
“We see LNG shipping as a commodity on its own,” said Niels Fenzl, Vice President Transportation and Terminals at Uniper, an energy firm which along with Shell, pioneered freight trade within the LNG market....
