By Oleg Vukmanovic
London Feb 21 Golar LNG, a
liquefied natural gas (LNG) shipping company led by billionaire
John Fredriksen, expects improved tanker earnings until 2017 as
an increase in Japanese demand reduces the supply of available
The Norwegian shipper said on Tuesday it saw a robust growth
outlook for the LNG market after its October-December net income
more than tripled, driven by sustained cargo diversions from
Europe to Asia.
The changing trade patterns have increased vessel journey
times and depleted the number of vessels available for charter
while demand surges and a wave of new LNG supply comes on
stream, leading to a scramble for tonnage.
The cost of hiring an LNG tanker has increased by more than
five times since the summer of 2010 to $145,000/day currently.
Market prices have been in backwardation, a pricing
structure that reflects strong demand in the near term and
weaker demand in the future.
But Golar sees "structural tightness" in the shipping market
for 2012-2014 supporting rates as far out as 2017, "as the major
players realise the underlying strength of existing shipping
demand", the company said in its financial statement for the
fourth quarter of 2011.
"Backwardation has weakened in the LNG shipping charter
market," it said.
"The company believes that this curve has flattened
somewhat, particularly for three-to-seven-year charter periods."
Driving demand for shipping are new liquefaction projects in
Australia and the Middle East, which will bring more fuel to
market in 2014-2015, as well as fast-growing demand in Asia,
The earthquake that crippled Japan's nuclear industry last
year sent Asian LNG prices sky-high as the country ramped up gas
imports to produce electricity.
In the near term, Golar expects that new liquefaction plants
starting in 2012 will further stretch the global shipping fleet
and potentially bolster tanker rates.
The start-up of Australia's Pluto and Angola LNG projects,
together with de-bottlenecking at existing plants that will free
up more supply could add 14 million tonnes of LNG, or 5.2%
percent of total current production, by the end of the year, it
"In the same timeframe only two conventional-size vessels are
expected to be delivered, both dedicated to lift project volumes
from Malaysia and Angola," it said.
Golar's net income rose to $17.2 million in the fourth
quarter from $5 million in the year-ago period.
It proposed a quarterly dividend of $0.325 per share.