LNG tankers lying unused around S'pore as gas downturn gets critical
Singapore
OVER a dozen liquefied natural gas (LNG) tankers are berthed, many idle, in and around Singapore - one of the world's biggest trading hubs for the fuel - in a sign that the slowdown engulfing world gas markets may be worsening into a crisis.
With Asian spot LNG prices down by almost two-thirds since February 2014 as slowing demand combines with rising output, shippers are bringing their tankers near ports like Singapore's, where they can undergo maintenance until new orders come in.
Leading ship-brokers estimate that more than a 10th of the global fleet of 400 LNG tankers is now unused because of slowing growth in Asia's biggest economies. The impact in Singapore alone hints that the problem could be worse.
Shipping data on Thomson Reuters indicates that 15 vessels with a combined capacity of 2.26 million cu m of LNG - enough for two weeks' of supply for Singapore - have been anchored off Johor and Batam and in Singapore for between two weeks and several months.
For ship owners, idle tankers mean a loss of $60,000 in daily chartering fees per vessel. The gas these 15 tankers can carry would be worth more than US$200 million in current market terms, down from US$600 million a year ago.
Gas markets have seen the Asian price premium over Europe fall, triggered at least partly by the oil price crash; this has made it unattractive to ship gas between the two regions and eroded tanker demand. In Asia, LNG prices have fallen to around $6.90 per British thermal unit (mmBtu), from over $20/mmBtu a year ago; the benchmark British price is about $8.50/mmBtu.
The crash in demand in Asia is so severe that some analysts say the future of the entire LNG industry may be in question.
Along with energy prices, tanker rates have also tumbled; British-based shipping services firm Clarkson said daily LNG charter rates have fallen from $90,000 in 2013 to $60,000 now. Erik Stavseth, Arctic Securities' shipping analyst, expects a recovery before 2018, and for LNG freight rates to stay in the doldrums this year. Reuters
