The LNG Shipping Forecast: costs rebounding, outlook uncertain

The cost of shipping LNG has always been an important element to include in the assessment of new LNG project breakeven economics, or in selecting the optimum destination for a spot cargo of LNG.  This Energy Insight was prompted a perception that convenient rules of thumb for LNG transport costs were becoming outdated.  Until recently, market perceptions were that the low charter rates, prevalent in 2015, 2016 and for the first half of 2017, would continue due to the apparent willingness of shipbuilders to add to the fleet of LNG carriers in excess of requirements. However, this paradigm has been challenged by the more than doubling of LNG carrier charter rates between July 2017 and December 2017.  It appears that the high seasonal demand for LNG imports by China has strained whatever shipping-mile reserve existed in the industry. This Energy Insight provides the means by which more sustainable longer term shipping cost estimates can be derived.

By: Howard Rogers

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