TradeWinds: Poten & Partners charts LNG ship demand

8 February 2017: ” Tusiani-Shearer double-act rocks up in London to discuss issues facing the industry. Shipbrokers and consultants Poten & Partners is forecasting that around 13 LNG newbuildings will need to be ordered each year between now and 2022 to meet projected vessel demand. Poten chairman emeritus Michael Tusiani told a London audience on Tuesday evening that in the last five years the average number of LNG carriers ordered each year was 32, indicating that demand for new LNG tonnage will fall. In the UK Tuesday to present some of the issues facing the industry and the wildcards that might affect it, Tusiani and Poten senior advisor Gordon Shearer promised to be “deliberately provocative” in a Q&A presentation to LNG shipowners, charterers and other industry players. “Is it [LNG shipping] a good business to be in? Tusiani asked rhetorically. “If you are prepared to accept single digit or industrial rate of returns then – probably,” he said. Touching on the changes to technology seen in LNG shipping he said owners sitting on a 12-year-old LNG steam turbine vessel of 135,000-cbm to 150,000-cbm might “not be in a good position” in the current market. But Dynagas chief executive Tony Lauritzen who runs the Cool Pool said he found Poten’s forecast of the number of vessels required “quite positive”. “Twenty-sixteen was a historically poor year but with the market growing by 50% by end of the decade that is a tremendous growth which should have an effect on shipping. “We’re positive,” Lauritzen said. Maran Gas Maritime executive vice president commercial Anita Odedra was also more upbeat pointing out that with demand growth and the recent stifling of LNG ship ordering there will come a point when the situation reverses. “And when will that be?” she asked challengingly to the on stage duo. Tusiani said that when asked what ship he would invest in his answer is always “a VLCC” as it is an “easy investment”. “Shipping is a risk taking business,” he said. “It is like going to a craps table – you bet and that’s where you get the maximum reward.” “LNG is a totally different,” he went on, explaining that in contrast LNG carriers are more complicated and expensive with newbuildings usually taking longer – some up to six months for a major to vet – to get fixed. Earnings are also not as transparent as on a tanker, he added. Tusiani said that while new LNG trades will help the development of a spot market the level that LNG carrier rates can rise to is limited because shipping is such a large cost in the LNG supply chain. “It is risky not a business that not everyone has strong stomach for,” he said pointing to traditional Greek shipowners as the probable LNG shipping players of the future who will best know how to optimise the business. “In my opinion when Shell acquired BG I think the game changed,” Tusiani said. “Because oil companies will use shipowners but oil companies will use them only to the extent of the advantage of cost of capital. And then as long as you have two ships and one cargo you’re going to get squeezed.” “I think the risk-rewards may not necessarily be worth it,” he added. ”   To learn more about the event, click here.