LNG Shippers Post Profits Despite Weak Market

Most LNG shipping companies managed to stay in the black in the first half of the year despite currently depressed market conditions. The best performers have been able to secure longer-term charters, which have been under less pressure than spot rates, although term rates longer than a year have also edged down from recent highs in 2012. Term charter rates climbed to just over $90,000/d toward the end of 2012, their highest level in 10 years, and have since edged down to slightly less than $80,000/d in the first half of 2015.Diversification of fleets by adding different types of vessels like floating storage-and-regasification units (FSRUs) has helped shippers reduce exposure to the difficult market conditions. Shippers are branching out further by adding floating liquefaction units, either as newbuilds or conversions from LNG carriers, and some of them are readying for deployment. Examining 10 publically traded LNG shipping companies shows that collective first-half profit fell to $229 million in 2014 from the recent peak of $455 million in 2013. It then rebounded to $333 million in the first half of this year. Master limited partnerships (MLPs) that some of these companies operate have been included in the group, since shipping companies sell part their fleets in what they call “dropdowns” to the MLPs, whose units are exchange-traded. These ships provide earnings for the MLP and also the parent company, which will hold some of the MLP’s units. Please fill out form below to view article.