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Teekay LNG Partners Orders Two LNG Newbuildings; Intends to Charter on Long-Term Contracts

Friday, 14 December 2012 | 00:00
Teekay LNG Partners L.P. yesterday announced that it has entered into an agreement with Daewoo Shipbuilding & Marine Engineering CO., LTD., (DSME) of South Korea for the construction of two 173,400 cubic meter Liquefied Natural Gas (LNG) carrier newbuildings, with options to order up to three additional vessels. The Partnership intends to secure long-term contract employment for both vessels prior to their delivery in the first half of 2016. The newbuildings will be constructed with M-type, Electronically Controlled, Gas Injection (MEGI) twin engines, which are expected to be significantly more fuel-efficient and have lower emission levels than other engines currently being utilized in LNG shipping.
The contract with DSME includes a favorable installment payment schedule, with the majority of the purchase price due upon delivery. The Partnership intends to finance the installment payments during construction with a portion of its existing liquidity, which was approximately $420 million as of September 30, 2012 (after deducting the equity required to complete the recently announced Exmar LPG joint venture acquisition), and expects to secure long-term debt financing for the two vessels prior to their scheduled delivery.
"The delivery of these vessels is timed to coincide with the next wave of increased demand for LNG carriers which is expected when a large number of new LNG export projects come on-stream commencing from late-2015. They are also among the largest LNG carriers that will be able to transit the Panama Canal after its expansion project is complete, which makes them ideal for U.S. LNG exports. The recent U.S. Department of Energy study supported the export of LNG from the U.S.," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. "In addition, we are confident these newbuildings will be especially attractive to our customers given their fuel-efficient engines as well as being built to a high specification at DSME." Mr. Evensen continued, "With scheduled delivery in 2016, we believe that we are well-positioned to charter these LNG newbuildings on fixed-rate charter contracts prior to their delivery, thereby providing Teekay LNG with visible built-in growth."
Teekay LNG Partners L.P. is a publicly-traded master limited partnership formed by Teekay Corporation (TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors. Teekay LNG Partners L.P. provides LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts with major energy and utility companies through its fleet of 27 LNG carriers (including one LNG regasification unit), five LPG/Multigas carriers and 11 conventional tankers. Teekay LNG Partners'' interests in these vessels ranges from 33 to 100 percent. In addition, Teekay LNG Partners has agreed in principal to acquire a 50 percent interest in a new joint venture with EXMAR NV, which will own and in-charter LPG carriers and expects this transaction to close by late-2012 or early-2013; and has entered into an agreement for the construction of two LNG carrier newbuildings from DSME of South Korea, which are expected to be delivered in 2016. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) formed by Teekay Corporation (TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors.
Source: Teekay LNG Partners
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