LNG shipping fleet poised for record growth
The global fleet of liquefied natural gas carriers is slated for record growth this year as LNG becomes easier to trade and U.S. exports ramp up.
Shippers, traders and energy companies are expected to take delivery of more than 70 new LNG carriers in 2018, according to a report by S&P Global Platts. Fleet owners ordered 28 large carriers during the first seven months of the year, compared to only 26 in 2016 and 2017 combined.
The growth is largely driven by natural gas demand in China and other Asian countries where environmental concerns have forced a shift away from coal-burning power sources. In the U.S., roughly a dozen new export terminals — including six in Texas — are in the works to serve that market and others.
The surge in supply and demand, the Platts report said, is helping to create a more transparent LNG market similar to oil and other commodity markets. It noted that long-term LNG contracts are beginning to give way to shorter, more flexible deals, with nearly a third of global transactions conducted on a spot or short-term basis.
Traders, as a result, are taking a larger role in the marketplace, helping drive demand for new ships. Houston LNG producer Cheniere, for example. this year signed deals to sell liquefied natural gas to Swiss energy traders Vitol and Trafigura.
Cheniere in 2016 became the first U.S. company to export LNG from its Sabine Pass terminal in Louisiana. The company, which now ships to nearly 30 foreign markets, is expanding that terminal and building a second one in Corpus Christi.
Virginia’s Dominion Energy also began exporting LNG from a terminal in Maryland earlier this year.
Other U.S. companies are expected to begin exports next year, including two based in Houston. Freeport LNG is working to open its Gulf Coast terminal at Quintana Island, and Kinder Morgan is completing an export terminal in Georgia.