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Westwood Insight: Will new LNG trade routes support demand for LNG carriers?

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LNG Industry,


The LNG carrier market has been highly cyclical and is often driven by global macroeconomic events.

The growth of LNG carriers over the past decade has been synonymous with the growth in global LNG import and export capacity. However, in recent years the increase in LNG cargos hitting the market has led to an oversupply problem, causing a significant decline in LNG spot prices. This oversupply has heavily impacted the LNG carrier market resulting in appetite for newbuild carriers to dwindle. In 2016, orders for newbuild LNG carriers amounted to only 6 units (excluding two optional orders) – a 92% decline compared to the number of LNG carriers ordered in 2014.

The recent focus on the LNG market oversupply and the continuous growth in LNG export capacity is, however, masking the continuous increase in LNG demand. Whilst increasing demand has been driven by traditional demand hubs, such as China and India, several new LNG importers including Poland, Jordan, Malta, and Pakistan have also emerged in the last two years. This is part of a trend of more countries seeking to utilise LNG to diversify their gas supply and improve power generation. Westwood expects this trend to continue, as 16 additional countries, including Bangladesh, India, Russia, and Sri Lanka, commission their first floating import units (FSRUs) over the 2017 – 2021 period. These units are expected to unlock new import markets by providing a quick and cost-effective solution to the increasing local gas demand.

Read the article online at: https://www.lngindustry.com/floating-lng/08082017/westwood-insight-will-new-lng-trade-routes-support-demand-for-lng-carriers/


 

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