The LNG shipping market was badly hit by the world economic recession in 2008 and orders for new-builds slumped to virtually zero, but that is changing quickly now and importantly, charter rates are also rising, indicating that the surplus shipping in the market is being snapped up quickly.
“The LNG market has been slowly recovering from virtually zero orders from late 2008 to early 2010...and the nuclear crisis in Japan will obviously boost further growth,” Hwang Tae-jin, executive vice president at Daewoo, told Reuters in an interview.
Daewoo, the world's No.1 LNG vessel manufacturer, is now participating in tenders to supply LNG ships to European and Russian firms, Hwang said, adding that overall LNG ship orders could grow to around 15 to 20 ships annually starting this year.
The nuclear problems that Japan is currently experiencing will certainly play a factor in increasing orders, as since the tsunami Japan has been struggling to bring reactors at the Fukushima plant under control. In the short term, Japan has been buying up extra supplies of LNG to meet its energy shortfall.
Nuclear power has been seeing a revival but public opinion is notoriously fickle and this disaster could put the brakes on the nuclear renaissance; LNG could fill the breach.
LNG traffic is forecast to rise by 7.7 percent annually by 2015 due to Japan's nuclear woes, according to Seoul-based KB Investment & Securities.
The Japan quake should also drive stronger demand for Australian LNG output as there is already US$ 205 billion worth of export projects in the works, which would provide a boost for the LNG tanker market.
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