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Live from Posidonia

Greek owners have lion’s share of LNG orderbook

Photo: Gaslog Gaslog.jpg
Several leading Greek shipping dynasties have stamped their mark on the LNG business as the sector has transformed from a long-term contractual business to a dynamic shipping market with spot, short- and medium-term contracts.

In little more than a decade, the cross-trading nation’s heavyweights have moved in on the capital-intensive sector in a big way, and now control about 140 ships in the approximately 620-vessel world total.

The Greek LNG fleet now ranks as the most valuable, according to a VesselsValue study last November. At that time, it was worth more than $19bn, the consultancy estimated, ahead of Japan in second ($18bn) and China, third with $10.4bn. The rankings are unlikely to change any time soon, although the fleet values will have increased significantly this year, as secondhand prices reflect both higher construction costs and a shortage of building slots.   

But companies like Angelicoussis, Capital Gas, Dynagas, Maran Gas Maritime and TEN LNG are certainly not biding their time. They successfully signed a substantial number of newbuilding contracts, booking relatively early delivery slots and closing deals at keen prices, before the latest dash for new capacity.

The precise number of Greek-owned LNG carriers under construction is hard to pin down but best estimates suggest that there are close to 30 ships on order for Greeks, requiring a capital commitment of around $7-8bn. However, the real number could be much higher, since databases such as Clarksons Research still list 40-50 contracts placed by unidentified contracting parties.   

One thing is certain, however. As the world comes to terms with an entirely new energy order following Putin’s mad invasion of Ukraine, almost everyone is hot about gas. There are abundant supplies – the US is now a major exporter, a relatively new trade in which Greek owners are heavily involved, and new capacity is coming on stream in Qatar and Australia, the world’s two largest suppliers.

New facilities are also at various stages of planning or construction in a range of other locations including Canada, Indonesia, Mauritania, Mexico, and Nigeria. New capacity is under construction in Russia, but related shipping requirements for these projects have been excluded from the following vessel requirements.

Three LNG trains being built at Golden Pass in the US as well as a new export facility at Calcasieu Pass. They are likely to require more than 40 ships of 174,000 cu m equivalent, according analysis by Clarksons. The vessel requirement for all projects under construction, excluding Russia, is 132. And these numbers do not include projects that are currently at the FEED stage, or others that are merely proposed.

Not everyone is on side, however. LNG is still a hydrocarbon and there are plenty of activists who get wound up, quite justifiably, about the impact of methane as a greenhouse gas. However, LNG is widely seen as a transition fuel – bioLNG and synthetic LNG can reduce its carbon footprint substantially. As a fuel, it is also many times cleaner than coal, wood or charcoal, widely used in vast areas of the world for cooking and heating.

Leaving no stone unturned, the Greeks have also moved in on the floating LNG sector where demand for converted floating storage regasification units (FSRUs) and other floating assets is ramping up sharply. Floating facilities are usually faster and cheaper than shore-based plant (see article on page xx).

mitrou-panos.jpgThere are likely to be plenty of conversion candidates available over the next few years, according to experts. Panos Mitrou is Lloyd’s Register’s Global Gas Segment director. He has analysed the existing LNG fleet and estimates that as many as 400 ships – almost two-thirds of the total – are likely to fall into unacceptable categories D and E when their Carbon Intensity Indicator (CII) assessments are made from January 2023 onwards. Even if they make an acceptable A, B, or C grade initially, they are likely to sink later in the decade as the CII framework tightens.

The main reason for their non-compliance is their lack of systems for effective handling of boil-off gas. Many steam-turbine ships cannot use boil-off gas as fuel, and many early diesels cannot reliquefy boil-off to use it for propulsion.