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LNG carrier spot market set to grow

Photo: Qatar Petroleum Qatar Petroleum LNG carrier.png
A prominent shipowner in the LNG carrier market expects the spot market to grow in the next few years, but not to levels seen in the tanker and dry bulk sectors.

Speaking at the Saudi Maritime Congress in Dammam, John Schmidt, CEO at McQuilling Partners asked fellow panellist Dr. Maria Angelicoussis, CEO, Angelicoussis Group whether she expects the usually term-driven LNG shipping market to develop a spot market.

“We're predominantly time players. And in the spring of 2020, we found ourselves with five LNG carriers on the spot market. I think we were about half of the spot market at the time,” said Angelicoussis, demonstrating how limited the LNG carrier spot market was.

Despite those ships becoming open at a bad time for the LNG carrier market, Angelicoussis’ father, the late John Angelicoussis, reassured her that with the rest of the fleet fixed, they would be fine.

“Being in the spot market gives you a real feel for where the rates to go going, and in addition we made a bunch of new relationships. Then when the market turned we fixed the ships out on term,” said Angelicoussis.

Looking ahead, she expects the sport market to be apparent in a larger form and to grow over the next few years, but not ever to the same size and significance as the tanker or dry bulk market.

Adding in a tanker market perspective, Hisham Alnughaimish, Senior Vice President Commercial & Operations, Bahri Oil, said that playing the spot market is essential to get a feel for market movements and to gather more information.

“The spot market makes you think, puts you on your toes,” said Alnughaimish.

Lois Zabrocky, CEO, International Seaways saw the spot market as an essential tool to time contracts.

“We are coming off of… the worst tanker market that I have seen in 30 years in 2021, and during that time, your vessels come off time charter. Now we, as owners, will wait for that market to mature into itself before we'll go ahead and lock in period business. We're trying to lock in a return as opposed to just grab a time charter at a low rate that doesn't provide a return on investment.”

The panel discussed support for term fixtures in another form – the need to decarbonise shipping. Zabrocky noted her company’s recent deal with Shell to build three dual-fuel VLCCs, and how that points to a need for deeper collaboration with charterers.

“I think the type of innovation where an owner gets together with a customer and you try to figure out what that technology is going to be is really a next step, but we have to keep working to go deeper with our customers and really try to innovate together,” said Zabrocky.

Ali Shehab, Global Director of Special Projects and Services at DNV, called collaboration “the fuel of the future,” adding that companies will need to work together both within the maritime space and across industries ashore.

“We foresee that the maritime industry has something of $8bn to $28bn USD of investment whereas the shore side has something from $30bn to $9bn of investment in order… to reach the future of net-zero 2050,” said Shehab.

“To be able to work with customers, this is the ideal”, said Zabrocky, “because I don't think we're going to get there without doing that.”