Charter rates for ships carrying liquefied natural gas have hit record lows, with some owners now facing a loss if they lease their vessels out, as the sector grapples with huge overproduction in the wake of Europe’s energy crisis two years ago.
The cost of hiring a modern LNG carrier have fallen nearly 80% since the summer, as the delivery of new ships outpaces the growth in global LNG production.
There were around 650 LNG carriers in operation as of last year, according to International Gas Union, an industry group. Sixty-eight vessels would have been added to that pool by the end of this year and 88 in 2025, according to Flex LNG, an LNG shipping company. More than 80 ships will be delivered each year through to 2027, according to Flex.
However, the additional volumes of LNG exports that these vessels wee ordered for have not materialised in the timeframe expected, mainly due to delays in the development of LNG export facilities in the US, now the world’s largest exporter of the superchilled fuel and the main source for Europe.
Additionally, Europe has not imported as much LNG as in previous years due to the high level of gas left in storage after last winter proved milder than normal, limiting the use of such vessels.
Martin Senior, deputy head of LNG pricing at Argus Media, a pricing agency, said that while 251 new-build carriers were due to be delivered between 2025 and 2027, the new export capacity coming online in the same period might require only 171 additional carriers.