After a relatively robust 2007 for LNG shipping, the winter of 2007-08 was characterized by increasingly troubling near-term project delays in LNG supply ventures, and by growing concerns over long-term LNG supplies and declining reserves/production ratios.  Much of this has been anticipated for some time in the Marsoft LNG shipping market forecasts, but supply developments this winter were clearly trending worse.  The winter also brought downward revisions in economic growth projections and associated implications for gas demand in the United States in particular.

The winter also saw the dawn of a new era in LNG shipping with the first deliveries of LNG cargos by Q-flex vessels capable of carrying in excess of 200,000 m³.  The first Q-flex ships began making deliveries from Qatar sources in December, with a partial cargo to Japan aboard the 216,200 m³ Al Gattara, and another partial cargo from the 210,100 m³ Al Safliya to the Energia Costa Azul terminal in Mexico.  Kogas received its first Q-flex cargo (the 216,280 m³ Tembek) in late January.

US LNG imports increased by 34% in 2007 over 2006, on the back of strong growth in total US natural gas consumption.  With 2007 imports of 781 Bcf (15.6 mt) of gas, LNG accounted for about 3% of US gas consumption in the past year.  The average price for LNG imports in 2007 was $6.66/mmBtu, slightly below the 2006 average.  The US Energy Information Agency (EIA) now forecasts imports of 937 Bcf in 2008 and 1,179 Bcf in 2009, growth of 20% and 26% respectively.

Short term charter rates over the past year have trended toward the high side of Marsoft’s base case forecast, with occasional spikes associated mainly with import surges in the United States.  These short-term rates are related to fleet utilization.  High demand for gas imports in the United States during much of 2007, combined with increased use of LNG carriers as floating storage, gave a boost to idle LNG tonnage in 2006 and in 2007.  Short-term rates spiked above $70,000/day occasionally, but on average remained in the $50,000/day range in 2007.  Long-term charter rates continue to run in the vicinity of $65,000/day.  Short-term trades now account for more than 10% of global LNG trade and are expected to grow to 15 to 20% of the LNG market over the next decade.

About Marsoft
Marsoft provides market analysis, investment and risk management, and finance services to the maritime industry. Founded in 1979, Marsoft's offices in Oslo, Boston and London and agents provide services and support on a worldwide basis. Marsoft Incorporated and Marsoft International provide consulting and decision support services.

For more information please download our brochure.