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Saturday, December 16, 2017

New growth – new technology – new people skills in the LNG sector

A broad sweep across the LNG market, including a comprehensive update from Qatar Gas Transport Company (QGTC), was given this week to those attending DNV's Maritime Forum in London. 

The dramatic growth in the LNG carrier fleet (from 182 vessels today to well over 300 by 2010) should be put in the context of the relatively small size of today's fleet, suggested DNV's Wilhelm Magelssen, Braemar Seascope's Debbie Turner and QGTC's Christian Steimler. This wave of new construction has seen ship size creeping upwards with the biggest and latest designs being for 250,000 cu mtr compared to the current 150-160,000 cu mtr. It has also seen the development of designs for the Compressed Natural Gas (CNG) carrier which is a far heavier ship (tanks of normalised fine-grain steel) costing much more than LNG carriers, but which cuts liquefaction and regasification out of the supply chain by carrying the gas pressurised at 120-275 bar (0.25 bar on LNG carrier), and at between minus 30 and plus 45 degrees Celsius compared to minus 162 degrees on LNG carriers. 

But Magelssen warned that this huge increase in the LNG fleet means more ships, more yards, more owners, and perhaps officers and crew with limited LNG experience. In addition, Russia's possession of 27-30% of global gas reserves, much of which is located in the Arctic, means that these ships will be trading in ice conditions – also requiring specialised seafaring experience. 

His DNV colleague Bjorgulf Haukelid stressed that, in a technologically advanced and specialised sector like LNG transport, the difference between success and failure is people. Good people have competence, he said, and competence comes from good training. "Training and competence should be directly aligned with the business goal," he added, "and that means directly aligned also with the boardroom."  

Turner went on to warn those jumping into LNG vessel ownership to beware that whereas shipping deliveries are usually on time, LNG projects can be delayed. The U.S. is a huge market, she said, with many LNG terminals in the Gulf and East Coast areas awaiting authorisation, but where will all the gas being produced by Qatar as well as by Algeria and Indonesia, not to mention other producers, go? Price is the key, she suggested. Positive growth in all areas, continued demand for newbuildings (primarily project-driven), and ongoing changes in technology and size will be the norm for this sector, she concluded. 

QGTC surprised many present with its commitment to LNG, both financial and operational. USD 16.5bn investment in LNG vessels is just part of the picture. Associated products (LPG, sulphur, condensate) actually make up 40% of total revenues for Qatar's LNG project. These all need to be reliably lifted to avoid impacting on LNG production, emphasised Steimler.  

LPG production will go from 2m tpa to 11.5m tpa by 2011 (and 14m by 2014) necessitating the construction of 20-30 VLGCs costing some USD 2.5bn. Sulphur production will increase to over 3.5m tpa by 2010, requiring a fleet of up to 15 handymax bulkers costing some USD 500m. Condensate is currently loaded on partly-laden VLCCs (there are draft constraints) but there are discussions on building a single buoy mooring (SBM) terminal. 

In addition Qatar is committed to building and operating a major USD 500m ship repair yard in Ras Laffan, which is itself in the throes of growing into a 100 square kilometre super-port next to Ras Laffan industrial city.   

Contact: Bill Box