LNG SHIPPING OVERVIEW · LNG shipping has expanded somewhat into the liquefaction and regasification ends of that part of the value chain and this tendency is here to stay. Developments

LNG SHIPPING OVERVIEW

1. FLEET EVOLUTION & SHIPPING COSTS• Worldwide traded volumes• Countries involved in LNG (1990, 2003, 2013, Future?)• LNG Spot Charter Rates• Shipping costs

2. FLEET FEATURES• General Features• Orderbook to be delivered 2013-2015

0 INDEX

3. TRENDS• Fleet trends• Propulsion technologies• Cargo containment system• Floating LNG (FLNG)• Regasification projects• Mini-LNG carriers• Compressed Natural Gas (CNG)• Contracts

4. CONCLUSIONS

2

3

FLEET EVOLUTION & SHIPPING COSTS1

1 MARKET EVOLUTION (I)

100

150

200

250

300

Mtpa

Worldwide LNG traded volumes:

Mtpa

2011 2012

Atlantic�Pacific 17 23

Pacific�Atlantic 2 2

4

In 2012, the interbasin trade grew by 31%...

�Increased spot demand in the Far East (post Fukushima)

�Reduced spot demand in Europe (recesion)

0

50

100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Year

1993

1 MARKET EVOLUTION (II)

5

Countries involved in LNG shipping

U.S.SpainFranceItalyAlgeriaBelgium

UKMalaysiaIndonesiaBruneiAustraliaUAE

S. KoreaJapanTaiwanLibya

2003


6

PortugalDom. Rep.T&T

GreeceTurkeyOmanPuerto Rico


2013


7

PeruChileArgentinaBrazilMexicoCanada

NorwayLituaniaNedherlandsBruneiAngola?

YemenRussiaIndiaChinaThailandKuwait

EgyptNigeriaEquatorialGuinea


Future


8

ColombiaIsraelPapua N.G.PolandSingapore

Iran?Jamaica?Bahamas?Germany?Venezuela?Uruguay?Tanzania?

Croatia?Cyprus?Pakistan?Philipines?Cameroon?Mozambique?


1 MARKET EVOLUTION (III)

The maturing of the LNG shipping business and its expansion worldwide has led to increased trades, mainly interbasin. The effect of this has been seen in the spot rates over the last couple of years and record hires have been paid (150 k$/day).

9

Source: Fearnleys AS

138K ST 170K DFDO

20 Days 60 Days 20 Days 60 Days

Distance (Miles) 4,000 12,870 4,000 12,870

DeliveredQuantity(TBtu)

3.05 2.90 3.84 3.65

Total Cost (MM$) 3.23 9.53 2.77 8.03

1 MARKET EVOLUTION (IV)

Costs in US$ per Mmbtu delivered (Non-spot shipping)

10

Assumptions 138K ST 170K DFDO

Charter rate (US$) 80,000 80,000

Bunker Price (US$) 600 HFO 600 / MDO 900

Port Costs (US$) 200,000 200,000

LNG Price ($/MMBtu) 8 8

Boil Off (%/day) 0.15 0.15

Speed (Knots) 18.5 18.5

Propulsion Steam Turbine Dual Fuel Diesel Electric

Total Cost (MM$) 3.23 9.53 2.77 8.03

Unit Price (US$/MMBtu)

1.06 3.28 0.72 2.20

Furthermore, a strong global market under expansion has lead to:

� More players (new owners, producers and traders)� More vessels� Diversity of technology solutions� Innovation

1 MARKET EVOLUTION (V)

11

� Innovation� New contracting models

FLEETFEATURES2

12

2 FLEET FEATURES (I)

150

200

250

300

350

400

450

Num. Vessels

Fleet evolution

13

0

50

100

150

Year

Producers: RasGas, QatarGas, NLNG, Tangguh, Sonatrach, etc.Majors: Stream, BG, GdF-Suez, BP, etc.Traders: Vitol, Trafigura, MorganStanley, Gunvor, etc.

Current distribution

49%

48%

3%

Producers Majors Traders

Cargo containmentNumber of vessels

100

380

21

Under Construction

Existing

Scrapped

2 FLEET FEATURES (II)

30%

36%

32%

3%

MOSS

NO 96

MARK I,III

Other

14

Vessels age Cargo capacity

87

151

67

2649

0-5 years

5-10 years

25-20 years

20-30 years

> 30 years

45

68

229

38 Q-flex/Q-max (>200,000 cbm)

Big (150-200,000 cbm)

Standard (100-150,000 cbm)

Small (<100.000 m3)

Mark III62 (62%)

GT NO 9631 (31%)

Moss7 (7%)

Shipbuilder

New building orderbook to be delivered 2013-2017

2 FLEET FEATURES (III)

Cargo containment

8 16

27

37

3 5 4

STX Offshore&Shipbuilding

Daewoo

Hyundai Heavy Industries

Samsung

Kawasaki Heavy Industries

15

Cargo capacity Owner

Industries

Mitsubishi Heavy Industries

4 2 2 24

5

5

10

13

2115

9

6

34

2 2 2 3 1 5

Alpha

Awilco LNG

Brunei Gas Carriers

BW Gas

Cardiff

Chevron

Dynagas

GasLog LNG

Golar LNG

SK Shipping/Marubeni

K-Line

30

70

170.000 - 180.000 m3

145.000 - 165.000 m3

TRENDS3

16

Fleet trends

3 TRENDS

�New “conventional” vessel size stablished in 155/165,000 cbm. The Q-Flex/Q-Max sizes have been project specific.

�New players

�Spot Market development

17

�Spot Market development

�Potential underutilised in backhauls

�New technologies in both shipping and floating liquefaction and regasification

Propulsion technologies

Engines

Compression

Reliquefaction unit

Re-heat ST

TRENDS (I)3

18

Economizer

Reheater

Reheater burner

Main burner

Boiler

Images from LNG journal & MHI.co.jp

ME-GI

Consumptions comparison

TRENDS (I)3

Speed (kn)

PROPULSION SYSTEMS

ST DFDE SS-RL SSDF

(140.000 m3) (170.000 m3) (210.000 m3) (170.000 m3)

19

Ldn (T/day) Bllst (T/day) Ldn (T/day) Bllst (T/day) Ldn (T/day) Bllst (T/day) Ldn (T/day) Bllst (T/day)

16 126 122 76 87 90 102 60 70

18 148 140 104 106 122 125 80 82

19.5 180 173 136 131 160 155 105 102

Preferred systems for NBs :

• NO96, 31% of the orders:• Consists of a thin, flexible (primary membrane), which is in contact with the cargo, a layer of plywood boxes filled with Perlite

called (primary insulation), a second flexible membrane similar to the first (secondary membrane) and a second layer of

boxes also filled with Perlite in contact with the inner hull (secondary insulation).

• The first and the second barriers are identical and are fabricated from cryogenic Invar.

Containment system

TRENDS (II)3

20

• Mark III, 62% of the orders

• Consists of a thin flexible membrane as primary barrier (1.2 mm stainless steel), which bears against a supporting insulationstructure embodying a secondary barrier (triplex scab) and further secondary insulation bolted o the inner hull.

• Insulation sandwich panels consisting of two layers of foam assembled by bonding with polyurethane or epoxy glue.

• ACT-IB (Aluminium Cargo Tank – Independent Type B):

• Developed by Daewoo Shipbuilding and Marine Engineering.

• Cargo capacity up to 210,000 m3

• Independent prismatic tanks.

• Aluminium and Polyurethane Insulation

• Increased security and flexibility in partial loads

• ADBT (Aluminium Double Barrier Tank System):

New cargo containment systems (under development)

TRENDS (II)3

21

• ADBT (Aluminium Double Barrier Tank System):

• Developed by Aker yards and DNV.

• For operations in harsh environments such as the Arctic.

• Independent prismatic tank barriers built in Aluminium.

• Capacities from 1,000 to 150,000 m3

• Short building time and cost efficient.

• FSP (Flat-Panel, Semi-Membrane, Prismatic-Shaped)

• Developed by General Dynamics and Wavespec.

• Semi-membrane prismatic tanks.

• Small-scale applications, offshore tanks or storage units.

• Short and cheap building processes.

• Facilities

• Platform.• Anchoring and swelling systems.• Liquefaction system.• Cargo containment.• Unloading system.

Floating LNG (FLNG)

TRENDS (III)3Firm Projects;

Prelude (Australia)MalaysiaColombia

22

Regasification projects

3 TRENDS (IV)

10

12

14

16

18

17

Existing and under construction FSRU`s projects

23

• Vessels with facilities to regasificate LNG to high-pressure natural gas.• Annual emission capacities up to 7 bcm.• Tank capacity up to 170,000 cbm in last generation vessels.• More than 20 potential projects under study

0

2

4

6

8

10

2005 2010 2015

0

8

Mini-LNG carriers

• Vessels designed for small scale LNG distribution.• LNG bunkering trade.• Double manifold height.• C-Type pressurized tanks (3 – 5 bar).• No Boil-off management system.• Ship to ship operation capability.

TRENDS (V)3

24

• CNG Market opportunities

• Reduced distance between production and clients.

• Reduced gas volumen.

• Lack of infraestuctures.

• Compressed Natural Gas (CNG)

TRENDS (VI)3

25

Time charter party still the most frequent choice� Spot, medium and long term contracts� ShellLNGtime1 used on spot fixtures� Charterer specific formats for long term

TRENDS (VII)3Contracts

26

However, backhaul opportunities and a market progressively more focused on the spot (more liquidity) demand new solutions:

� Contracts of affreightment� Voyage charter party

…but the LNG shipping is very rigid due to the Take or Pay contracts characteristic of the business tied together with very narrow laycans so these formats are challenging to implement.

CONCLUSIONS4

27

CONCLUSIONS4There has been a dramatic increase in the fleet and players over the last 10 years.

The traffics have become globalised and the fleet has suffered the corresponding constraints, very well reflected in the spot market rates.

The increase in vessel sizes and the implementation of new technologies in propulsion have reduced the unit shipping costs significantly.

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There have been no significant breakthroughs in cargo containment technologies.

LNG shipping has expanded somewhat into the liquefaction and regasificationends of that part of the value chain and this tendency is here to stay.

Developments in mini-LNG and CNG are at their first stages.

The Time Charter Format is still the most frequent choice but there are interesting challenges that may require more flexible contract formats; Voyage Charters, Contracts of Afreightment, etc.

Thanks for your attention

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LNG SHIPPING OVERVIEW · LNG shipping has expanded somewhat into the liquefaction and regasification ends of that part of the value chain and this tendency is here to stay. Developments