TEMASEK-OWNED Pavilion Energy has agreed to hire two newbuild liquefied natural gas carriers (LNGCs) from energy shipping giant BW group as it seeks to bolster its capacity on surges in demand seen in long-haul trades for the super-chilled fossil fuel.
This pair of LNGCs, to be built with engines boasting lower carbon footprints, are scheduled for delivery between 2019 and 2020 from South Korea's Daewoo Shipbuilding & Marine Engineering.
The two vessels would double Pavilion Energy's charter-in fleet. The Temasek-owned LNG-focused player has on hire the BW Pavilion Vanda, while a second LNGC, BW Pavilion Leeara, is expected to join its fleet from 2019. Both the Vanda and Leeara are owned by its joint venture with BW Group.
Pavilion Energy group CEO Frédéric Barnaud said the long-term charters on the two newest LNGCs "will strengthen the group's global LNG trading activities, especially on long-haul voyages from Atlantic liquefaction plants to Singapore and Asian markets".
The long-term charters agreement on these low-carbon LNGCs was signed at a juncture when global LNG trade has strengthened significantly over previous years against a backdrop of a looming supply boom and rapid growth in demand.
Wood Mackenzie principal analyst Andrew Buckland said: "LNG shipping is benefiting from an unprecedented wave of new LNG supply projects coming on stream in a relatively short period of time."
WoodMac projected that LNG output will increase by over 150 million tonnes per annum (tpa) between 2015 and 2020, compared to just 20 million tpa for the five-year period prior to 2016. Additionally, some 114 million tpa of new LNG capacity are in line to be sanctioned between 2018 and 2021.
Mr Buckland noted that most of the new supply is coming from the US Gulf and this benefits LNG shipping because the largest LNG markets are farther away in North-east Asia.
He added that the huge increase in LNG supply has been "comfortably absorbed" by demand growth, with China alone raising its imports by 50 per cent in the first half of 2018.
The Business Times understands that to date, Pavilion Energy's LNG trading volumes amount to about 5 million tonnes per annum.