Golar LNG to Expand Fleet
Liquefied natural gas carrier Golar LNG announced Tuesday that it will be expanding its fleet in response to a strengthening LNG market.
The firm said that its management has considered several options for expanding the company's activities. This has included growth through acquisitions as well as organic growth, it said.
Particular emphasis has been given to valuations, operating efficiencies and timing of such an expansion, said Golar. The firm sees significant strength in the present development in the LNG shipping market. Global LNG trade is estimated to increase by in the region of between eight and 10 percent per year over the next few years with further upside if US LNG exports materialize.
The firm's board, it said, has in the recent months been in discussions with several yards with respect to increasing the size of the company's new building program. The fact that ship new-building prices in general are under some pressure and also that the new tri-fuel engines are significantly cheaper to operate than the previous generation steam turbine ships makes new buildings attractive, said Golar.
The company believes that it is important to get new capacity delivered as early as possible in order to position Golar for the anticipated large LNG volume increases expected to come from Australia and possibly the US in 2015 and 2016.
As a first part of this expansion Golar is pleased to announce that it has entered into two new-building contracts for 162,000 cubic meters of new buildings with fixed-priced options for a further two with the Korean shipbuilder Hyundai Samho Heavy. One vessel will deliver during the third quarter of 2014 and the other will deliver during the fourth quarter of 2014.
The total cost of the two vessels is slightly above $400 million. As with Golar's existing new-building orders, the vessels will be delivered with tri-fuel diesel electric engines. The new engines will be more fuel efficient and will also have lower emission levels of pollutants and carbon dioxide.
"We are excited to see the rapid developments in the LNG market," said Golar Chairman John Fredriksen. "We clearly see LNG as one of the key parts in the future energy supply chain. The increased flexibility provided by floating production and regas solutions has transformed the LNG industry and made it significantly more competitive versus other energy types. The large global spreads in gas prices, the high growth in trade and the tight availability of shipping give this investment a solid foundation."
In addition to the reported contracts with Hyundai, Golar is in final discussions with regards to further increasing the company's new building investment. This includes ordinary LNG carriers as well as ordering more infrastructure type LNG assets. A final clarification about this should be expected in the coming weeks.
Golar said it is now uniquely positioned with a total of 13 modern LNG carriers including 2 FSRU's available for trading in the period 2012- 2014. In addition the company has several older vessels available. The firm's board will use the existing open position to seek strategic partnerships as well as creating a balanced portfolio of short, medium and long term charters, it said.
With the large new-building commitment at attractive prices; the current portfolio of long term charters and the corporate structure including Golar LNG Partners, the company said it is well positioned to serve its customers rapid expansion and to grow earnings aggressively in the years the come. These latest orders confirm Golar's commitment to be the worlds leading independent LNG shipping company, added the firm.
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