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Transcript of chapter1part3password-13502900144001-phpapp01-121015033603-phpapp01 (1)
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2012
[LNG REPORT 2012]
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III. LNG Shipping Fleets and Costs
a. LNG Shipping Fleet & Vessels
i. How many ships for a project?
Determine
AnnualLNG
DemandLiquefaction Capacity
Plant Availability
Calculate
No.
Of
CargoesShip Size
Determine
Ship
Arrival
frequencyPlanned Maintenance
Calculate
No.Of
ShipsDestination Ports
Trade Split
Ship Journey Times
Offload port delays
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Determining No. of Ships for a Project
EXAMPLE:
DES project Nigeria to UK
Liquefaction train = 4Mtpa
- Equates to max daily production of 12,000 tonnes over 330 days annual operation
Will consider use of 155,000cbm standard vessel sixe
- A 155,000cbm vessel delivers 150,476cbm cargo
Round trip takes 12.5 days
How many ships
ii. LNG Shipping
1. Developing History
The ship ever classified as liquefied gas carrier was Methane Pioneer in 1958
Traditionally, LNG gas carriers were funded and built for single projects,
balanced with 20-25 years take-or-pay sales contracts
Japan and Korea created their own LNG ship building industries through
imposed FOB supply imported using their own tankers
China has recently begun to adopt similar thinking in developing contracts
Malaysia policy was to export LNG only on ex-ship (CIF) basis and reserved
all shipping for Malay flagged vessels
India has recently done the same for imports. The LNG marine industry is growing and changing
iii. The Modern LNG Fleet:
1. Growth
o 1998: it had taken 34 years to reach 100 vessels in service
o 2006:200 vessels in service
o 2008/9: wil l reach 300 vessels in service
o Estimated 326 vessels needed in 2010
o
Potential dangers as all parties assume safety in the norm and thatrelevant skills will be available.
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2. Modern LNG Fleet (by type) at 27 April 2012
LNG Carrier Fleet By Type
LNG CARRIER FLEET BY TYPE
Type Delivered On Order Conversion Total
Ship 363 70 0 433
FPSO 0 1 0 1
FSRU 7 6 1 14
RV 7 0 0 7
Total 377 77 1 455
Source: Platou LNG
The fleet has grown rapidly to meet the increases in trade rising from just under 5 mill ion TEU at
the end of 2000 to 14.28 mill ion TEU at the end of March 2011.
3. Development of World Container Fleet Capacity: 2000 to 2011
(Million TEU End of Period)
Source: Drewry
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4. LNG Fleet Age Profile
Global LNG Fleet by AGE, 2011 (Number of Carriers, % of Total)
iv. World LNG Shipping:
1. Sufficient ship building capacity to meet projected demand?
Probably only about 15 world shipyards capable of building LNG tankers
Only about 8 established shipyards currently build LNG tankers- 3 major yards in Japan
- 3 in Korea
- 2 in Europe
- 1 now in China
Plus:
- 2 new yards in Japan
- 2nd
possibly in China
- And, Russia, India & Poland soon?
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2. LNG Orderbook , LNG fleet development and Forecast
3. LNG Shipping Process
4. Retirement and New Builds
Due to increased safety and environmental controls there about 55 to 62 older
tankers that wil l be retired up to 2014, as they become less commercially
uneconomic
- Some will be converted into FSRUs
We are now seeing swelling orderbooks at the South Korean shipyards but the
current orderbook of 56 vessels will not meet projected need
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This is mostly driven by increasing Asian plants and demand
- New Australian plants alone will need additional 40 to 45 vessels to 2015
- New special vessels for Yamal LNG also
5. Structure
Contrary to the trend in more traditional shipping markets (e.g., oil tankers, bulk
carriers), the O&G majors and state enterprises tend to be more directly
involved in LNG shipping
- 44% of fleets is owned by O&G majors and state enterprises
Independent owners and international companies are re-emerging as significant
players
- Among private owners, 55% are South Korean or Japanese shipping
corporate- About 33% of new order book is for independent ship-owners with around
21% being Japanese and 24% being Korean.
- Now we are seeing independent Greek and Scandinavian companies
entering LNG taner market with new builds.
- O&G majors account for about 12%
6. Shipowner process
Ships can be owned by LNG sellers (directly or by special purpose company), or
by buyers or independent third parties who charter vessels out to LNG buyers &
sellers.
Shipowner must consider several factor before ordering a new build LNG tanker
- Financing (usually project financed via banks)
- Shipyard quoted prices
- Shipyard slot availability
- Cargo containment system required
- Standard or ice-class
- Etc.
Shipowner reviews all such specification with the classification societies (Lloyds,
ABS, etc.), the shipyards and the equipment providers to allow yard selection,
usually by competitive tender process.
Shipowner generally has a supervision team onsite at the shipyard throughout
the construction process to ensure that vessel is being build to agreed
specification.
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7. Vessel Safety
Today, LNG tankers safely transport more than 220 million tons per year to
ports around the world- One LNG tanker enters Tokyo Bay every 20 hours
- One LNG cargo enters Boston harbor every week
Outstanding safety records, but why?
- Continuous improvement in ship technology & maintenance
- Continuous improvement in ship safety equipment
- Comprehensive safety procedures and training
- Effective government regulation and international oversight
SIGGTO Society of International Gas Tankers and Terminal Operators
8. Vessel Design basics
Double-hulled tankers/ gas carriers
- From first one unlike oil tankers
Traditionally driven by stem propulsion
- Use of LNG Boil-off gas
LNG cargo contained in protective, cryogenic tanks within inner hull
- Broadly, 2 types of gas carrier vessel based on LNG tank design
Enhanced equipment to support safe ship handling
Sophisticated leakage detection equipment and emergency shutdown systems
9. Containment and Boil-off Gas
LNG is carried
- As a boiling liquid at approx -160 centigrade
- In non-pressurized tanks
LNG cargo is boiling therefore it continually produces vapor (Boil-off Gas BOG)
- Mostly used as propulsion fuel
- Can be re-liquefied
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Boil off Gas used as Propulsion Fuel
Source:BrighthubEngineering
Boil off Gas re-liquefaction
Source: CNOOC Fujian LNG
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10.Moss Containment
LNG is stored in a numbers of self-supporting, aluminum spherical tanks fixed
within the hull LNG cargo system is separate such that any contraction/ expansion is not passed
to the tanker hull.
11.Membrane Containment
Standard tanker consists of 4 separate LNG holds
Insulating material is applied to the ships inner hull
Membrane applied to ensure liquid tightness
Source: epd.gov.hk
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12.Containment Design Advantages & Disadvantages
Key selection issues
Capacity/ fi lling l imits
Weight
Complexity of manufacture
Cost
Size/ terminal compatibility
Self-Supporting Tanks
Tank: Heavy rigid metallic.
High material and Fabrication cost.
Tank capacity: 125,000 m Ship tank material weight: 4,000 tons
Insulation: Non-load bearing. Relatively cheap.
Membrane Tanks
Tank: Specialized light construction
High material and fabrication cost
Tank capacity: 125,000 m
Ship tank material weight: 400 tons
Insulation: Rigid load bearing over whole surface. Relatively expensive.
Source: Shell Global Solutions
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13.Current Fleet by Containment Design Type
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14.What is Storage Tanker Roll-over?
Natural convection causes circulation of the LNG within the storage tank, maintaining a uniform
liquid composition. The addition of new liquid, however, can result in the formation of strata of slightlydifferent temperature and density within the LNG storage tank. "Rollover" refers to the rapid release of
LNG vapors from a storage tank caused by stratification. The potential for rollover arise when two
separated layers of different densities (due to different LNG compositions) exist in a storage tank.
Source: www.igu.org
Note: ship tanks only fill from bottom
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v. LNG Fleet
1. Tank Roll-over?
It has been generally considered that rollover in cargo tanks was not a majorissue, although cargoes with high nitrogen content are more prone
However, an incident has been reported when a vessel with substantial LNG
heel (~5400m) consolidated into only 2 tanks loaded a higher density LNG
below the heel
- Original cargo (& heel) was of lean LNG from an Atlantic Basin terminal
- New cargo loaded was rich LNG reloaded from an SE Asian terminal
- Important to remember that ship tanks only fill from bottom
The first tank roll -over occurred 5 days after loading and second tank rolled a
day later
-Whilst there was reported rollover in both ship tanks causing a noticeablerise in tank pressure there was no uncontrolled BOG release
2. IHI SPB Containment
Special design prevents sloshing damage which can occur in membrane tanks
Most expensive containment system
Main potential is for Floating LNG Production and FSRU applications
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3. LNG Tankers of various Types and Sizes
Moss Type
4 Tanks
5 Tanks
6 Tanks
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Membrane
Large
Small
3 Tank Moss
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Other Types
Pressurized
Prismatic
Conch
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4. Standard Ship Size
1970-2002
130-140,000m
Limitations
- Japanese maximum displacement, 105,000 dwt
- US maximum draft, 11.3 m.
Conservative designs
2002-2006
140-153,000m
Limitations
- Japanese maximum displacement, 105,000 dwt
- US maximum draft, 11.3 m.
Optimized designs
- Larger ships, same constraints
5. Vessel Size has increased
2007
A new generation of LNG tankers arrived to transport the output of the
large Middle East mega-train projects to long haul markets in USA and
Asia
1. To extend the reach of existing commercial ventures in other distant
supply centers
2. Fewer transits with reduced fuel costs
Vessel Size for its economies of scale are critical for this new strategy to
achieve equivalent or lower delivered cost
- Increase from 138,000 to 220,000m vessel size can reduce cargo
delivery costs by up to 45%
54 Q-flex and Q-max vessels now operating equaling ~20% of global fleet
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Growth in Capacity of LNG Carriers
Source: Short History of Shipping, Peter G. Noble
125,000m
(MOSS)
145,000m
(MEMBRANE)
200,000m
(MEMBRANE)
250,000m
(MEMBRANE)
LNG Cargo Tanks 4 4 5 5
Length (overall) m 285 289 313 345
Beam (m) 44 43.4 50 54
Loaded Draft (m) 11 11.4 12 12
Ballast Draft (m) 10 9.7 9.9 10.3
Deadweight tonnes 69,000 72,000 100,000 120,000
Displacement (loaded) tonnes 97,800 103,000 140,000 174,000
Boil-off Rate % per day 0.15 0.15 0.14 0.13Max. Loading Rate (m/hr) 11,000 13,000 16,000+ 16,000+
Manifold dia inches 16 16 20 20
Propulsion Power MW 26 MW 27 31 34
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Against Bigger ships
Draft and its relationship with LOA & Beam size is the issue for Moss tankers
- Must have loaded draft of 12 meters or less
-Suez canal
- Limited terminal access
Terminal loading and unloading lines and arms limited typically to 10,500m/hr
Commercial contracts require a turnaround of 24 hours so a 138,000-155,000 m
LNG ship unloads in 12 hours
A 216,000m ship takes 21 hours to unload
Increasing size = increased design problems
Regarding sloshing, particularly for Membrane tankers.
Possibility to put in 5th
tank per vessel but then cost goes up due to associated
equipment
The sloshing phenomena occur when the ship motions coincide with the natural
frequency of the liquid motion in the tanks. The build-up of violent motion is due t
frequency, not amplitude.
Increasing size = new propulsion systems
Increasing size is driving consideration of new more complex and efficient
propulsion methods (away from single screw, steam turbines)
- Single screw slow speed diesel
- Twin screw, lean burn diesel electric
-
Twin screw, diesel electric coupled with re-liquefaction units to limit boil-off- 4 stroke diesels using boil-off gas as a dual fuel
- Gas turbines
Choice of propulsion system is highly correlated to
- Commercial drivers (fuel saving vs. maintenance)
- Type of trade (point-to-point, short voyage, long distance voyage or merchant)
- Experience of shipping company
6. Changing propulsion trends:
Environmental pressures on LNG carriers
FUEL NOx SOx CO2
Steam Turbine HFO + LNG 200 2,400 180,00
Low Speed Diesel + re-liquefaction HFO 3,950 1,800 120,00
Dual fuel electric LNG only 240 0 100,00
Gas turbines and COGES LNG only 850 0 108,00
Note: Emissions shown in tones/ year/ ship Source: ALSTOM
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In 2003, with exception of 3 very small vessels, ALL were steam turbine
driven, burning combinations of BOG and Heavy Fuel Oil (HFO).
Now, around 40% of new vessels on order are for diesel (Diesel Fuel Diesel
Electric) driven ships
- DFDE vessels cannot burn BOG/ HFO fuel combination
- New Q-flex and Q-max vessels now use slow speed engines burning HFO
only
Gas turbine units have fuel efficiency of 38-40% compared with 28% for
steam turbines
- Plus, would use light gas instead of heavy bunker oil as fuel.
Qatars Nakilat is reported to be considering changing all its 45 tankers
(including Q-flex and Q-max) to run only on LNG gas fuel Should they decide to go ahead with this plan the tankers will be converted
during 2012 to 2015
Shipping brokers and analysts say the refit programs and consequent idling
of Qatari tonnage wil l push day-rates on LNG carriers even higher as they
wil l have to charter in other tankers to cover during refit period.
Other design development
New advanced containment designs for both Moss and Membrane tank
carriers
On-board re-liquefaction facilities for cargo retention on new Qatari vessels
7. Vessel size has also decreased
Coral Methane
The first Polish built LNG carrier was launched on may 7, 2008, at Gdansk
based Stoczina Polnocna SA (Northern Shipyard), member of REMONTOWA
Group
- Diesel/ gas electric driven
- Can carry a variety of gas cargoes; liquefied natural gas (LNG), liquefied
petroleum gases (LPG) or ethylene
- Ice class 1B
- Cargo capacity 7,500m
- Length over all 117.80m; breadth 18.60 m; draught 7.15 m
8. Technological Change
Cold Weather needs
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More severe weather conditions ice and waves
- Sakhalin winter-ising the vessels
- Snohvit/Shtokman/ Barents Sea artic-ising the vessels
Requires greater thickness (ice) and more cryogenic steels for hulls
Requires strengthened propellers, and protection
Ice-class
Sovcomflot
- Energy shipping company
- One of most modern and youngest world fleet
- Specialist in ice-class vessel and extreme cold operations
- Took delivery of 2 tankers at end of 2007 ex Japan for Sakhalin 2 project
to travel to Japan & elsewhere on 20 year charter
145,000m
Moss containment
Ice-class
Russia
- Reported that Russia will requi re 30 LNG tankers by 2020 to transport
~25Mtpa from existing and new export plants
Shtokman LNG wil l need 12 new vessels
Yamal LNG wil l need 12 new vessels; new design for large-scale,
year around Arctic export .. Very large, ice-class with Moss
tanks
Others will need ~6 new vessels
- Many, if not all, of these vessels to be built by Russian United
Shipbui lding Yards agreements with Korean shipyard and with French
Technip for technology transfer
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9. LNG Transfer at Sea
Two vessels moored together
LNG transferred using flexible hoses (6,000 m/h)
Benign conditions required
Allows maximization of Exelerate Energy, Energy Bridge vessels
Ataris testing transfer from their Q-flex & Q-max vessels to smaller tankers
Maximization of Exelerate Energy business model
The Problem.
- Tugs: Much smaller than LNG carriers. Work beam on to waves
10.Tandem Unloading
LNG (un)loading at wave heights up to 5.5 m (18ft)
Considerable design work performed by individual companies and through JIPs
- Model testing completed
- Products commercially available
- Needs a project to develop further
LNG tankers would need modification so would have to be dedicated to a
specific trade
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11.Hoses
Considerable work being done in the industry to develop and commercialize
large diameter cryogenic LNG hoses for (un)loading- Designs focusing on (un)loading in wave heights of 4.5-5.5 m
- Floating and sub-surface versions being developed from aerial hoses
12.LNG Shipping Experienced personnel a serious challenge
Number of officer on a LNG carrier
Deck officers = 5 ( including Cargo)
Engineering= 5 (including Cargo)
Total Off icers = 10
Estimate of new required officers to meet shipbuild
143 x 10 x 2.5 = 3,575
Senior officers = 2,145 (60%)
Junior Officers = 1,430
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b. LNG Shipping Logistics & Costs
i. Basic Commercial Models
Free on Board (FOB)
- Title to the LNG cargo transfer to buyer at loading and buyer has responsibility for
shipping
Cargo, Insurance & Freight (CIF)
- Title of LNG cargo can transfer during the voyage (high seas) or delivery and the
seller is responsible for shipping; complex liabilities as buyer is responsible for cargo
but sel ler responsible for shipping.
Delivered Ex-ship (DES)
- Title transfers on unloading and seller has responsibility for shipping
ii. Control of Shipping
For LNG sellers, control of LNG shipping is a core value chain issue to ensure loading
schedules are tuned to production activities
- Shutting in or slowing LNG liquefaction needs to be avoided.
Controlof shipping does not necessarily require ownership or operation both short
and long term charters provide sufficient controls
-Having the ability to tune an FOB ship loading schedule and the heelmanagement of vessels provides sufficient control in most cases
- This tuning facili ty does however require some contractual changes to the
apportionment o shipping & commercial l iabilities.
iii. Long Term LNG Charter Contracts
Traditionally:
Newbui ld vessels constructed to meet the requirements of a specific project
Long duration charter period (typically 15-25 years)
Fixed or relatively fixed hire
iv. Risks to Owner and Charterer
Owner
- Technical/ Operating Risk
- Non-performance by the charterer
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Charterer
- Technical/ Operating Risk
- Non-performance by the owner
-Market risk
v. LNG Charter Terms
The owner is responsible for the operation, maintenance and performance of the vessel
The technical operating/ breakdown risk is shared between owner and operator
- Of hire and exceptions provisions typically excuse charterer from paying hire but
owner not obliged to provide alternative vessel or pay damage
- If repeated/ serious failure to perform owners obligations, charterer may have right
to replace vessel operator or take vessel under a bare-boat charter
vi. Allocation of Costs or Who Pays for What
Type of Charter Shipowner Ship Charterer
Spot or single voyage Capital, operating, voyage None
Consecutive voyage Capital, operating, voyage None
Contract of affreightment Capital, operating, voyage None
Period of Time Charter Capital, operating Voyage
Demise or bareboat Capital Operating, voyage
Source: Drewry Maritime Research
Allocation of costs depends on the nature of the shipping contract The shipowner aims for a minimum charter hire rate, at which costs (including an allowance for
a target %age rate of return on investment capital) wil l equate to revenues.
- This minimum rate differs according to the type of charter contract employed, because the
owners costs differ according to the type of charter contract employed
vii. Basic Economics
Breakdown as:
Capital Costs (fixed costs): purchase of vessel consist of ship owner equity plus bank
financing interest
Operating Costs (variable non-trading): vessel costs unrelated to trading consist of
crew, insurance, repair & maintenance, stores, spares, lubes, etc.
Voyage Costs (variable trading):directly related to trade consist of bunker fuel, port
& canal costs.
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viii. New Build Capital Costs
LNG tankers are the worlds second most costly merchant vessels after very large
cruise l iners- Similar degrees of sophistication to build process
LNG tankers are by far the most expensive type of cargo vessel, costing two to thre
times the price of an oil tanker of similar tonnage.
New LNG tanker average capital cost is ~$200-300million for Q-flex and Q-max
vessels and ~$180-190 mil lion for 155,000m
- Steel costs have risen rapidly over recent years
- New technologies
- New propulsion systems
ix. ECONOMICS
1. Newbuild Prices
Newbuilding Price (Conventional LNGC)
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Note: More than x2 cost of equivalent sized Oil tanker which carries 4 to 5 times as much energy.
2. Operating Costs
LNG shipping costs are largely determined by daily charter rate
There are no set rates for LNG tankers as there are for Oil tankers
- Charter rates vary widely from ~$27,000-$150,000 per day
Average long-term charter rate is seen as $55,000-$65,000 per day
Short-term (spot) charter rates vary with market
Conventional LNGC Short Term Charter Rate Projection
Spot & short-term charter rates (2006-Present)
Ship trading costs vary widely and are largely depend on voyage distance
- Voyage length is often is of key importance because the main voyage cost item,
beside port dues and canal tolls, is fuel or boil off (using part of the LNG cargo)
to propel the ship.
New ship technologies are helping to bring costs down and make previously
uneconomical projects viable
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3. Fleet Utilization
Utilization of LNG Fleet
Source: ConocoPhilips
LNG tanker market is currently very tight with many players searching the world for
tankers for short-term charter
-Many spot tankers now being used for Japan
- Qatar looking for tanker over next years?
Market is forecast to remain tight for the next few years
Where are we
Estimates are about 14% of fleet (maximum) is available at any time for Spot
Market activity up to 1 year
Spot charter rates differ between Atlantic and Asia
Current spot charter rate increasing with rates doubling in second half of 2010
reaching ~$60,000/day in winter 2010 period and now to ~$125,000/ day in late
2011
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LNG Spot Charter Rates
Source: Teekay Corporation
4. Voyage Costs
Voyage Cost Circulation from:
- Market rates
- Operating costs of ship
- Voyage days
- Waiting days
- Port days
-Mileage
- Fuel prices
- Speed & consumption of fuel
- Canal, port and terminal fees
To get:
- Total cost of voyage
- LNG shipping rate
5. Main Engine Bunker Fuel Prices
Volatility of this main fuel price leads to necessity for contractual coverage (price
hedging) of this.
Market price vary wi th geography and are quoted monthly at Rotterdam, Houston,
Middle East and Singapore
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6. Additional Voyage Charges
Port Charges ($ 000) [for loading and discharging] Trinidad/ Lake Charles 100
Ras Laffan/ Japan 200
Algeria 82 102
Port Fontin 46
Spain 91 110
Lake Charles 31
Bonny Island 291
Oman Qalhat ~80
Canal Charges About 10% of LNG trade transits though canals, nearly all via Suez at
present
Suez
- Conisderable number of Middle East cargoes coming to Atlantic Basic
- Charge can be up to 20cents/MMBtu
- Canal Authority offers 35% rebate + cargo incentive up to 15% for volumes
over 2Mtpa to encourage LNG vessels?
Panama
- Can only take LNG tankers that are 100,000m or smaller
- This
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Copyright 2012 Capman C onsulting Strategic Human Resource M anagement 31
This wil l allow LNG tankers up to 170,000m passage
- Potential to open up new routes linking Atlantic and Pacific and possibility a
further 10% of LNG trade
2. Shipping Rates
LNG tankers ply their trade around the world but there are commercial limits
- The voyage costs are critical
The LNG shipping rate is a major variable cost in the LNG chain which can make
supply routes either profitable or commercially impossible.
Shipping Rates vary with journey mileage:
Estimated LNG Shipping Costs Alaska Asia Pacific
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Estimated LNG Charter Rates and New Build Orders
Note: Rates must be based on a particular size of tanker at a specific charter rate in $000 per day
3. Netback Pricing
Simple method (from oil markets) to track and compare the return & profitability of
a particular trade
Netting off the price back to the supply source value
- Deducing regas costs and shipping costs from the market sale price gives a FOB
netback
- Further deducting the liquefaction cost and feed-gas price gives an upstream
netback value to the producer (often involves JVs at this upstream level)