Awilco LNG freight income down on lower fleet utilization

Awilco LNG freight income down on lower fleet utilization

Oslo-based LNG shipping company, Awilco LNG, posted a second-quarter US$8.3 million freight income, down from $8.9 million in the first quarter due to lower utilization of its LNG carrier WilPride. 

The company noted in its quarterly report that along with the reduction in rates, the utilization of the vessel dropped from 57 percent in the first quarter to 51 percent in the quarter under review.

Fleet utilization for the quarter ended at 76 percent, compared to 78 percent in Q1 2016.

Awilco LNG posted a net loss of $11.5 million for the second quarter, compared to the $4.6 million net loss in the first quarter of 2016.

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After two years of continuous price fall, the Far East gas price seems to have stabilized during the quarter, Awilco LNG said.

The price started the quarter at $4.4 per mmBtu and firmed slightly to $5.16/mmBtu at the end of the quarter. The UK NBP price followed the same trend, starting at about $3.78/mmBtu and ending at $4.6/mmBtu.

The moderately firming gas prices, unfortunately, had little effect on the arbitrage opportunities as the spread remained low, resulting in continued pressure on ton-mile, according to Awilco LNG.

LNG imports to Japan, South Korea and China were all down compared to Q1. Compared to same period last year imports to China and Japan were up 26 percent and 10 percent respectively.

New LNG production capacity added over the last 6 months has resulted in a reduction in the number of available vessels during the quarter and according to analysts, the number of spot cargoes has increased to 144 for first half 2016 up from 90 during the same period last year.

Awilco LNG further adds that the rates improved marginally during the quarter, starting at $30,000 per day and $32,000 per day at the beginning of the quarter for vessels open in the Far East and Atlantic respectively, ending at $30,000 and $35,000. However, after the end of the quarter rates have continued the positive trend, and fixtures in the high $40,000s have been reported in the Atlantic.

After a two year shut down, the 5.2 mtpa Angolan LNG plant finally re-started during Q2 and the first cargo was shipped at the end of the quarter. The Gorgon facility which was closed down during Q1 after only have shipped one cargo since its commissioning in January 2016, was also re-started during Q2 and shipped its second cargo in early July.

In total about 21 mtpa of new LNG production capacity has been added during the first half of 2016 which will hit the market as ramp-up and initial production issues are solved. According to analyst construction of the next trains at Gladstone, Australia Pacific, Gorgon and Sabine Pass are proceeding according to schedule, with expectations of more than 40 mtpa of new LNG capacity in total to be added during 2016.

“Analysts forecast the production capacity in 2020 to 450 mtpa, which represents an increase of about 50 percent compared to the 2015 production capacity and an increase of about 80 percent compared to 2015 actual LNG production,” Awilco LNG said.

Newbuilding activity eased off during the second half of 2015 and has remained low since. So far in 2016 four newbuilding orders have been placed compared to 15 vessels in the same period last year.

According to shipbrokers, the orderbook at the end of the second quarter of 2016 for LNG vessels above 100,000-cbm, excluding FSRU and FLNG, was at 119 vessels, of which only 10 are available for contract.

During the second quarter, seven vessels were delivered and a further 21 are scheduled for delivery in the remainder of 2016. As a result of the weak market and shipyard constraints some deliveries are expected to be delayed, Awilco LNG concludes.

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Posted on September 5, 2016 with tags .

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