Flex LNG, the company controlled by billionaire John Fredriksen and an emerging player in the LNG shipping business, has seen the LNG shipping market tighten considerably over the past months.
The company reported a $4 million net loss for the third quarter 2017, and operated four chartered-in LNG carriers as it aimed to establish its market presence, Flex LNG said in its quarterly report.
At the end of third quarter, two chartered-in vessels were redelivered while remaining two chartered-in vessels were subsequently extended for an additional 180 days, as Flex LNG secured employment for the two vessels that have been sub-chartered in the spot and short-term market under four separate deals.
Speaking of the company’s activities over the third quarter, Flex LNG CEO, Jonathan Cook said, “Over the past months, there has been upward pressure on charter rates as the LNG shipping market has tightened considerably, and we continue to see a trend towards a three-tier market with modern gas injection LNG carriers commanding a premium.”
As Flex LNG awaits the delivery of its newbuildings, starting in the first quarter of 2018, the company believes that the “continued strengthening of structural fundamentals in the LNG sector will improve the rate environment further and provide us with various attractive employment options for our vessels,” Cook said.
Flex LNG expects the coming growth of LNG production and the expected growth in demand for natural gas in combination with the recent limited ordering activity of LNG carriers to gradually tighten the shipping market over the course of the next 18 months, the report reads.
With the newbuild deliveries in the next 2 to 21 months, upon which the company will own a fleet of six MEGI LNG carriers, it expects its fleet to command a premium in the market.
The company is additionally pursuing opportunities to implement FSRU projects, and it has signed a heads of agreement with NextDecade to create a full value chain solution for customers seeking to purchase LNG from NextDecade’s Rio Grande LNG export project in Brownsville, Texas.
In July, NextDecade signed a memorandum of understanding with the Port of Cork to develop an FSRU and associated LNG import terminal infrastructure in Ireland, with Flex LNG supporting the delivery of the import solution.