GasLog Partners, the New York-listed spinoff of LNG shipper GasLog reported a drop in profit for the second quarter this year.
According to the company’s latest quarterly report, the net profit in the three months ended June 30, 2017, reached $20.5 million, 9 percent down on the corresponding period in 2016.
The decrease in profit is mainly attributable to an increase of $2.3 million in net financial costs, mainly due to increased interest expense and loss on interest rate swaps in the three months ended June 30, 2017, partially offset by an increase in profit from operations of $0.4 million.
Commenting on the LNG market, GasLog Partners said that during the quarter, there has been continued momentum in the start-up of new LNG liquefaction capacity with the fourth train at Sabine Pass commencing commercial production.
The partnership noted that later this year, Wheatstone in Australia and Cove Point on the east coast of the U.S. are expected to start production. In total, Wood Mackenzie estimates that there will be projects with approximately 28 million tonnes per annum (”
In total, Wood Mackenzie estimates that there will be projects with approximately 28 mtpa of nameplate capacity coming online in 2017.
Some off-takers from projects currently under development are yet to secure all of their shipping requirements, leading to increased tender activity in the medium and longer term charter markets. These tenders include requirements for both newbuild vessels and on-the-water vessels with the latter being positive in terms of absorbing the current oversupply in the spot market.
In the shorter term LNG shipping market, TFDE headline rates have increased year on year, but remain below mid-cycle rates at around $35,000-$40,000 per day, according to Clarksons.
“Whilst a recovery in spot rates to mid-cycle levels is taking longer than anticipated we continue to see a greater number of fixtures in 2017 compared to the same period in 2016 and increasing signs of seasonality, both of which point to a tightening market,” the partnership said.
Over time, this market tightening should be helped by the low level of new vessel orders, which stand at 7 for 2017 year to date including four vessels ordered for the Yamal project post quarter-end.