Golar LNG Benefits from Tanker Squeeze

LNG tanker operator Golar LNG benefited from the surge in demand for vessels as new liquefaction capacity came online and the forward gas price curve encouraged European charterers to book floating storage, Golar said November 26. Longer than usual voyages and idling at sea pushed spot rates up.

The rapid tightening of the shipping market in late September meant that even steam-turbine vessels have seen service. The Golar Maria secured close to full utilisation in 3Q and the Golar Grand enjoyed operating under its time charter at a higher average daily rate.

New liquefaction is expected to ramp up at the fastest pace on record over the course of 2020. With the Asian arbitrage closed, most of the new US gas has ended up in Europe. 

Golar also said it won a two- and possibly three-year contract from Kuwait National Petroleum Co (KNPC) for the FSRU Golar Igloo. It will be tied to the Mina Al-Ahmadi Refinery in Kuwait from March 2020 but it will be idle this December and so it is going to have its regasification capacity expanded ahead of the 2020 regas season. 

Collectively, the two-year Golar Maria and Golar Igloo contracts are expected to add close to $95mn of additional revenue backlog, bringing the total to $2.1bn as at September 30. But Golar is still pursuing opportunities to redeploy the Golar Spirit and Golar Mazo.

Lower operating costs and borrowing rates also contributed to Golar’s LNG vessel business doing better in Q3 than in Q2 this year, it said November 26. Distributable cash flow rose $1.6mn to $33.6mn. But despite the high day-rates for spot charters, pre-tax earnings (Ebitda) were just $81mn, down a  fifth from Q3 2018's $104mn.