World LNG Shipping Capacity Expanding

• According to LNG Shipping Solutions, 151 LNG tankers were in operation worldwide as of October 2003: 16 ships with a capacity of less than 50,000 cubic meters, 15 in the 50,000 to 120,000 cubic meters range, and 120 larger than 120,000 cubic meters.
• Fifty-five ships are under construction, of which 46 are designed to carry at least 138,000 cubic meters of LNG (equivalent to 2.9 Bcf of natural gas).¹⁴ Much larger ships with 250,000 cubic meters of capacity (equivalent to 5.3 Bcf of natural gas) are under consideration, but may not be compatible with all existing LNG terminals.
• The addition of new ships to the fleet will raise total fleet capacity 44 percent from 17.4 million cubic meters of liquid (equivalent to 366 Bcf of natural gas) in October 2003 to 25.1 million cubic meters of liquid (equivalent to 527 Bcf of natural gas) in 2006.
• Shipping accounts for 10 to 30 percent of the delivered value of LNG (depending on the distance from the reserves to the market), compared with less than 10 percent for oil, because of the relatively high cost of manufacturing LNG tankers. Tankers currently cost $150 to $160 million for a 138,000-cubic-meter ship, more than double the price of a very large crude oil tanker which carries 4 to 5 times as much energy. One reason for this high cost is that LNG ships require expensive, insulated cryogenic containment for the cargo.
• The cost of a 138,000-cubic-meter LNG tanker has declined, however, from a peak of $280 million (in nominal dollars) in 1995.
• In the conventional oil tanker market, most ships are built on speculation. This has not been the case in LNG where ships were used on dedicated routes for specific projects. However, several large companies that import or export LNG, including BP, Shell, and Tokyo Gas, have recently ordered ships that are not dedicated to a project.
• The availability of uncommitted LNG tankers is a key element in the development of the LNG short-term market.
• Only eight shipyards in the world currently build LNG tankers: three in Japan; three in Korea; and two in Europe. However, India, China, and Poland are planning to develop LNG tanker construction capabilities in their shipyards.