LNG Carrier Rates Rise to Record $150,000 a Day as Vessel Shortage Worsens

Rents for ships hauling liquefied natural gas reached a record as winter fuel demand runs up against few available vessels, investment bank Pareto Securities AS said.

The cost of hiring an LNG carrier for a year rose to $150,000 a day, 11 percent higher than last week, the Oslo-based bank said today in an e-mailed note, citing brokers’ estimates. One-time cargoes cost $145,000 a day, up 16 percent from the week before.

Charter rates will extend gains as few vessels are available for immediate shipments and only six new vessels will join the fleet next year, Per Kristian Reppe, a Pareto analyst, said today by phone. Japanese demand for LNG rose as the island nation seeks to replace nuclear power capacity lost since the March earthquake and tsunami, Morgan Stanley said in a report yesterday.

“We definitely see a tight market,” Reppe said. “We don’t think anyone should be surprised if rates start to boom further in the seasonally strong first quarter.”

Average daily rates for spot cargoes more than doubled this year to $91,000 from $40,858 in 2010, according to Pareto. Demand for the ships, which carry gas frozen at about 260 degrees below zero Fahrenheit, will grow 8 percent in 2012 while the fleet grows 1 percent, Oslo-based shipowner Awilco LNG AS said Nov. 23.

Higher Demand

Higher Asian demand for LNG shipped from Atlantic Ocean- based countries boosted distances traveled, lengthening voyage times to curb supply and exacerbate a shortage of available ships, according to Braemar Seascope Ltd., a London-based shipbroker. Countries like Nigeria are also raising LNG output, requiring additional ships to export it, according to the company.

Shares of Golar LNG Ltd. (GOL), the shipowner led by Norway-born billionaire John Fredriksen, added as much as 3.1 percent in Oslo today to 266.1 kroner ($44.53), extending yesterday’s 6.4 percent gain after Morgan Stanley raised its 12 to 18 months price target to $63. The company’s fleet includes nine LNG carriers, according to its website. Awilco, which has three such carriers, gained 2.2 percent to 23 kroner. Hoegh LNG Holdings Ltd., which operates seven of the vessels, fell 1.1 percent to 46.5 kroner.

The shortage of LNG carriers contrasts with a glut of ships hauling oil and raw materials. Daily earnings for supertankers on the benchmark Saudi Arabia-to-Japan route averaged $17,882 this year, the lowest since at least 1997, according to data from Clarkson Plc (CKN), the world’s largest shipbroker. Rents for capesizes, the largest ore carriers, averaged about $15,277 a day, the lowest since 2002, according to the Baltic Exchange, the London-based publisher of shipping costs.

To contact the reporter on this story: Isaac Arnsdorf in London at iarnsdorf@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

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