U.S. President Barack Obama saying the country will probably become a net exporter of natural gas signals that new volumes will add demand for ships hauling the fuel in liquid form, Arctic Securities ASA said.
Obama said in Costa Rica on May 4 that he had to decide on LNG exports and how they could lower energy costs in Central America. Companies have applied for licenses to export more than 200 million metric tons of LNG a year, and firm deals totaling 41 million tons will require about 65 vessels, Erik Nikolai Stavseth, an analyst at the Oslo-based investment bank, said in a report today.
The Energy Department is considering about 19 applications to build export terminals for selling LNG to countries that lack free-trade agreements with the U.S. The volumes will increase shipping demand because longer distances mean each additional ton will require two vessels to carry instead of the current average of one, estimates RS Platou Markets AS, the investment-banking unit of Norway’s largest shipbroker.
“We see the comment from Obama on U.S. potentially being a net exporter as highly positive for the LNG market, as it substantiates our view that U.S. will add a number of LNG export projects,” Stavseth said in the e-mailed report.
Rates for LNG carriers will decline 10 percent to $115,000 a day this year as the fleet grows 6.9 percent while demand expands 3.8 percent to 574.7 million tons, Evercore Partners estimates. Daily earnings for the vessels, which averaged a record $128,000 in 2012, fell 21 percent since the start of the year to $98,000, according to Fearnley LNG, a shipbroker in Oslo.
Imports to the U.S. in 2011 traveled an average of 5,700 nautical miles, compared with average exports, mainly to Asia, of 8,100 nautical miles, Herman Hildan, an Oslo-based analyst at Platou, said in a report yesterday. At full potential, U.S. export applications could add demand for 200 vessels, compared with a current fleet of 380 ships, he said.