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Transcript of Attach 126
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8/3/2019 Attach 126
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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 1
Programme
LNG Shipping Recent Trends and Prospects
Mike P. Rowley, Director & General Manager LNG Division
Mitsui O.S.K. Bulk Shipping (Europe) Ltd.
& Kenneth C. Wilson, External Adviser - LNG Shipping Economics &Commercial Services
Gastec 2011 - Amsterdam
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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 2
Mitsui O.S.K. Lines Ltd. (MOL) Corporate & LNG Profile
Established: 1884
Head Office: Tokyo, Japan
Number of MOL Group employees: 9,707
Number of MOL Operating Fleet: 905 vessels
Revenues (2010): US$ 14,488 million
Assets: US$ 2,006 million
Debt: US$ 8,331 million
Credit Rating: A3 (Moody)
LNG Customers
http://www.osakagas.co.jp/indexe.htmlhttp://www.sonatrach-dz.com/NEW/index.htmlhttp://www.kepco.co.jp/english/index.htmlhttp://www.tokyo-gas.co.jp/index_e.htmlhttp://www.kogas.or.kr/kogas_kr/html/main/main.jsphttp://www.omanlng.com/tabid/36/Default.aspxhttp://www.pertamina.com/index.php/home/http://www.rasgas.com/rg/http://www.qatargas.com/Default.aspx -
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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 3
High LNG shipping supply exceeded demand for last 10 years
0
15
30
45
60
75
2000 2002 2004 2006 2008 2010
Ship Capacity(million m3)
Fleet Supply (14% p.a.*)
Demand (9% p.a.*)
Excludes ships below 17,500m3* CAGR: compounded annual growth rate
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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 4
Result - shipping oversupply leading to lower fleet utilisation
0
15
30
45
60
75
2000 2002 2004 2006 2008 2010
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Fleet Utilisation
Ship Capacity
(million m
3
)
Fleet Supply
Surplus
Demand
Excludes ships below 17,500m3
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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 55
Freight rates dropping from above 100,000 dollarsper day in the early 2000s to as low as 20s in 2010
0
20
40
60
80
100
120
140
1Q00 2Q01 3Q02 4Q031Q05 2Q06 3Q07 4Q08 1Q10
Short-term freights ($000 daily)
Also lower freight rates
0
15
30
45
60
75
2000 2002 2004 2006 2008 2010
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Excludes ships below 17,500m3
Fleet Utilisation
Supply Demand
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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 6
Speculatively ordered ships (18%)
70,000m3-plus ships only
Majors merchants fleets under-use (11%)
ShipsAwaitingProjects
(65%)
Technical inefficiencies (6%)
Estimates of 2008 make-up
of LNG fleet over-supply
65% of tonnage oversupply due to projectdelays in 2008
Speculatively ordered ships accounted for therest of the fleet over-supply
65% of surplus shipping in 2008 comprised ships awaiting new projects
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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 7
0
15
30
45
60
75
90
2000 2004 2008 2012 2016
LNG demand growth is expected to be strongestover the next few years, driven mainly by Asian
consumers
Asian markets will likely underpin shippingdemand
Other markets - particularly Latin America andEurope will boost demand
Worth noting long haul arbitrage trade may take amore prominent role
Forecast
Shipping demand is trending to increase progressively through 2016
Ship Capacity(million m3)
CAGR 7.5%
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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 8
8
The growth of LNG fleet supply is expected to moderate over the next six years
Replacement Orders
Existing Fleet (1.3.11)
Existing Order Book
The additional order requirement to satisfyreplacement needs and new exports isequivalent to about 25 standard-size ships,
by 2016
0
10
20
30
40
50
60
70
80
2011 2012 2013 2014 2015 2016
Ship Capacity (million m3)
Year of Delivery
Base Case Additional Orders Required
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0
10
20
30
40
50
60
2008 2009 2010 2011 2012 2013 2014 2015 2016
Number of LNG Ships(155,000m3 equivalent units)
Newbuild deliveries (excluding any speculative orders) will be much lower
Delivery Year
Deliveries
Excludes ships below 17,500m3
Replacement Ships
Additional Requirement
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0
15
30
45
60
75
90
2000 2004 2008 2012 2016
Million m3
Forecast
Demand
Supply
Fleet supply growth will flatten due to:
- Absorption of the large amount of thoseexisting ships which do not have anyemployment commitment
- Decline in order book- Conversion of increasing numbers of older
ships
Having risen sharply in recent years, fleet supply is forecast to level off
CAGR 1.5%
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0
15
30
45
60
75
90
2000 2004 2008 2012 2016
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Convergence of shipping supply and demandwill boost fleet utilization
Fleet employment (already increasing since endof 2010) is expected to rise sharply to 2013
Million m3
Forecast
Fleet utilization is improving markedly from a low base in 2010
Utilisation
Demand
Supply
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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 12
Few ships are available for charter over the next 12 months
0
50
100
150
200
1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16
Standard-size ships, post-2000 built
Open ships Uncommittednew builds
Short charter to
longer-termcommitment
Committednew builds
Ship charter expiry & new building delivery schedule(assumes extension options exercised)
Bottleneck
Recent multiple fixtures has reduced the pool ofuncommitted modern, standard-size ships
This bottleneck situation is could well last into2012
Some speculatively-ordered new buildings are
available, but other existing modern ships arealready assigned to longer-term business
Chartered
Long-term chartered& owner-occupied
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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 13
Freight rates have risen sharply in response to tightening fleet demand/supplybalance
Time charter rates bottomed in June/July 2010,then rose sharply through February this year
0
15
30
45
60
75
J10 M10 M10 J10 S10 N10 J11
US$1,000Daily
Modern 155,000m3
Source: E.A.Gibson
6 months 2 years
Less than 6 months
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Older ships have been coming off project charter
0
5
10
15
20
25
30
35
40
1Q113Q111Q123Q121Q133Q131Q143Q141Q153Q151Q163Q16
Standard-size ships, pre-1986 built
Chartered
Open ships
ExpectedConversions
Ship charter expiry schedule(assumes options exercised)
Laid-up ships
A large number of ships built in the 1970s andearly-1980s coming off long term trades
Best ones will initially trade conventionally formedium term given current high demand
Currently 10 - 30 ships fixed or under considerationfor FSRU/FSO projects leading to a furthertightening in fleet supply and demand
Eventually most will find offshore projects
(FSO/FRSU) Long-term chartered& owner-occupied
Assumes static fleet (no scrap sales)
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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 15
MOL positioned to provide diversified LNG transport and offshore (FSO/FSRU)
High quality mature 126k m3 Moss steam ships
LNG Capricorn (CAP1)
LNG Libra (CAP1)LNG Taurus (CAP2)LNG Aries (CAP2)LNG Aquarius
Complementing existing modern fleet run out of London:
1.Steam shipsDukhan (135k m3 - 2004 Moss )Fuwairit (138k m3 2004 MkIII )Al Deebel (145k m3 2005 MkIII I)LNG Pioneer (138k m3 2005 NO 96 )GDF Suez Point Fortin (154k m3 2010 MkIII )
2.Slow Speed Diesel ships
Al Aamriya (210k m3 2008 No 96 )Murwab (210k m3 2008 No 96 )Fraiha (210k m3 2008 No 96 )
3.Tri-Fuel Diesel Electric shipsAbdel Kader (177k m3 2010 MkIII )Ben Badis (177k m3 2010 MkIII )
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Tightening LNG shipping supply / demand = higher freight rates
Quality older tonnage can bridge short to medium term requirements
During next 2-3 years new vessels will need to be ordered to replace oldertonnage and meet growing LNG transportation demand
Mitsui OSK Lines well positioned to meet these challenges and exploreopportunities that we can develop together with our customers:
New projects Older vessels for short medium term conventional business
Conversion of older tonnage for Offshore (FSO/FSRU)
Concluding remarks