Worldwide Gas Ship Shortage Leads To Vessel Rates Surging At Record Levels

A maddening rush to safeguard and secure natural gas is resulting in a massive shortage of seaborne vessels, compelling firms to pay record-high rates for transporting fuel to Europe.

The continent has been racing to replace Russia’s pipeline flows with liquefied natural gas (LNG) from suppliers, including Nigeria and the US. But only a few vessels are available throughout the year, presenting new risks to the global gas supply in winter.

Gas Ship
Image for representation purposes only.

Buyers have been snapping up available vessels as the demand for gas increases with the winter fast approaching, and — at the same time — refraining from releasing any back into the market in case they are required for supplies at short notice. The two deals were executed last week:

Shell Plc reportedly booked the Yiannis to load US cargo in October for delivery to Europe at a rate equivalent to $400,000 daily on a round-trip basis, mentioned the traders. Per brokers and traders, the deal is more likely to be the most expensive so far for the Atlantic basin.

GAIL India Ltd. reportedly booked the LNG Schneeweisschen for loading cargo from the US in early November at approximately $360,000 daily, said traders. The firm that recently sold off an LNG shipment from the Cove Point export facility chartered a vessel from one of the European utility majors, they said.

Atlantic LNG freight rates have increased more than 300% in a month as participants look to secure the last remaining vessels ahead of the coming winter, mentioned Tim Mendelssohn, the chief executive officer (CEO) of Spark Commodities spot freight assessments from the LNG shipbrokers.

The rally in energy prices in 2022 has been a boon, especially for tanker ship owners, who have been witnessing the cost of transporting everything from diesel to petrochemical feedstock touching new highs. According to shipowners and traders, buyers have been paying up to avoid being stranded without any supply if it gets unexpectedly cold this coming winter.

References: Economic Times

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