It is well known that the growing energy use is rapidly depleting the world’s oil reserves and as a result the oil production in many of the most prosperous oil fields is on the decline. With the demand for energy increasing and the supply of oil decreasing, other energy options need to be considered.
One alternative source of energy is liquefied natural gas or LNG, the demand of which is accelerating faster than energy analysts had anticipated, in part because of increasing consumption in Japan, which needs to replace nuclear power lost during the earthquake and tsunami last March. Although liquefied natural gas accounts for less than 10 percent of today’s energy market, with the discovery of new natural gas reserves and the evolution of LNG shipping capabilities, it is likely that the LNG market will continue to grow in the future. This suggests that the opportunities for ship employment will grow in the coming years.
LNG carriers are constructed with expensive cryogenic containment systems that are necessary to transport the natural gas in its liquid state at a temperature of minus 161 degrees Celsius. Natural gas, in the form of LNG, has the potential to be exported from countries with large natural gas reserves. Roughly 340 loads of LNG take place each month. Out of a fleet of just over 360 vessels this suggests a good utilization rate. Qatar is currently the world’s biggest LNG exporter, loading around 80 cargoes a month for export primarily to Asia and Europe. A new carrier cost $210 million in March 2010, compared with $99 million for a supertanker and $57 million for a capesize bulk carrier. The average size of a vessel calling to load in Qatar is 170,000 cubic meters which is equal to 105 million cubic meters in expanded gas form, that is equal to about 25 percent of peak daily winter demand in the UK, Europe’s biggest gas market.
As gas projects were delayed by the financial crisis, contracts for new LNG vessels weren’t made. However, now it is expected that gas cargoes will rise by 21 percent by the end of 2012, compared with a fleet growth of 3 percent*, helping to keep charter rates up after declining for three years through 2009. Today a medium-size LNG ship can earn up to $ 70,000 a day.
To sum up, new proposals for both production and receiving facilities, as well as increased LNG shipbuilding, will most certain lead LNG to play an important role in the future global energy market. Currently, it is ranked third in the world’s energy mix and it is expected to overtake coal as a safe and lower carbon fossil fuel.
By Xenofon Varias,
AUEB Energy & Sustainability Club