LNG SHIPPING GROWING FASTER THAN SUPPLY

The liquefied natural gas (LNG) industry faces an acute dilemma with respect to shipping: whereas there is a robust demand for LNG carriers in the long run, currently the market is oversupplied. Charter rates have plunged just as new-build costs have climbed steeply. This CERA Decision Brief examines the global need for LNG shipping relative to the orderbook and considers the implications for key players.

- The LNG shipping sector is responding to the global LNG opportunity by overinvesting relative to supply.
- The LNG shipping surplus will endure until 2010 and could extend into the next decade.
- Although significant numbers of new ships need to be ordered for service post-2010, availability of shipping and shipyard capacity will not be a constraint on LNG growth.
- The shipping bubble is unlikely to deter further investments given the strategic importance of shipping to producers, buyers, aggregators, and shipowners.

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CERA Reports Online, a wholly owned subsidiary of IHS Energy, is a leading advisor to international energy companies, governments, financial institutions, and technology providers. CERA delivers critical knowledge and independent analysis on energy markets, geopolitics, industry trends, and strategy. CERA's expertise covers all major energy sectors--oil and refined products, natural gas, and electric power--on a global and regional basis.