[Marxism] And now for something completely different....

rrubinelli rrubinelli at earthlink.net
Sun Jan 8 09:08:52 MST 2006

Going through yesterdays's papers, came up with this from the Financial
Times 1/4/6:

Ships lie dry as LNG transport fails to add up
The liquefied natural gas market is growing, but shipping groups are
struggling ot translate that growth into profit

Visiting Ras Laffan Industrial City in Qatar, it is clear how fast the
world's liquefied natural gas industry is growing.  Building work cover
the 106 sq km desert site.... In 2004 output from Ras Laffan rose 50
percent year on year....

Such growth has made LNG shipping the fastest growing sector, even amid
the current global boom fuelled by China's economic growth.  Shipyard
have 126 carriers of 19.6m[million] cu m[cubic meters] capacity on
order, against a current world fleet of 184 ships of just 21.8m cu m

Yet, for many shipowerners, LNG has not proved a worthwhile investment.
Most want to charter their ships, which cost about $215m each, for long
periods to energy companies.  But the rates on offer at present are
uneconomic, they complain....

Evangelos Pistiolis, chief executive of Top Tankers, an Athens-based oil
tanker operator, says he is mystified that so many shipowners are
rushing into LNG.  While Top Tankers expects annuyal returns of 12-13
percent on capital in its oil tankers, LNG ships can offer as little as
3-5 percent...

New ships are usually delivered on time, while the equipment to liquerfy
the gas and regassify [my favorite word] it on arrival is often late.
So, there is a worldwide glut of ships chartered to energy companies...

Sveinung Stohle [my favorite name] chief executive of LNG at Norway's
Leif Hoegh & Co. reckons 12 to 14 speculatively built ships, or about 10
percent of the world LNG fleet, have been idle in recent months..

...LNG Shipping Solutions, a London-based consultancy, says that some
deals are providing returns on equity of less than 6 percent.

...Meanwhile, many owners seeking long-term charter work say they are
avoiding Qatari projects...

...[The partners in Qatargas] dmand owners use the largest LNG ships
ever built, which would be too large to switch to other routes if the
charter ended.  The returns on offer are also too low..


Can you say overproduction?

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