Gas shipper Flex LNG signs deals to buy six new vessels

Oslo-listed Flex LNG has signed contracts to buy six new liquefied natural gas (LNG) vessels for its fleet by 2019, as it bets on increasing fuel demand from Britain and other countries, its chief executive told Reuters.

The gas shipping company said earlier this year it was considering buying the six vessels, each with around 170,000 cubic metres of capacity, subject to securing funding for the $1.2 billion transaction.

Geveran Trading, the private investment vehicle of billionaire shipping tycoon John Fredriksen, acquired 52 percent of Flex LNG earlier this year, enabling the necessary finance.

“All of the contracts have been signed and the initial payments have been processed during the course of this month,” said Flex LNG chief executive Jonathan Cook.

Samsung Heavy Industries, Daewoo Shipbuilding and Marine Engineering are commissioned with constructing the vessels.

“We expect the first two ships (to be delivered) in January (2018), and four more by August 2019,” Cook said.

Flex LNG is aiming to charter out some of the vessels in multi-year deals and commit others to spot and short-term LNG shipping markets.

Flex LNG bought its first four LNG vessels this March, which have 660,000 cubic metres of capacity in total and are in operation.

“The LNG market in the UK is growing and it is one of the importers we are looking at,” Cook said.

Consultancy Wood Mackenzie expect Britain’s LNG imports to double in the coming winter, and analysts expect more 20 million tonnes of new global LNG supply to come online this year.

According to a report by the International Gas Union last month, there is a global LNG shipping fleet of 439 vessels as of January this year.

The market is undergoing huge changes as the biggest ever flood of new LNG supply is hitting the market, with volumes mainly coming from Australia and the United States.

The flurry of LNG production has resulted in global installed LNG capacity of more than 300 million tonnes a year, but only around 268 million tonnes were traded last year, Thomson Reuters data shows.