Prospects for shipping in 2013 & beyond (LNG Sector)

• Main Author: Heng, Yang Ling.
• Other Authors: Teh, Kong Leong
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Engineering::Maritime studies::Maritime management and business
• Online Access: http://hdl.handle.net/10356/52672
• Institution: Nanyang Technological University

The project provides an evaluation and analysis on the prospects for the liquefied natural gas (LNG) shipping sector in the next five years. With rapid changes occurring at short intervals, looking at long term prospects may not be appropriate as it may not be easy to provide a good prediction in such a dynamic environment. Moreover, in such situations, investors usually refrain from long term investment due to the higher risk exposure. In the current LNG market, the environment seems to be in a state of constant change and therefore, all research information and statistics in this project are accurate as of 28 February 2013. The project will therefore not include any additional information, which may emerge beyond the said date and could therefore partially result in having a slightly different outcome on the project analysis and findings when this project is read, analysed and assessed at a later date. The research has focused more on a business perspective as compared to the technical aspects of the LNG trade. The analysis includes a brief introduction on the sector as well as its relationship with the four phases of the shipping cycle. In addition, the impact of oil prices and strength of US currency on shipping has also been provided. An in-depth analysis on the economic factors affecting LNG shipping has been conducted. The economic factors include trade volume and routes, major importer and exporter data, tonnage supply and demand balance, etc. Subsequently, other commodity factors - particularly oil, coal and shale gas that may also affect the LNG market has been looked into, to further support the analysis. Survey and interviews with various LNG stakeholders and professionals were conducted to gather their views of the market. Results have shown that the LNG market is currently at its peak, experiencing tight supply and balance, with prospects in the near future predicted to remain positive. For the long term outlook, additional factors may have to be considered, however this is not within the scope of this project and has therefore not been considered. Finally, recommendations have been outlined on how shipping companies can better position and prepare themselves for the future. In this dynamic and fast changing market, risk pooling is an option for companies to minimise their risks and counter and cushion any major changes in the market. For instance, companies with similar interests can work together to form a consortium and come up with a global service network like the liner services to cater to the increasing LNG spot market demand. This may thus allow shipowners to reduce the need for capital investments in newbuildings.