New LNG tenders prefer old boys | Global Maritime Social Network

New LNG tenders prefer old boys

Written by Perter Clarkson Thursday, 09 July 2009 08:14

LNG carrier procurement negotiations in the future will increasingly focus on the battle between relatively young and competitive existing vessels and newbuildings.

Even with the international tender currently being held by the Papua New Guinea (PNG) project, it is highly probable that the project will secure existing vessels from the market.

This is largely because newbuilding prices offered by shipyards to the project promoters are higher than the expected prices by the buyers.
There is currently a vast excess in LNG carriers in the market due to the shortage of cargoes and there are numerous existing cutting-edge ships available that were built when the ship prices were relatively low.

These vessels are targeting the winning of long-term contract negotiations, so it is believed that some procurement talks will result in the hiring of existing tonnage.

The PNG, a project led by ExxonMobil of the U.S. and a target of much attention as a large-scale project after a rather long hiatus, held its international bidding in early June this year.

The tender was characterized by its being open to the possibility of procuring newbuildings or existing vessels. The promoters of the project plan to secure a maximum of five 150,000-180,000-cbm ships, with the contracts for the vessels scheduled to commence in the latter half of 2013.

According to various informed sources, Nippon Yusen Kaisha (NYK), Mitsui OSK Lines (MOL), Kawasaki Kisen Kaisha (K Line) and Iino Kaiun Kaisha are the Japanese entities that took part in the tender. It seems that a little more than 10 overseas and Japanese companies joined the bidding, including A.P. Moller, Bergesen and Sovcomflot. It is believed that NYK, MOL and K Line bid for both newbuildings and existing ships.

Existing ships have become leading choices in the tender because the prices of newbuildings offered by shipyards exceeded the advanced estimates of the project promoters.

"It seems that South Korean yards offered prices in the latter half of $200 million. If this were the case, then existing ships would be more competitive. Amid unstable financial conditions these days, the fact that fund procurement has already ended for them can also be considered as another advantage of existing vessels," said a source.
The details are not immediately available, but the above source claimed that, "What would matter most is how much the yards would ask for newbuildings. If they lower the prices in order to win orders, then newbuildings will have a good chance of winning."