Top 3 Emerging Trends Impacting the Global LNG Tanker Market from 2016-2020: Technavio
Technavio’s latest report on the global LNG tanker market provides an analysis on the most important trends expected to impact the market outlook from 2016 to 2020. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.
LNG Tanker market trend
The global LNG tanker market, along with the rest of its counterparts of the energy market, is experiencing significant turmoil at the current state of time. As the energy market is cyclical in nature, the prices are expected to correct by the year 2018. This is expected to provide a significant boost to the global LNG tanker market. The market is however expected to see a declining trend in the growth trajectory.
The top three emerging trends driving the global LNG tanker market according to Technavio energy research analysts are:
- Emergence of new demand hubs
- Revamping of carrier propulsion systems
- Change in vessel costs and delivery timelines
- Emergence of new demand hubs
Emergence of new countries
Looking at the present LNG tanker market, and also the broader LNG market, the emergence of new countries is expected to drive the market forward. The conventional consumers like Japan, Korea, and China are witnessing waning demand volumes on the back of weaker economic cues. But this is a time when the conventions have been broken and new consumers have entered into the market to be part of this highly lucrative prospect. China and India head the list of regasification and import terminals that are under construction. The Middle East has also recently inducted a list of floating import terminals into service in 2015.
The list of projects that are under construction signals the arrival of many smaller and new nations into the LNG import scene. This trend is expected to buoy the LNG tanker market in the tough times, which are expected due to weaker demand from the conventional markets and weighing down effects of the current supply glut that marred the market in the last year. With the lack of significant capital with many of the new players, which are mostly expected to be emerging economies, the best route for business would be through chartering. This is expected to raise the charter rates in the future and make the LNG tanker business a bright spot in the global energy trade again.
Revamping of carrier propulsion systems
Sayani Roy, a lead analyst at Technavio for research on oil and gas, says that one of the major trends that has been noticed in the current LNG tanker market is the revamping in the carrier propulsion systems. Ever since the very first LNG vessel was inducted into service, some half a century ago, these LNG carriers have undergone a paradigm shift in their design. The historical fleet of LNG tankers in the global trade had been fitted with a reliable, but moderately efficient steam turbine-driven propulsion systems. The only fuel option these systems had was related to the boil-off gases, which was a by-product of the storage of natural gas under cryogenic conditions.
Changes are recent
The majority of the changes that the propulsion systems have witnessed have come into picture only in the past decade or so. The innovation in this concern can be attributed to GDF SUEZ, with the ordering of GDF SUEZ Global Energy and Provalys vessels. These vessels are expected to be propelled by a dual-fuel diesel-electric propulsion (DFDE) system. These DFDE systems are capable of utilizing both diesel oil as well as boil-off gases, thus enhancing the vessel efficiency by almost 25% to 30%, relative to the conventional steam turbines.
Change in vessel costs and delivery timelines
One of the most important aspects of the global LNG tanker market is the one pertaining to the high costs of vessels and duration of the vessel delivery. As these vessels do not belong to the common seagoing class of tankers, they are mostly built-to-order. The historical trend analysis of the vessel price will reveal that the cost of building a new vessel have come down significantly over the past few decades. The major reason for this was the distribution of the technological know-hows among the players and increase in the number of skilled labor required by the industry.
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Source: Businesswire
