QatarEnergy Offers 10 LNG Tankers for Lease as Hormuz Conflict Disrupts Supply
QatarEnergy is offering 10 LNG tankers for lease outside the Strait of Hormuz as production disruptions and the U.S.-Iran conflict push LNG freight rates to multi-year highs.
(Reuters) — QatarEnergy is offering for lease 10 liquefied natural gas tankers currently located outside the Strait of Hormuz, two industry sources told Reuters.
The world's second-largest LNG exporter has announced a production halt at its 77 million ton per year (MMtpy) facility, and shipping rates have soared as the U.S.-Iran conflict heads into its second week.
Qatari Energy Minister Saad al-Kaabi told the Financial Times it would take "weeks to months" to return to normal deliveries, even if the war ended today. The company declared force majeure on LNG shipments on March 4.
The production halt has intensified competition between the Atlantic and Pacific basins for LNG cargoes, sending European and Asian gas prices and LNG freight rates to multi-year highs.
"All of the tankers on offer are located outside the Strait of Hormuz, so that any safety issues can be avoided," said Klaas Dozeman, market analyst at Brainchild Commodity Intelligence.
"Two of the tankers are due to deliver next week in Europe. This implies that these vessels are not expected to be back in service for QatarEnergy anytime soon, indicating a quick and full restart is becoming increasingly unlikely," he added.
The vessels offered for lease include at least four Q-Flex tankers, Murwab, Al Safliya, Al Thumama and Al Oraiq, with a capacity of approximately 210,000 cubic meters, which are able to carry up to 50% more volume than conventional LNG tankers and are typically used by Qatargas to export its LNG to Europe or Asia.
The others are dual-fuel, two-stroke engine vessels with a capacity of 174,000 cubic meters. Most of the vessels are offered for prompt lease and some from mid-March. These are Mesaieed, Wadi Al Syl, Al Sakhama, Al Khuwair, Al Shamal and Slaimi.
LNG freight rates have soared this week, with Atlantic rates hitting a new week-on-week record, increasing by $221,500/day to $264,250/day, the highest since December 2022, according to data from Spark Commodities. Pacific rates followed suit and rose to $219,250/day.