| The LNG shipping sector remains sensitive to production cuts due to political unrest, shipping analysts at DNB Markets in Oslo have noted. This was highlighted by events in Yemen, where Yemen LNG that has export capacity of 6.7 million tons per annum (tpa), equal to 2.8% of 2014 global exports has become victim of unrest in the country. 'The facility declared a Force Majeure in January, and foreign experts were evacuated, but operations were resumed shortly afterwards. The facility is still operational; there have been no cancellations of loadings but of some partial loadings, according to Argus,' said Nicolay Dyvik, Oyvind Berle and Petter Haugen, the DNB shipping analysts. 'We highlight the risk for utilisation of the LNG carrier fleet, as we still see this market as supply driven (with regards to the supply of LNG to market), hence a failure in LNG exports would be a negative interpretation of LNG carrier utilisation and rates,' they said in a market report emailed to IHS Maritime. 'According to media reports, attacks on oil infrastructure has cost the country (Yemen) USD4.75 billion over 2011-2013. Oil and gas represents 90% of the country’s foreign currency earnings,' they added. Meanwhile, Hoegh LNG, whose board today approved the company's 2014 accounts, has noted that the drop in the oil price has led to lower energy and LNG prices, which is expected to lead to higher demand for LNG. Together with a significant increase in LNG supply over the next three years, the increased LNG demand creates a solid foundation for continued growth in demand for FSRUs, which has become the preferred solution for new importers of LNG. 'The current world fleet of LNG carriers totals 379 vessels and the order book stands at 139 vessels, which is equivalent to 37% of the current fleet. At the time of writing there are approximately 40 LNG carriers without employment, which means that the short term LNG shipping market remains oversupplied, leading to very soft charter rates,' the company said in its 4Q14 and full year statement of results. 'Another 24 LNG carriers are scheduled to be delivered this year; seven do not have a contract and in addition, many of the contracted LNG carriers will be available in the spot market before entering into service for new liquefaction projects. The short term market for LNG carriers is consequently expected to remain oversupplied until 2016-17,' the listed unit in the Oslo based Leif Hoegh group concluded. |