With gas across oceans in 2025-2027. There will be more gas and LNG tankers

By Marek Grzybowski

Drewry expects LNG shipping to continue to normalize in 2025 as tanker fleet growth outpaces LNG supply. According to the International Maritime Organization (IMO), more than 250 new ships will sail out to sea between 2025 and 2027. However, demand for the 124 million tons of additional LNG capacity per year over the same period may require only 171 additional tankers, Argus predicts.

The increased supply of LNG carriers is likely to keep LNG shipping rates low. Argus assumes that “demand will recover.” However, gas and freight prices are not expected to rise dramatically due to the growing supply of LNG from new facilities.

Disruptions to shipping could be periodically disrupted by unpredictable weather conditions and, of course, geopolitical turmoil, such as in the Black Sea and the Red Sea. LNG prices will certainly be influenced by the supply of competitive supplies from other energy sources, mainly renewable energy. It is also worth considering that the activity of the shadow fleet of LNG carriers carrying oil from suppliers of countries covered by sanctions will increase. Global LNG supply will be subject to disruptions if investors do not meet the deadlines for starting LNG production from new projects already underway.

LNG fleet operators will seek to find employment for tankers through organizational and ship management measures. One approach will be to reduce the speed of ships between buyer and supplier ports, a method commonly used when fuel prices are high or there is an oversupply of cargo space in liner shipping.

Optimistic scenarios for buyers

Argus says that “This scenario assumes a 160,000 m3 tanker and a speed of 17 knots on the sea route.” This scenario does not include the need to load an additional 8 million tons/year from the seventh LNG facility, supporting the Bonny terminal in Nigeria with a potential for 22 million tons of LNG supply per year. The terminal is operated by: Nigerian National Petroleum Corporation (49%); Shell (25.6%); TotalEnergies (15%); Eni SpA (10.4%).

Currently, Nigeria LNG Limited operates six LNG liquefaction units producing 22 million tons/year. Units 1, 2 and 3 have a production capacity of 3.2 million tons per year, while 4, 5 and 6 have a production capacity of 4.1 million tons per year each. As of April 2020, the nominal production capacity of units 1-3 was 3.3 million tons per year.

Gas supply may increase in 2025 due to increased activity of Arctic LNG 2 with a liquefaction capacity of 19.8 million tons/year, which is subject to US sanctions. Investors are: Novatek (60%), Total S.A. (10%), China National Petroleum Corporation (10%), China National Offshore Oil Corporation (10%), Mitsui Group (2.5%), JOGMEC (7.5%). In September 2023, the US imposed sanctions on the project. These were the first U.S. sanctions directly targeting LNG exports from Russia, and were followed by two further rounds of sanctions in November 2023 and February 2024.

In December 2023, all non-Russian investors suspended their activity, including TotalEnergies, Mitsui Group, JOGMEC, China National Petroleum Corporation and China National Offshore Oil Corp, which together hold a 40% stake in the project. The suspension of participation in the project due to sanctions was justified by the fact that the action was caused by force majeure. The third round of sanctions in February 2024 concerned investment support for production shipyards, specialized log-class ships for gas transportation and construction site operations.

Novatek active on the EU market

And it should be noted that in 2024, EU countries imported at least 16.65 million tons of LNG. This is a record since production began at Russia’s largest production facility, Novatek’s Yamal LNG, which entered the market in late 2017. The latest figures exceed the combined import values ​​of 15.21 million tons and 15.18 million tons recorded in 2022 and 2023. The main recipients of LNG from the Russian Federation were gas terminals in France, Spain and Belgium, which operate under long-term contracts.

The project began production in December 2023, but no official loadings had been made by April 2024. Novatek sharply reduced gas production in February. Since April 2024, Novatek has suspended production from the project. Sources have said that Unit No. 1 was scheduled to be launched in the second half of 2024. Novatek’s problems with LNG transportation are reportedly directly related to the shortage of tankers.

According to Kpler’s Head of Gas and LNG, who tracks activity in the ‘Oil and Gas’ market, “Novatek’s Arctic LNG 2 project, which commenced production at Plant 1 in December 2023, has faced significant challenges due to sanctions imposed by the US, EU and UK. In August 2024, Kpler’s LNG team was the first to expose the AIS spoofing tactics used by UAE-registered shadow tankers Pioneer, Asya Energy and Everest Energy to discreetly lift LNG cargoes from the sanctioned project.”

The disclosure underscored the emergence of a Russian-linked shadow LNG fleet skirting U.S. sanctions, exporting a total of eight cargoes from Arctic LNG 2. However, by Oct. 11, 2024, production at Unit 1 had been halted due to logistical bottlenecks, ship shortages and reduced buying interest, leaving at least four LNG carriers idle as floating storage, vulnerable to boiling off, analyst Ana Subasic and reporter Jana Sutenko said. Kpler Insight expects the facility to be closed until summer 2025, when Novatek will respond to buyer interest.

Novatek will struggle to sell gas if “supplies from the Gulf of Mexico to Northeast Asia via the Cape of Good Hope increase to 50% of the loading from the new liquefaction capacity, instead of the targeted 33%,” Argus predicts. The firm’s experts assume that demand for loading could then increase by another 20 shipments. If each LNG carrier had an average of five days of additional turnaround time between round trips, loading demand could increase by another 23 deliveries.

The shadow and legal fleet is growing
If the shadow LNG tanker fleet is not launched and the above Argus scenarios turn out to be true, new tankers will find employment. However, it is noted that over the past few years, new LNG terminals have been struggling with greater delays. On the other hand, deliveries of new LNG carriers have been carried out relatively on time. Experience from 2024 indicates that LNG carrier charter rates have fallen to record lows. This was mainly due to new deliveries exceeding the supply of LNG at loading ports.

The situation may also be saved by ship scrapping. According to Equasis shipping data, there are around 86 ships in service that are at least 20 years old. Scrapping of older ships has been extremely rare in recent years and there is no indication that shipowners will be sending LNG carriers to the scrapyards en masse. Decisions to scrap may be accelerated by the FuelEU regulations, which came into force in 2025.

However, Drewry predicts that LNG freight will fall in 2025 compared to last year, as 96 LNGCs are scheduled to be delivered this year. This will create an oversupply of liquefied gas cargo space. The additional 42 mtpa of new liquefaction capacity will be insufficient to offset the fleet growth.

The US and Asia decide the market

The imbalance in supply and demand for seaborne gas transport will be regional. A small recovery in demand is expected in Europe. However, the main center of growth in gas demand will remain Asia, especially China. In 2024, the Chinese economy imported from about 6 million to over 7 million tons of LNG per month. Natural gas imports reached 131.69 million tons in 2024, according to data from the General Administration of Customs. LNG Prime reports that “The world’s largest LNG importer paid about $64.3 billion for gas imports, an increase of 1.2% compared to 2023.”

LNG imports to India reached their lowest level in December 2024, mainly due to higher spot prices and colder weather. However, the overall picture for the year was positive, with imports up 2.5% compared to 2023, reaching a total of 26.6 million tonnes. This growth was supported by higher energy demand and lower spot prices earlier in the year, Kpler explains.

India imported around 2.1 million tonnes of liquefied natural gas per month. Kpler reports that “India’s largest terminal, Dahej, stood out by handling 17.9 million tonnes in 2024, operating at an impressive 101.7% efficiency. Utilisation rates at other terminals such as Mundra, Ennore and Hazira also improved slightly.

According to preliminary data from the Japanese Customs Service, in the first nine months of 2024, Japan imported 49.2 million tons of LNG, a slight increase compared to the same period in 2023. However, LNG imports in September 2024 were lower than a year earlier.

In 2025 and beyond, LNG freight and the situation in the maritime transport market will be affected by the fact that the United States will add the largest new production volumes in 2025, with the start of operations of key facilities such as Plaquemines LNG (capacity 13.3 mtpa) and Corpus Christi LNG Phase 3 (10 mtpa). Global LNG supply will improve in 2025 with the arrival of a new exporter, Canada LNG (13 mtpa).

There will therefore be more LNG carriers on the oceans, but they will sail slower and on longer routes. Despite this, the oversupply of the fleet, also caused by the activity of the shadow fleet, will keep freight low. Which is good news for gas recipients, including in the European Union and Poland.