Most people, when they think about small scale LNG carriers, think about LNG carriers of a smaller size. That is not completely wrong, of course, but in today's market is not completely right either.
The reason why we make that claim is because most new small size LNG carriers are built using completely different technologies than "normal size" LNG carriers.
We put the line at when an LNG carrier is "small" at about 40,000 cbms. Most ships above that size will use Moss or membrane tanks and will be able to carry exclusively LNG. But if you look carefully at the latest New Buildings in the small side of the LNG carriers market, you will see that most of them share significant differences with their "big sisters":
These and other differences make them more flexible and capable of profiting from other shipping markets. So when there is no LNG to be transported, they can still take part in the Ethylene or Ethane business and make a decent return. A complete change from a market that sees LNG carriers sitting idle waiting for cargoes. That will not happen (as easily) in small scale because Ship Owners will be able to find alternative cargoes to employ their ships.
These look like simple cosmetic differences, but they are in fact fundamental differences that completely change the economics of the Ship Owners and the market.
So get ready for a new market with new rules and dominated by new players in small scale LNG shipping. A market where freights will never go as low as in the case of their big sisters, simply because will be alternative cargoes available for those ships. And in some cases, those alternative cargoes might even make the freights for small LNG carriers to go up in spite of being very few small LNG cargoes in the market, like is happening now.
Join the Conversation: How do you see the evolution of small scale LNG in the coming years?
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