Teekay LNG Pounces on U.S. Natural Gas Study, Orders Two LNG Carriers on Spec

Mike Schuler
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December 13, 2012

imgres-1Teekay LNG Partners (NYSE:TGP) has taken a hint from a recently released U.S. government study on natural gas exports and has entered into an agreement with South Korea’s Daewoo Shipbuilding & Marine Engineering (DSME) calling for the construction of two LNG carriers, with options to order up to three additional vessels.

In a statement, Teekay says that it has ordered the vessels with the expectation to secure long-term contract employment for the vessels prior to their delivery in the first half of 2016. The order comes on the heels of a recently released report from that concluded unequivocally that natural gas exports would be a net benefit to the U.S. economy, providing almost no excuse for the U.S. government to not export more LNG.

“The delivery of these vessels is timed to coincide with the next wave of increased demand for LNG carriers which is expected when a large number of new LNG export projects come on-stream commencing from late-2015,” said Peter Evensen, Chief Executive Officer of Teekay GP LLC. “[The vessels are] also among the largest LNG carriers that will be able to transit the Panama Canal after its expansion project is complete, which makes them ideal for U.S. LNG exports. The recent U.S. Department of Energy study supported the export of LNG from the U.S.”

The 73,400 cubic meter newbuildings will be constructed with M-type, Electronically Controlled, Gas Injection (MEGI) twin engines, which are expected to be significantly more fuel-efficient and have lower emission levels than other engines currently being utilized in LNG shipping.

Evensen added:

“We are confident these newbuildings will be especially attractive to our customers given their fuel-efficient engines as well as being built to a high specification at DSME.” Mr. Evensen continued, “With scheduled delivery in 2016, we believe that we are well-positioned to charter these LNG newbuildings on fixed-rate charter contracts prior to their delivery, thereby providing Teekay LNG with visible built-in growth.”

Teekay LNG Partners L.P. provides LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts with major energy and utility companies through its fleet of 27 LNG carriers (including one LNG regasification unit), five LPG/Multigas carriers and 11 conventional tankers.

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