Teekay LNG Partners L.P. (NYSE:TGP) has announced that it has exercised two of its three existing options with Daewoo Shipbuilding & Marine Engineering Co., Ltd., (DSME) two build another two 173,400 cubic meter liquefied natural gas carriers (LNGCs). This order adds to their original order for two LNGCs placed in December 2012.
These vessels are expected to be delivered in 2016 and are designed to be the maximum size to fit through the new Panama Canal once completed.
“The delivery of these two additional 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,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC.
“Our recently announced charter contracts with Cheniere Energy for the first two MEGI LNG carrier newbuildings, ordered in December 2012, are a good example of the contract opportunities available in the LNG shipping market and the attractiveness of these vessels with the new fuel-efficient MEGI engines. Given the strong fundamental outlook in LNG shipping, combined with the optimized design of these vessels, we are confident in our ability to secure fixed-rate charter contracts for these additional two newbuildings, which will provide Teekay LNG with further visible built-in growth. Furthermore, the new options we secured to order up to five additional LNG carrier newbuildings should provide the Partnership with a competitive advantage for the various LNG projects we are pursuing.”
These newbuildings will also be constructed with MAN B&W 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.
In connection with the exercise of these two newbuilding options, TGP has also negotiated options to build up to 5 additional ships at DSME.
In their press statement, TGP notes that the contract with DSME includes an installment payment schedule similar to the two LNG carrier newbuildings ordered from DSME in December 2012. TGP intends to initially finance the installment payments during construction using a portion of its existing liquidity, and expects to secure long-term debt financing for the two newbuildings prior to their scheduled deliveries.