Teekay Books Newbuilds After Signing Long-Term Contract to Ship U.S. LNG

Photo: Teekay Corporation
Photo: Teekay Corporation

 

Teekay LNG Parters, the LNG shipping unit of Bermuda-based Teekay Corporation, has placed an order for two fuel-efficient LNG carriers after booking up to two time-charter contracts with BP Shipping Limited for use of the vessels.

The order was placed at Hyundai Samho Heavy Industries Co., Ltd. of South Korea and calls for the construction of two 174,000 cubic meter LNG carriers with the option for a third ship.

Teekay LNG placed the order after it entered into a 13-year time-charter contract with BP Shipping Limited for one LNG newbuilding, plus BP has the option for one additional LNG carrier under similar terms. The option exercisable by the end of the third quarter of 2015.

The vessels, including the optional third vessel, will primarily be used to transport BP’s LNG volumes from the Freeport LNG export facility located on Quintana Island near Freeport, Texas. Freeport LNG received final approval to construct and operate the export facility in November 2014 after a four-year permitting process. The facility will consist of three LNG trains with a total capacity of 13.2 metric tonnes per annum and it is expected to begin commercial operations in 2018.

Teekay says the new vessels will be fuel-efficient and initially financed by installment payments from a portion of its existing liquidity. The company says it expects to secure long-term debt financing for the vessels prior to the scheduled deliveries.

The two vessels are scheduled for delivery in the first quarter of 2019.

“We are excited to be supporting our second U.S. LNG export project, adding Freeport LNG to our existing charters committed to Cheniere Energy’s Sabine Pass, and we look forward to the continued growth in U.S. LNG exports, which are expected to create substantial future demand for LNG transportation services,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. “This accretive transaction both builds on our strong relationship with BP and our portfolio of fuel-efficient LNG carrier newbuildings on long-term contracts.”