Traders hoarding LNG at sea before winter

Energy traders and power utilities had increased the amount of liquefied natural gas (LNG) being stored at sea in an unusual move to hoard supply for winter as the market faces a severe shortage.

Energy-starved utilities in Europe were parking LNG shipments off the coast in a scramble to replace Russian pipeline gas this winter. In effect the vessels are being used as faux-terminals, because storage facilities on land are full.

Some traders were also said to be looking to profit by storing LNG and cashing in when prices spike during the winter months. LNG volumes in floating storage globally rose to 1.4m tons by September 2nd, the most in two years, according to energy intelligence firm Kpler.

The strategy, used frequently in the oil market, had been rare for LNG because the liquid fuel slowly evaporates in the ships, making long periods of storage challenging. At least nine vessels were storing LNG in the ocean, according to Bloomberg and Kpler shipping data.

Tanker British Partner (IMO 9766530) was idling in the South China Sea after loading a cargo of Omani and Qatari gas via STS transfer near Malaysia, Bloomberg data showed. Tankship Aristidis I (IMO 9862906) was waiting in the Caribbean with Dominican Republic-origin and US gas onboard, according to Mathew Ang, an analyst at Kpler.

The demand for LNG ships globally was driving freight rates higher

“We would expect there to be more floating storage,” said Oystein Kalleklev, CEO of shipowner Flex LNG Management AS, noting that “the LNG gas carrier market is mostly sold out for the winter, so we would expect traders to utilize the ships in their existing portfolio.”

2018-built, Isle of Man-flagged, 115,366 gt British Partner is owned b NGOTI No 20 SPC A SA care of BP Shipping Ltd of Sunbury-on-Thames, UK. It is entered with Britannia on behalf of Natural Gas Ocean Transportation Investment No. 20 SPC A SA. As of September 9th the vessel was listed as underway in the South China Sea from Dapeng, China, to Singapore, ETA September 18th.

2021-built, Malta-flagged, 116,581 gt Aristidis 1 is owned by Atrotos Gas Carrier Corp care of manager Capital Gas Ship management Corp of Piraeus, Greece. It is entered with West of England Club (Claims team Greece) on behalf of Atrotos Gas Carrier Corp. No AIS since August 16th, when it was listed as underway from Caucedo, Dominican Republic, and was idling in the Caribbean Sea, no named destination.