In terms of pure numbers, LNG imports can replace a portion of the Russian pipeline gas in Europe. Much of the available global liquefaction capacity is already contracted, however, and building new LNG terminals takes several years. A short-term solution is to use Floating Storage and Regasification Units (FSRU). Yet most of the FSRUs available on global markets - already few in number as it is - are under long-term charters. Can older LNG tankers be converted into FSRUs? What does that mean for the LNG tanker market? Will greater demand for sea transport of LNG lead to a shift in trade routes? What secondary effects are to be expected?
In our current Flash Analysis we shed light on the impacts of the war on the LNG tanker market and describe the resulting opportunities and challenges that will arise for LNG tanker shipping in the short to medium term.
Author: Barbara König, Credit Analysis department of KfW IPEX-Bank
Published: May 2022