28.03.2008 - Teekay reveals floating liquefaction ambitions

Shipowner Teekay is throwing its hat into the ring with those in the industry who are vying to be among the first players in the floating LNG (FLNG) arena.

David Glendinning, who is president of Teekay Gas Services, says the company is already talking to shipyards about specifications for a floating liquefaction unit with capacity in the region of 1.5 to two million tonnes per annum (mtpa). He says Teekay would optimise its design of floating production, storage and offloading unit (FPSO) to suit its customers' requirements.

Glendinning said: "We are taking this very seriously. We are building the foundation for Teekay in the future. This is the focus for this year."

Glendinning says Teekay obviously has much of the experience needed to provide floating liquefaction. He points to Teekay's offshore work with floaters, topsides, mooring along with its shuttle-tanker and lightering business.

He admits the company may be starting "a little bit behind" others but says it does not matter if the company is not the first to move. "I believe we have the competitive edge to make up that ground," he said.

A move into the FLNG will be a new departure for Teekay, which has grown its LNG business largely through project-backed newbuildings. At the end of this year, the company will take on two vessels that will go on long-term charter to serve the Tangguh LNG project.

Glendinning says Teekay will continue to pursue this type of work, mentioning the newbuilding tenders for Brass LNG and Nigeria LNG, which are expected to be concluded this year. But he acknowledges that LNG production-project slippage has made the volume of this type of work a bit disappointing. "The food chains have dried up a bit," he said.

Teekay has recently managed to add an impressive six LNG vessels to bump up its fleet to an interest in 19 LNG ships. Glendinning says this ranks the company as the third-largest independent owner of LNG carriers in the world, just behind Japanese giants Mitsui OSK Lines (MOL) and NYK.

The company's most recent coup was to snatch two coveted LNG carriers that came up for sale. Teekay paid ConocoPhillips and Marathon Oil $115m each for the 88,000-cbm Arctic Spirit and Polar Spirit (both built 1993). The ships, which have been transporting cargoes from Alaska to Japan, were sold on a charter-back basis until at least 2009 with options for the charterers to extend this period.

They were popular candidates in the very private and infrequently visited world of LNG sale-and-purchase (S&P). Thirteen parties were invited to bid for them, with more making unsolicited offers. A big draw was that the vessels are fitted with SPB cargo-containment tanks. This makes them suitable for carrying partial cargoes and therefore attractive for other kinds of LNG business.

Glendinning sings their praises, citing the SPB system, flat decks for installing additional kit and mint condition. "We still think there is a niche area for this size of LNG ship," he said. But he adds that the ships could also be converted into small regasification vessels or be used to act as feeders for floating storage and regasification units

Teekay also managed to scoop another quartet of LNG newbuildings. Working in partnership with NYK and trader Mitsui, the company walked off with four vessels for the Angola LNG project.

It was a long haul to secure the work with the partners pre-qualifying for the business in February 2006 and signing charter parties for the vessels in December 2007.

Glendinning describes NYK as "a very good partner and culturally aligned to us". He also points out that Teekay has a long relationship with energy major Chevron, which is the lead shareholder in the Angola project.

From April through to June, Teekay will pass another LNG milestone as the company takes delivery of four Q-flex LNG carriers of around 215,000 cbm. The vessels will go on long-term charter to lift cargoes for the RasGas-III project.

Lucy Hine, Tradewinds

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