Tsakos orders LNG carrier
Tsakos Energy Navigation Limited (NYSE: TNP) today announced that it had signed a contract for the construction of a Liquefied Natural Gas (LNG) carrier.
The 150,000 cubic meter capacity vessel will be built by Hyundai Heavy Industries in Korea, and is scheduled for delivery in March of 2007. This is TEN's first LNG newbuilding order, but more could soon follow. The company says it "remains engaged in negotiations with another shipyard regarding two additional LNG carriers."
"The LNG market represents the next phase in the evolution of our company," said Nikolas P. Tsakos, President and CEO of TEN. "Our entry into one of the fastest growing shipping segments in the global energy market coincides with a growing number of new export projects and importer construction of new regasification terminals. As a result, we believe that the growth in this segment will be substantial in the coming years. With this contract, TEN joins a select fraternity of shipowners who are actively pursuing this market."
According to the Energy Information Administration (EIA), U.S. imports of LNG are expected to increase by 58% between 2007 and 2010 as new regasification projects come on line. And, while LNG imports into the US doubled in 2003, this amount represented only 2% of U.S. natural gas demand, illustrating the potential for growth.
Mr. Tsakos continued, "True to our strategy, TEN's diversified fleet is growing to meet the demands of suppliers and consumers around the world, which is now further enhanced by our ability to serve the LNG market. The high-spec nature of this LNG carrier, in tandem with the 10 ice-class vessels that we currently have on order, should provide significant charter premiums, as well as increased earnings and shareholder returns."
Out of TEN's 27 vessels currently trading, 21 operate with medium or long- term employment contracts, some at variable rates, accounting for 78% of the remaining operating days for 2004, and 63% of the operating days of 2005. These contracts will generate a minimum of approximately $255 million over the next seven quarters, which should provide a sustainable flow of earnings. The company currently employs its remaining six vessels in the spot market. Currently, 90% of TEN's fleet is of the double hull design