Saturday 8 October 2011

Bad bet costs Qatar $1bn in gas tanker refits » Kuwait Times Website

Qatar made a billion dollar error when it built its liquefied natural gas shipping fleet in the last decade, and now consumers may have to pay for the misstep. The world's biggest LNG producer is about to approve the overhaul of 45 of its largest tankers from 2012 to 2015 to burn natural gas after the decision to run them on petroleum fuel backfired when oil prices rose, senior industry sources said.

The retrofit will exacerbate a shortage of ships able to carry LNG and could stifle short-term trade at a time that demand is rising due to increased buying by Japan and other countries following the shutdown of nuclear power plants since the March Fukushima disaster.Qatar is nearing the end of a year-long consultation on the $1 billion upgrade involving shipowners, shareholders and engine manufacturers, which was prompted by an unexpected fall in natural gas prices versus oil in recent years, according to
people present at the ongoing discussions.

Qatar wants to make a decision as soon as they can. These ships are coming around to their first scheduled five-year service," a shipping source said. Retrofitting is expected to begin in mid-2012. Qatar Petroleum and ship owner Qatar Gas Transport Co (Nakilat) were unavailable for comment. Some experts say the cost could be as high as $1.4 billion, assuming each retrofit costs $30 million. Exact costs will be established at a meeting between counterparties at the end of the month, the sources said. Top
energy executives at Qatar Petroleum want upgrades to coincide with the mandatory five-year servicing of its fleet, which starts next year and lasts until 2015, to minimise disruption to trade.


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