NextDecade sees Middle East conflict boosting long-term LNG ship charters

By Curtis Williams

HOUSTON, May 6 (Reuters) - ‌Ongoing conflict ​in the ​Middle East and other disruptions will lead to more companies hiring LNG ships under long-term contracts rather than on the spot market, ‌NextDecade shipping vice president Peter Fitzpatrick said on Wednesday at an ⁠event in Houston.

The LNG industry became comfortable with hiring ships on the spot market when ‌there was an oversupply of ‌the fuel, with very few long-term deals done in 2024 and 2025, Fitzpatrick said. The market, however, is beginning to realize there will be increased ​volatility and is starting to adapt, he added.

"The long-term impact of the geopolitical crisis is that we will see more long-term shipping where you manage ⁠your own risk and not rely only on the spot market," Fitzpatrick said at Lloyd’s Register’s Global LNG ​Forum.

He said supply chain challenges in acquiring gas turbines will slow the ability of U.S. LNG project developers to make ​final investment decisions because it is difficult to ‌determine when the equipment will be available.

"There was a time when gas turbines were mainly for plants like LNG, but ⁠with the amount of data centers being built and the LNG expansion it is very challenging to get gas turbines," Fitzpatrick told Reuters on the sidelines of the conference.

European ⁠resistance to long-term purchases, meanwhile, is also making FID challenging for some U.S. developers, as well ​as continued high interest rates which are driving up costs, he added.

With growth in LNG exports, the shipping industry is on track to build 100 carriers a year, with new ‌ships carrying up to 15% more than current tankers, Gaztransport & Technigaz North America general manager Patrice Brossard said at the ‌same event.

The United States, already the world's largest exporter of LNG, is on track ⁠to double its export capacity ‌by 2030. NextDecade is building ​a 30 million metric ton per annum export facility in Brownsville, Texas.

(Reporting by Curtis Williams in Houston; Editing by Nathan Crooks, ‌Kirsten Donovan)

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