In this episode of Capital Link’s Shipping Sector Webinar Series, we were joined by Mr. Jerry Kalogiratos , CEO of Capital Clean Energy Carriers Corp. (NASDAQ: CCEC), Mr. Knut Traaholt , CFO of FLEX LNG Ltd. (NYSE: FLNG), Mr. Karl Fredrik Staubo , CEO of Golar LNG (NASDAQ: GLNG), and Mr. Spyros Leoussis , CCO of MARAN GAS MARITIME INC.
The webinar, moderated by Mr. Michael Webber, CFA , Managing Partner | Energy Infrastructure at Webber Research & Advisory, explored the current LNG market trends and forward-looking opportunities, with panelists discussing global LNG production forecasts, shipping demand dynamics and evolving market fundamentals offering insights into supply-demand balances, pricing implications, and geopolitical risks impacting the sector. The discussion also addressed newbuilding pricing, shipyard capacity constraints, and the long-term outlook for LNG shipping infrastructure, alongside considerations around speculative ordering activity and challenges related to U.S.-flagged LNG vessels.
To watch the full discussion please visit the following link:
The Shift in Incremental LNG Supply
The global LNG market, currently estimated at approximately 430 million tonnes per annum (MTPA), is projected to add approximately 200 MTPA over the next five years, representing nearly a 50% increase in supply. It’s important to note that 65% of this incremental capacity is expected to originate from the United States.
Commenting on this structural shift, Mr. Karl Fredrik Staubo noted that the market is transitioning “from one driven primarily by demand to one that will increasingly be shaped by international LNG prices, with the U.S. emerging as the marginal producer.” Mr. Staubo commented on this transition.
This expansion, largely based on a Henry Hub linked pricing model, is creating opportunities for competing projects that can undercut US cost structures. Golar highlighted this dynamic by emphasizing its strategic focus on regions such as West Africa and South America, as Mr. Staubo explained, the company can source gas at fixed prices “significantly below both current and forward Henry Hub, curves”, construct liquefaction capacity at a 40% discount to US volumes, and benefit from shorter shipping distances.
This drive toward geographic and supply diversification was further demonstrated by Golar’s recent sale of 2 million tonnes of LNG from an Argentine project to Germany’s SEFE, reflecting a deliberate strategy to reduce reliance on U.S.-sourced LNG.
Emerging Structural Tightness Across the Global LNG Carrier Market
Panelists expressed a clear consensus that the LNG carrier market is about to face a prolonged period of structural tightness, beginning in the 2027-2028 timeframe. Mr. Kalogiratos emphasized that LNG shipping is largely price – agnostic, functioning effectively as a floating pipeline, with demand driven primarily by volumes. In such an environment, the sheer scale of incremental LNG supply becomes the dominant driver of vessel demand.
Applying a conservative multiplier of approximately 1.5 LNG carriers needed per MTPA of new liquefaction capacity based on U.S. to Europe trade routes suggests a need for 300 additional vessels. Should a greater proportion of LNG volumes be directed toward Asian markets, where voyage durations are longer, the multiplier increases toward 3 carriers per MTPA, translating into potential demand for up to 400 LNG carriers.
This anticipated demand growth coincides with a structural transition of the global LNG carrier fleet. As highlighted by Mr. Jerry Kalogiratos, the modern benchmark vessel has evolved into a two-stroke LNG carrier of approximately 174,000 cubic meters, equipped with liquefaction capability, a configuration that stands in stark contrast to the legacy steam turbine fleet. As a result, older steam-powered vessels, along with portions of the TFDE fleet, are increasingly becoming economically and operationally obsolete and are expected to exit the market. Reflecting this trend, a record 15 LNG carriers were scrapped in 2024, and with approximately 200 older vessels still in service, Mr. Kalogiratos anticipates sustained elevated scrapping activity in the years ahead.
Mr. Spyros Leoussis further noted that charterers have already begun seeking to secure LNG carrier tonnage for the 2028–2029 period, albeit at an early stage. However, he cautioned that current contracting activity represents only a fraction of the capacity that will ultimately be required, stating, “I still think this is a very small part of what the market will need at that time.”
Newbuilding capacity is a limiting factor. South Korean yards, widely regarded as the preferred builders for most major LNG players, can produce a maximum of 60-65 LNG carriers per year. Evidently, as 2028 delivery slots are already full for the most part, and as 2029 slots are now being actively booked, Mr. Webber expects newbuild prices, currently in the region of $250 million per vessel, to rise.
Mr. Jerry Kalogiratos reinforced this view, stating that he expects a significant portion of 2029 capacity to be committed within the first half of 2026. Concurring with this assessment, Mr. Traaholt observed that shipyards and key technology providers such as GTT have strong incentives to keep prices elevated given the visible demand.
This tightness is reflected in asset values too, creating a steep difference in the value curve between modern and older tonnage. Mr. Leoussis observed that “you don’t have buyers on the DFDEs, and you don’t have sellers on the two-strokes.” The scarcity of modern secondhand ships means their values are likely to depreciate linearly, affected by newbuild prices, while older technologies face a sharp discount.
Key Demand Drivers and Geopolitical Variables
Several geopolitical factors could disrupt or reshape trade flows. The predominant concern appears to be the state of U.S. and China relations. “China will be a big factor for LNG,” stated Mr. Leoussis, as evidenced by Chinese regasification build-out. A trade war or any escalation that restricts US LNG exports to China would also have meaningful implications for global LNG shipping patterns and vessel demand. On the other hand, Mr. Traaholt believes that a resolution to the war in Ukraine could be a net positive for LNG shipping, as it might unlock new Russian liquefaction projects needing vessels.
Domestic US policy dynamics also represent an important variable. Mr. Staubo highlighted the risk that high Henry Hub prices, coming as a result of increased export volumes alongside growing domestic demand from AI data centers and industrial policy initiatives, could trigger political pressure to limit US exports. As he explained, “Either exports continue and prices move higher, or some form of limitation is introduced, increasing the call on non-U.S. LNG.”
On the demand side, China remains the swing buyer in the global LNG market, with consumption tied directly to the relative pricing of LNG versus alternatives fuels, particularly coal.
Mr. Jerry Kalogiratos emphasized that a renewed and sustained return of Chinese demand could act as a powerful catalyst for LNG shipping. In such a scenario, the implied multiplier for LNG carrier demand increases sharply, with vessel requirements nearly doubling almost immediately.
A potential new source of demand is LNG bunkering. The landscape has changed since a decade ago, now a large fleet of dual-fuel container ships and other LNG capable vessels operate on fixed trade routes. “To cater for a bunkering infrastructure along those already known geographical points is a lot easier than it was 10 years ago,” said Μr. Staubo. In parallel, Mr. Kalogiratos confirmed that ship operators continuously assess fuel switching economics, and the moment the price differential makes LNG an economic alternative, adoption is likely to accelerate.
Contracting and Market Structure Evolution
The upcoming LNG shipping cycle is expected to differ from previous cycles, driven by the significant volume of merchant LNG capacity lacking long term off-take agreements. This structural shift is likely to introduce greater short-term volatility in freight rates, as uncommitted volumes actively chase market opportunities according to Mr. Kalogiratos. Building on this point, Mr. Leoussis added that this environment would likely favor medium-term charter structures, typically in the two-to five-year range, rather than traditional long-term charters, as players without specific long-term SPAs would seek flexibility. “If those cargoes still come to the market, we’re still picking them up”, continued Mr. Kalogiratos.
When addressing the topic of speculative LNG carrier newbuilding, both Mr. Leoussis and Mr. Kalogiratos indicated that their respective companies routinely order on a speculative basis. In contrast, Mr. Traaholt expressed a more cautious stance, citing the capital commitments and the potential risk of new vessels competing with a company’s existing fleet that may be coming open in the same period.
For Flex LNG, the current long-term charter rates do not yet sufficiently justify that risk. Finally, the idea that a U.S. built, U.S. flagged LNG carrier fleet will come to fruition was met with skepticism among panelists. While political will does exist, the practical barriers were viewed as insurmountable. Mr. Kalogiratos concluded that the key constraints include a lack of U.S. shipyard capacity and, more importantly, a severe shortage of U.S. mariners trained for LNG carriers. As a result, any practical solution would likely involve hybrid approaches, such as LNG carriers completed in the United States or blended crewing models with experienced international officers.
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