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  • mikeyhorsehead mikeyhorsehead Jan 14, 2013 8:36 PM Flag

    Gas Exports From U.S. Surge as Sanctions Undermine Iran: Freight

    Gas Exports From U.S. Surge as Sanctions Undermine Iran: Freight
    By Isaac Arnsdorf - Jan 14, 2013
    At a time when sanctions are causing a slump in Iranian cargoes of liquefied petroleum gas, the U.S. is exporting more fuel than ever, driving up tanker rates for BW Group Ltd. and other ship owners.

    U.S. sales (EPD) jumped 27 percent last year as those from Iran fell 18 percent, according to the Energy Department and Joachim Grieg & Co., an Oslo-based shipbroker. Tanker rates will rise 6.7 percent to a record $32,000 a day in 2013, RS Platou Markets AS estimates. The U.S. surge is boosting demand for export terminals and shares of Enterprise Products Partners LP, which operates one in Houston, will gain 10 percent in a year, analyst forecasts compiled by Bloomberg show.

    Iranian sales are being curbed by European Union sanctions that prohibit any vessel insured in the 27-nation bloc from carrying the country’s energy products. That applies to about 90 percent of the world’s merchant fleet. LPG, which is used for cooking and in petrochemicals, is a byproduct of natural-gas output and the U.S. is producing more than ever as it taps deposits from previously inaccessible shale rocks.

    “In Iran you clearly see the declining trend, but don’t forget the U.S. is expanding, so there’s some substitution,” said Steve Engelen, the Oslo-based head of research at Joachim Grieg. “More buying and selling and shifting trade tends to be positive for shipping.”

    Minute Steaks

    Spot earnings for so-called very large gas carriers averaged $30,000 daily in 2012, 25 percent more than in 2011, according to Platou. Seaborne trade will expand 8.4 percent this year, from 4.5 percent in 2012, Oslo-based Pareto Securities AS estimates. Each vessel hauls about 44,000 metric tons of cargo, or enough gas to grill about 1 trillion minute steaks.

    Extracting natural gas yields 10 percent propane and butane, accounting for about 60 percent of global LPG supply, according to the Paris-based World LP Gas Association. The rest comes from refining crude oil. Residential demand accounts for 49 percent of consumption, according to Pareto.

    o contact the reporter on this story: Isaac Arnsdorf in London at iarnsdorf@bloomberg.net

    To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

    ®2013 BLOOMBERG L.P. ALL RIGHTS RESERVED.

 
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