Liquefied natural gas (LNG) traders are storing excess LNG on tankers, following a similar trend in the oil market. Tanker tracking data showed that there were 17 floating storage tankers in March, but the number has declined to 13 after some of them were discharged in India.
According to some analysts, this trend signaled that the LNG industry is poised to reduce output. LNG exporters are reacting to the destroyed demand by two consecutive warm winters and the coronavirus pandemic. Prices are also under intense pressure, with Asian LNG benchmark losing more than 50% this year to a new all-time low. European prices also tumble to near a record low.
However, unlike crude oil, which can sit on tankers for months or even years, LNG tends to evaporate even in vessels with specialized mechanisms to handle it. Hence, it limits the feasible time of tankers as LNG floating storage. Besides, keeping gas frozen at minus 265 degrees Fahrenheit temperature (minus 165 degrees Celsius) requires extremely expensive energy costs.
