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Rush to build new LNG tankers could backfire

The rush to build new liquefied natural gas (LNG) tankers to cash in on high charter rates could backfire, with the market rebalancing by the time the vessels are delivered

Short-term LNG tanker charter rates have more than tripled over the last 12 months, from around $30,000 a day to $100,000 a day. This sparked a rush to build new vessels, with orders in 2011 so far nearly 10 times higher than in the whole of last year. And although LNG supply and demand is expected to increase – requiring a larger tanker fleet to serve the market – ordering LNG vessels to take advantage of the spot market is risky. LNG tankers are more expensive to build than oil tankers, because of the equipment needed to keep the cargo at subzero temperatures, so LNG carriers are usually ordered for specific liquefaction plants to carry the super-cooled gas on a specific route. The high

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