Tsakos orders LNG from IZAR

Athens-based Tsakos Energy Navigation (TEN) has signed a letter of intent (LOI) with the Spanish shipbuilder Izar for the construction of one 145,000 cubic metre LNG tanker for delivery in July 2007. The LOI also provides for an option for an additional vessel for delivery later that year. These new buildings represent TEN?s first venture into the rapidly growing LNG market.

Nikolas Tsakos, president and CEO of TEN, stated, “LNG currently represents one of the fastest growing shipping segments in the global energy market. In 2003, the global LNG trade grew by 13% and is expected to double by 2010. Low cost natural gas reserves in the Middle East and Africa, combined with a decreasing cost structure of the LNG process, will allow large-scale expansion of the trade. With the vessels announced today, TEN is poised to join a select group of operators who will be able to take advantage of this growing market segment.”

The current LNG carrier market appears very fragmented, with only 40 owners operating 160 vessels, and is characterized by long-term contracts that typically average about 20 years. The long-term fundamentals of this sector are sound, as most LNG vessels currently on order (approximately 60 vessels) are already dedicated to satisfy the transportation needs of specific existing LNG projects. Current market estimates project demand growth for LNG tankers to exceed the current order book by 100 vessels by 2010. Increased competition for shipyard capacity from tankers, bulkers and containerships has resulted in a shortage in LNG shipbuilding capacity.

Including options and the LNG carriers announced today, TEN?s fleet is expected to grow to 44 vessels by the end of 2007. Out of the 28 vessels currently trading, 22 operate with medium or long-term employment contracts, some at variable rates, accounting for 70% of the operating days for 2004, and 56% of the operating days of 2005. Currently, 90% of TEN?s fleet is of the double hull design.