Interview with Nakilat Managing Director Abdullah Al Sulaiti
While enroute to Singapore’s Sea Asia maritime conference earlier this year, I made a slight detour to Qatar where I had the opportunity to visit Nakilat, the LNG shipping arm of Qatar Gas which owns the world’s largest fleet of LNG carriers.
Driving down the desert highway toward the LNG shipping hub of Ras Laffan just north of Doha, the expansive facilities could be seen for miles and the seemingly never-ending string of high tension power lines were a visual prequel to the industrial complex I was about to visit in person.
Passing at least three, perhaps four security checkpoints I arrived at the port where familiar red-hulled LNG carriers could be seen taking on super-cooled hydrocarbons destined to provide the energy needed to literally power some of the world’s biggest economies such as Japan, South Korea and India. I was looking at one of the world’s core energy hubs and I must admit, it was a cool visual.
From Ras Laffan, Nakilat ships approximately 77 million tons per year of LNG via their current fleet of 63 LNG carriers (61 at the time of my interview). Providing background to their operations and to the LNG market, Nakilat’s Managing Director Abdullah Al Sulaiti answered a few of my questions:
RA: Can you provide an overview of your current operations?
AAS: Nakilat owns 61 LNG vessels. We own 100% of 25 of our vessels, (all 14 QMax and 11 QFlex) and the others are 43% owned on aggregate. Gulf LPG’s four very large LPG carriers are fully operated and managed by Nakilat Shipping Qatar Limited (NSQL), a wholly-owned subsidiary of Nakilat. We also co-own four VLGCs.
Of our 61 LNG vessels, 54 are on long term charters to Qatargas or RasGas while the remaining seven are chartered into the international market. Nakilat also has several joint ventures to support its business, including a state-of-the-art ship repair yard N-KOM, as well as NDSQ; which is responsible for shipbuilding and refurbishment of special vessels up to 170 meters in length; towage affiliate NSW and agency NAC.
Nakilat’s core business of shipping Qatari liquefied natural gas to global markets is key to our company’s strength. Our fleet represents one of the world’s newest and largest LNG fleets, with all vessels incorporating state-of-the-art technology to ensure the safe, environmentally sound and cost-effective transportation of LNG. The ships represent a total investment of approximately US $12 billion and have a combined aggregate carrying capacity of nearly nine million cubic meters of LNG cargo space.
Nakilat LNG ships are utilized in meeting the transportation requirements of the State of Qatar’s LNG industry, providing the country and the world with a strategically important ‘floating pipeline’ of clean energy. Nakilat’s LNG vessels are chartered through long-term time charter agreements with Qatargas and RasGas. Our 25 wholly-owned LNG vessels are operated via a strategic alliance with Shell International Trading and Shipping Company Ltd. (STASCO). Nakilat’s 36 (including two vessels delivered in the first-half 2015) jointly-owned LNG vessels are operated by the vessel’s co-owners, which include many of the world’s leading ship owning and operating companies.
RA: Is there room for expansion of Nakilat’s fleet going forward?
AAS: Absolutely. Nakilat is an ambitious company, and since our foundation in 2004, we have expanded at a commendable pace, to the point that we are now one of the largest LNG shipping companies in the world. However, much of our success to date has been attributed to careful change management strategies, and as such we don’t rush into things without significant advance planning.
RA: Floating regas and liquefaction has been a trend that has seen a lot of interest and growth over the past few years. How has this technology affected Nakilat’s business?
AAS: As part of our five-year ‘Declared Future’, we have unambiguously stated that this is an area we are interested in developing. We’re closely monitoring the establishment of offshore regas and liquefaction projects globally, and it’s certainly an area where we hope to expand and grow in the future.
RA: Does Nakilat have any ambitions to get into the floating LNG business?
At this point, we aren’t ruling anything out. Nakilat’s Fleet and SHE teams constantly explore these possibilities, and our management team gives broad support to innovative new ways of transporting LNG.
RA: Can you provide a general overview of the LNG shipping market? What are the market forces that are most in play at the moment?
AAS: It’s impossible to predict the future, but generally speaking we see a growing demand for LNG worldwide and thus associated shipping. Given the current state of new-build LNG vessels orders, around 163 currently, and the historical tendency for new LNG production projects to be delayed, we think that there will be a softening of the near-term LNG vessel spot market, but that the vessel length will be absorbed as it has been in the past. It’s important to note that since all of Nakilat’s vessels are on term charters, we think our exposure to the near-term market is extremely limited.
RA: What are the two biggest hindrances to the growth of the global LNG shipping market?
AAS: We would like to see governments worldwide invest in attracting young people to the STEM (science, technology, engineering, mathematics) fields. The industry regularly faces difficulties in attracting the right calibre of qualified and talented graduates, and moves to see this remedied could have a hugely positive impact on the industry as a whole.
While our long-term charters remain unaffected by the drop in oil prices recently, emerging markets that currently rely on oil are, in some cases, becoming more reluctant to look at the infrastructural investment required to develop the LNG sector.
RA: Do you see further consolidation happening anywhere else in the gas sector?
AAS: It’s quite possible that further consolidation will come about in the near future. As the process of globalisation continues, organisations with similar goals and complementary ambitions are likely to seek consolidation and partnerships. There’s significant media speculation about possible mergers at the moment, and from Nakilat’s point of view, all we can say is ‘watch this space’.
RA: Will Nakilat’s ships call on U.S. ports to export LNG in the future?
AAS: We have been involved in the export of cargo from the US to Europe in the past, and there is always the possibility that this will happen again in the future. This depends on commercial viability, international regulation and a variety of other factors.
We currently ship cargoes to 25 countries and 69 LNG receiving terminals around the world. Countries served include Japan, Korea, Spain, United Kingdom, France, USA, Canada, Mexico, United Arab Emirates (UAE), India, China, Greece, Italy, Netherlands, Thailand to name just a few.
RA: If the U.S. required that all of their domestic LNG be exported on U.S.-flagged ships, how might you respond to that?
Right now, we don’t feel the need to speculate on the ‘ifs’ and ‘buts’ of the United States’ shipping industry. Our team of experienced experts would assess the specifics of the situation and make a calculated business decision if that situation were to arise.