Teekay LNG Partners L.P. Exercises Options for Two Additional LNG Newbuildings
Teekay LNG Partners L.P. (Teekay LNG or the Partnership) TGP today announced that during the past week it has exercised twoof its three existing options with Daewoo Shipbuilding & MarineEngineering Co., Ltd., (DSME) of South Korea for the construction oftwo 173,400 cubic meter liquefied natural gas (LNG) carriernewbuildings for delivery in 2016. These two newbuilding LNG carriersare in addition to the two LNG carriers Teekay LNG ordered from DSMEin December 2012, which have since secured time-charter employmentcommencing upon delivery. These newbuildings will also be constructedwith the M-type, Electronically Controlled, Gas Injection (MEGI) twinengines, which are expected to be significantly more fuel-efficientand have lower emission levels than other engines currently beingutilized in LNG shipping. The Partnership intends to secure long-termcontract employment for both vessels prior to their delivery in 2016.In connection with the exercise of these two newbuilding options, thePartnership secured further options from DSME which will enable it toorder up to five additional LNG carrier newbuildings in the future.
The contract with DSME includes an installment payment schedulesimilar to the two LNG carrier newbuildings ordered from DSME inDecember 2012. The Partnership intends to initially finance theinstallment payments during construction using a portion of itsexisting liquidity, and expects to secure long-term debt financingfor the two newbuildings prior to their scheduled deliveries.
"The delivery of these two additional vessels is timed to coincidewith the next wave of increased demand for LNG carriers which isexpected when a large number of new LNG export projects comeon-stream commencing from late-2015," commented Peter Evensen, ChiefExecutive Officer of Teekay GP LLC. "Our recently announced chartercontracts with Cheniere Energy for the first two MEGI LNG carriernewbuildings, ordered in December 2012, are a good example of thecontract opportunities available in the LNG shipping market and theattractiveness of these vessels with the new fuel-efficient MEGIengines. Given the strong fundamental outlook in LNG shipping,combined with the optimized design of these vessels, we are confidentin our ability to secure fixed-rate charter contracts for theseadditional two newbuildings, which will provide Teekay LNG withfurther visible built-in growth. Furthermore, the new options wesecured to order up to five additional LNG carrier newbuildingsshould provide the Partnership with a competitive advantage for thevarious LNG projects we are pursuing."