A market built on long-term contracts
LNG carriers have historically been chartered on long-term time charters, often 15 to 25 years, tied directly to a specific liquefaction project and a specific buyer. The vessel is frequently purpose-built for that trade before the charter even begins, which is a fundamentally different commercial model from the crude tanker spot market.
A genuine LNG spot and short-term charter market has developed over roughly the last decade as US and other new export volumes came online without matching long-term shipping commitments, giving traders and portfolio players tonnage to move uncommitted cargo.
Containment systems
| System | Character |
|---|---|
| Membrane | Now dominant in new construction; flexible cargo tank lining within the hull structure |
| Moss (spherical) | Distinctive spherical tanks; older design, largely superseded in new orders |
The containment system affects cargo capacity, boil-off rate and hull design, and charterers with terminal-specific requirements sometimes specify a containment type.
Boil-off gas and propulsion
LNG naturally boils off in transit as it absorbs heat. Modern vessels use this boil-off gas as fuel - through dual-fuel diesel-electric or two-stroke engines - which is both an operational necessity and a commercial variable, since boil-off rate affects delivered cargo quantity on long voyages.
- Boil-off rate is a specified vessel performance metric in the charter party.
- Reliquefaction plants on some vessels can convert boil-off back to liquid rather than burning it, preserving cargo quantity.
- Voyage length and ambient temperature both affect total boil-off on a given voyage.
Frequently asked questions
Why are most LNG carriers chartered long-term?
Because LNG shipping has traditionally been tied to specific liquefaction projects requiring guaranteed, dedicated transport capacity over the life of a gas supply contract, often 15 to 25 years. Vessels are frequently built specifically for that trade.
Is there a real LNG spot market?
Yes, and it has grown significantly as flexible export volumes - particularly from the US - have come online without matching long-term shipping commitments, creating uncommitted cargo that trades on shorter-term and spot charters.
What is boil-off gas?
LNG naturally vaporises in transit as it absorbs ambient heat. Modern carriers burn this boil-off gas as engine fuel rather than venting it, which affects both propulsion economics and the quantity of cargo delivered.