1 00:00:07,600 --> 00:00:11,400 Speaker 1: Hi everyone, and welcome to Bloomberg Intelligence Talking Transports Podcast. 2 00:00:11,440 --> 00:00:15,080 Speaker 1: I'm your host, Lee Klaskaw, Senior Freight Transportation Logistics Analyst 3 00:00:15,080 --> 00:00:18,560 Speaker 1: at Bloomberg Intelligence, Bloomberg's in house research arm of five 4 00:00:18,640 --> 00:00:22,680 Speaker 1: hundred analysts and strategists. Before diving in a little public 5 00:00:22,720 --> 00:00:26,200 Speaker 1: service announcement, your support is instrumental to keep bringing great 6 00:00:26,239 --> 00:00:28,520 Speaker 1: guests onto the podcast like the one we have today. 7 00:00:28,880 --> 00:00:31,080 Speaker 1: If you haven't already, please do take a moment to 8 00:00:31,160 --> 00:00:34,680 Speaker 1: follow Ray and share the Talking Transports podcasts with your 9 00:00:34,680 --> 00:00:38,559 Speaker 1: friends and family. We appreciate your support. We're delighted to 10 00:00:38,600 --> 00:00:43,080 Speaker 1: have Oystein Kliklev CEO of Flex LNG, a physician he's 11 00:00:43,120 --> 00:00:47,640 Speaker 1: held since joining the company in twenty seventeen. Oysen is 12 00:00:47,680 --> 00:00:51,600 Speaker 1: also the CEO of Avants Gas, which he's held since 13 00:00:51,640 --> 00:00:55,520 Speaker 1: April of last year. Prior to joining Flex LG, Oysen 14 00:00:55,640 --> 00:01:01,280 Speaker 1: was CFO of Nitsen NYK Offshore Tankers from twenty thirteen 15 00:01:01,320 --> 00:01:05,000 Speaker 1: to twenty seventeen, where he also served as Chairman of 16 00:01:05,040 --> 00:01:10,000 Speaker 1: the General partner of the Master Limited partnership Knot Offshore 17 00:01:10,080 --> 00:01:15,319 Speaker 1: Partners from twenty fifteen to twenty seventeen. Thanks for joining 18 00:01:15,400 --> 00:01:18,080 Speaker 1: us on the Talking Transport podcast, Oystein. 19 00:01:18,760 --> 00:01:20,720 Speaker 2: Thank you Lee for inviting me. And that's how cool 20 00:01:20,760 --> 00:01:23,440 Speaker 2: you have transportation shipping podcast in Bloombery. 21 00:01:23,840 --> 00:01:26,280 Speaker 1: Yes, it's it's one of the modes that we love 22 00:01:26,360 --> 00:01:29,920 Speaker 1: to focus on. And you are actually our first LNG 23 00:01:30,160 --> 00:01:32,880 Speaker 1: tanker person to come on the podcast, so we have 24 00:01:32,920 --> 00:01:34,919 Speaker 1: a lot to learn and a lot to talk about. 25 00:01:35,200 --> 00:01:38,399 Speaker 1: Can you talk a little bit about what exactly is 26 00:01:38,520 --> 00:01:41,120 Speaker 1: flex LNG for those that aren't familiar with the name. 27 00:01:42,000 --> 00:01:44,679 Speaker 3: Yeah, it's a it's a good question. You know. 28 00:01:44,760 --> 00:01:47,800 Speaker 2: We are located in a group of companies here in 29 00:01:47,800 --> 00:01:50,960 Speaker 2: Oslow where we run about three hundred and fifty ships. 30 00:01:51,200 --> 00:01:53,720 Speaker 2: So I'm sitting in the same office as the tanker 31 00:01:53,760 --> 00:01:59,840 Speaker 2: company Frontline, which is the biggest listed tanker company, Golden 32 00:02:00,280 --> 00:02:02,760 Speaker 2: which is a riber company also listed in the US, 33 00:02:02,800 --> 00:02:05,320 Speaker 2: which is the second biggest ribal company listed in the world. 34 00:02:05,360 --> 00:02:10,440 Speaker 2: And our guests were recently on your program Ulik in 35 00:02:10,600 --> 00:02:13,240 Speaker 2: SFL So we kind of we have a big scale 36 00:02:13,280 --> 00:02:17,119 Speaker 2: and we have one common denominator. Is we all supported 37 00:02:17,160 --> 00:02:19,440 Speaker 2: by the shareholder John Frederickson, which is kind of like 38 00:02:19,560 --> 00:02:24,000 Speaker 2: the Norwegian Warren Buffett, which has amassed a lot of 39 00:02:24,040 --> 00:02:28,600 Speaker 2: different companies. Among those he founded Golar LNG, which still 40 00:02:28,639 --> 00:02:32,600 Speaker 2: listed in the US, founded that in the early two 41 00:02:32,639 --> 00:02:35,160 Speaker 2: thousand and it's whole lot of that company in fourteen, 42 00:02:35,560 --> 00:02:38,320 Speaker 2: and from that on we built up a new LNG 43 00:02:38,440 --> 00:02:42,440 Speaker 2: shipping company called Flex LNG, where we invested in a 44 00:02:42,520 --> 00:02:46,040 Speaker 2: lot in new ships. In the period twenty seventeen eighteen, 45 00:02:46,040 --> 00:02:48,240 Speaker 2: we conflicted eleven ships at that time. 46 00:02:48,520 --> 00:02:50,280 Speaker 3: Prices at that time was about. 47 00:02:50,040 --> 00:02:51,919 Speaker 2: One hundred and eighty one hundred and eighty five million 48 00:02:51,960 --> 00:02:54,920 Speaker 2: dollars for LNG ship. We saw that US would become 49 00:02:54,919 --> 00:02:58,600 Speaker 2: the biggest LNG exporter, which would create more atonished demand, 50 00:02:58,720 --> 00:03:00,600 Speaker 2: and the fact that there was a lot of older 51 00:03:00,600 --> 00:03:04,120 Speaker 2: ships around two hundred ships with the steam turbine, which 52 00:03:04,600 --> 00:03:08,000 Speaker 2: is kind of our legacy asset. So we kind of 53 00:03:08,240 --> 00:03:10,600 Speaker 2: to begin with, we were like an asset play, you know. 54 00:03:10,639 --> 00:03:13,000 Speaker 2: We invested in ships at the right time. Today a 55 00:03:13,120 --> 00:03:15,840 Speaker 2: new building price for allergy carriers about two hundred and 56 00:03:15,880 --> 00:03:18,600 Speaker 2: sixty million lee time is four years other than two 57 00:03:18,600 --> 00:03:21,400 Speaker 2: and a half years. And then we got the ships 58 00:03:21,440 --> 00:03:24,840 Speaker 2: on water from eighteen to twenty one. We thought that 59 00:03:24,919 --> 00:03:28,760 Speaker 2: was good timing until COVID happened. We managed through that 60 00:03:29,000 --> 00:03:32,000 Speaker 2: cycle and then we built up with long term contracts 61 00:03:32,000 --> 00:03:34,080 Speaker 2: for all of our ships. We have close to fifty 62 00:03:34,120 --> 00:03:37,400 Speaker 2: years of minimum film backlog today with options that's going 63 00:03:37,440 --> 00:03:40,680 Speaker 2: to be creeping up to somewhere around sixty sixty five years. 64 00:03:41,040 --> 00:03:42,920 Speaker 2: So we kind of we de risked and built the 65 00:03:42,960 --> 00:03:46,240 Speaker 2: company from asset play to know our cash flow play. 66 00:03:46,720 --> 00:03:50,680 Speaker 1: Gotcha. And for those that know, Flex LNG is listed 67 00:03:50,680 --> 00:03:53,480 Speaker 1: on the OSLO in the New York Stock Exchange. Market 68 00:03:53,480 --> 00:03:56,400 Speaker 1: cap is roughly one and a half billion dollars. Did 69 00:03:56,440 --> 00:03:58,840 Speaker 1: I hear you correctly? You said a new LNG tanker 70 00:03:59,000 --> 00:04:01,080 Speaker 1: costs two hundred and six million and it can take 71 00:04:01,160 --> 00:04:03,400 Speaker 1: four years from the time in order to delivery. 72 00:04:03,520 --> 00:04:06,000 Speaker 3: Yeah, it's it's quite high. 73 00:04:06,080 --> 00:04:12,440 Speaker 2: So two hundred and sixty Korea, maybe two forty forty 74 00:04:12,480 --> 00:04:15,520 Speaker 2: five in China if you unless you go to Hudong, 75 00:04:15,600 --> 00:04:17,799 Speaker 2: then you're probably playing like two hundred and fifty million 76 00:04:18,200 --> 00:04:21,440 Speaker 2: lee time. Yes, four years, So four years of lee 77 00:04:21,440 --> 00:04:24,000 Speaker 2: time cost a lot when you can get five percent 78 00:04:24,080 --> 00:04:29,040 Speaker 2: into a state giving you money into Uncle Sam's treasury bills. 79 00:04:29,480 --> 00:04:32,760 Speaker 1: Yeah, and you mentioned maybe Chinese ships are a little 80 00:04:32,839 --> 00:04:37,400 Speaker 1: cheaper than others. Are they up to snuff in terms 81 00:04:37,400 --> 00:04:40,200 Speaker 1: of you know where, like maybe the Japanese or the 82 00:04:40,440 --> 00:04:43,360 Speaker 1: Korean yards are they Are they just as good or 83 00:04:43,720 --> 00:04:45,160 Speaker 1: is it a discount for a reason. 84 00:04:45,800 --> 00:04:48,120 Speaker 2: It's so funny you mentioned it. Actually it's a big 85 00:04:48,240 --> 00:04:52,040 Speaker 2: article about it in Financial Times today. That China is 86 00:04:52,279 --> 00:04:54,720 Speaker 2: of course now the biggest ship builder in the world. 87 00:04:54,760 --> 00:04:57,720 Speaker 2: They have been totally dominated in the kind of commodity 88 00:04:57,760 --> 00:05:00,800 Speaker 2: ships like tankers and bulkles, where they have you know, 89 00:05:01,600 --> 00:05:04,760 Speaker 2: sixty to eighty percent market share. But you know, the 90 00:05:04,839 --> 00:05:08,320 Speaker 2: Chinese have a steep learning curve. They are quick to adapt. 91 00:05:08,360 --> 00:05:10,920 Speaker 2: They are know, the biggest in the container business. A 92 00:05:11,000 --> 00:05:12,960 Speaker 2: lot of the container ships are being built out with 93 00:05:13,120 --> 00:05:16,520 Speaker 2: LNG propulsion. They are not the biggest in the VLGC, 94 00:05:16,680 --> 00:05:19,360 Speaker 2: which we operate in Avance Gas, which is very large 95 00:05:19,400 --> 00:05:23,039 Speaker 2: gas carriers for LPG. And actually they grabbed more than 96 00:05:23,160 --> 00:05:25,520 Speaker 2: a close to a quarter of the LERG orders now. 97 00:05:26,000 --> 00:05:30,000 Speaker 2: So the Japanese you mentioned, they are not competitive, They 98 00:05:30,040 --> 00:05:34,040 Speaker 2: were competitive in the past. Today l G ship building 99 00:05:34,120 --> 00:05:37,279 Speaker 2: is about two nations. It's South Korea which is by 100 00:05:37,320 --> 00:05:41,039 Speaker 2: far the biggest they have like seventy five percent market share, 101 00:05:41,040 --> 00:05:43,640 Speaker 2: and then it's China. Those two are the only countries 102 00:05:43,680 --> 00:05:44,960 Speaker 2: building LERG ships today. 103 00:05:45,320 --> 00:05:48,840 Speaker 1: All right, great, and so who are your major customers, 104 00:05:48,880 --> 00:05:52,880 Speaker 1: like are they I guess tells who are your customers? 105 00:05:52,880 --> 00:05:54,839 Speaker 1: Then the buyers are the sellers of the LNG. 106 00:05:55,320 --> 00:06:00,520 Speaker 2: It's it's yeah, that's good question. Sometimes it's both. Of course, 107 00:06:00,680 --> 00:06:03,320 Speaker 2: we have publicly said that we have we fixed five 108 00:06:03,360 --> 00:06:06,839 Speaker 2: ships with Channier, so Channier is the biggest LERG EXPORTO 109 00:06:06,880 --> 00:06:07,680 Speaker 2: out of the US. 110 00:06:08,760 --> 00:06:09,240 Speaker 3: We have. 111 00:06:11,240 --> 00:06:14,680 Speaker 2: Five ships with what we could define as the supermajors, 112 00:06:14,760 --> 00:06:18,280 Speaker 2: so it's the big oil company or energy companies, and 113 00:06:18,320 --> 00:06:22,360 Speaker 2: then we have ships with two ships with our three 114 00:06:22,360 --> 00:06:25,240 Speaker 2: ships with traders you know, depending a bit on your definition, 115 00:06:25,360 --> 00:06:29,719 Speaker 2: so it's really end users. We have typically a contract 116 00:06:29,800 --> 00:06:34,640 Speaker 2: for SPA so assailant purchased off take off l G. 117 00:06:35,360 --> 00:06:38,039 Speaker 2: It could be because that would be a buyer of 118 00:06:38,120 --> 00:06:41,719 Speaker 2: the gas. But sometimes like Channier, they sell some of 119 00:06:41,720 --> 00:06:45,400 Speaker 2: the portfolio of LERG on our FOB basis where basically 120 00:06:45,480 --> 00:06:47,800 Speaker 2: the customer pick up the LNG cargo and take it 121 00:06:48,240 --> 00:06:51,800 Speaker 2: to the import place. Some of the cargoes from Chenier 122 00:06:51,920 --> 00:06:54,800 Speaker 2: is also sold on what we call death spasis. So 123 00:06:55,000 --> 00:06:58,280 Speaker 2: FOB means free on board. This means delivered X ship, 124 00:06:58,600 --> 00:07:01,880 Speaker 2: so that means that channel act also not only producing 125 00:07:01,920 --> 00:07:04,400 Speaker 2: the energy, they're also delivering it to the import nation. 126 00:07:04,960 --> 00:07:05,920 Speaker 3: So that really. 127 00:07:05,920 --> 00:07:10,280 Speaker 2: Sometimes the kind of a counterparty is the buyer, and 128 00:07:10,320 --> 00:07:12,720 Speaker 2: sometimes they can be the seller and the traders. Of course, 129 00:07:12,760 --> 00:07:15,800 Speaker 2: they are looking for arbitrash picking up cargoes and selling 130 00:07:15,880 --> 00:07:17,360 Speaker 2: them somewhere else for a higher price. 131 00:07:18,840 --> 00:07:20,880 Speaker 1: And I'm assuming you know, given the costs of these 132 00:07:20,920 --> 00:07:23,280 Speaker 1: assets two hundred and forty two hundred and sixty million 133 00:07:23,320 --> 00:07:27,040 Speaker 1: dollars a piece, these ships are are they have long 134 00:07:27,240 --> 00:07:28,760 Speaker 1: they're on long term contracts. 135 00:07:28,840 --> 00:07:30,160 Speaker 3: Is that fair to say? Yeah? 136 00:07:30,200 --> 00:07:33,760 Speaker 2: So I started with energy as close to twenty years ago, 137 00:07:33,880 --> 00:07:37,320 Speaker 2: so the LERG business was then at that time probably 138 00:07:37,320 --> 00:07:41,800 Speaker 2: the most conservative shipping segment around, most conservative than even 139 00:07:41,880 --> 00:07:45,120 Speaker 2: car carriers we used to say at that time. Typically 140 00:07:45,320 --> 00:07:49,680 Speaker 2: the process was you are our customer, whether that's an 141 00:07:49,680 --> 00:07:53,280 Speaker 2: oil company, you sign up for twenty years maybe twenty 142 00:07:53,320 --> 00:07:58,480 Speaker 2: five years energy of take agreement. So just an example 143 00:07:58,520 --> 00:08:00,200 Speaker 2: which I also walked in, or you know, you have 144 00:08:00,560 --> 00:08:06,280 Speaker 2: Spain Utility, you're buying LERG from Trinidad Tobago. Then you 145 00:08:06,760 --> 00:08:09,720 Speaker 2: charge in a ship for twenty years and that ship 146 00:08:09,800 --> 00:08:12,400 Speaker 2: is then intended to do a to B picking up 147 00:08:12,440 --> 00:08:16,320 Speaker 2: cargoes in Trinidad Tobago, delivering that to Spain and the 148 00:08:16,400 --> 00:08:19,040 Speaker 2: customer has a twenty years contract for LERG, twenty years 149 00:08:19,040 --> 00:08:22,800 Speaker 2: contract for shipping, and everything is back to back, and 150 00:08:22,840 --> 00:08:26,360 Speaker 2: this is super financiable, so you typically you go to 151 00:08:26,400 --> 00:08:29,800 Speaker 2: our bank and this is prayer the global financial crisis, 152 00:08:29,840 --> 00:08:32,960 Speaker 2: you could get basically one hundred percent leverage because you 153 00:08:33,040 --> 00:08:37,400 Speaker 2: have a contract that repays the ship during the duration 154 00:08:37,520 --> 00:08:41,480 Speaker 2: of the contract, and the counterparty is really investment grade 155 00:08:42,400 --> 00:08:46,320 Speaker 2: and it's a lot of predictability. And then as the 156 00:08:46,440 --> 00:08:51,880 Speaker 2: market's evolved, you know, with LERG becoming more a commodity 157 00:08:51,880 --> 00:08:55,000 Speaker 2: in the sense that certainly you know, this changed a 158 00:08:55,000 --> 00:08:58,800 Speaker 2: lot during Fukushima. So Fukushima really was an eye opener 159 00:08:58,840 --> 00:09:04,840 Speaker 2: for the market. Had the triple disaster nuclear, the tsunami, 160 00:09:05,200 --> 00:09:07,800 Speaker 2: and the flooding, and then they really had to rush 161 00:09:07,960 --> 00:09:11,600 Speaker 2: in order to get LNG to replace that nuclear shutdown. 162 00:09:12,000 --> 00:09:14,720 Speaker 2: And what happened then was that they bought a lot 163 00:09:14,760 --> 00:09:18,920 Speaker 2: of LNG in the market from the big portfolio players 164 00:09:18,920 --> 00:09:22,160 Speaker 2: that evolved. These are the kind of like Big was 165 00:09:22,200 --> 00:09:25,600 Speaker 2: an early starter which kind of diverted LERNG then to 166 00:09:25,720 --> 00:09:28,880 Speaker 2: Japan and made a killing on those cargoes, which is 167 00:09:29,000 --> 00:09:31,560 Speaker 2: really also resulted in those very few people who had 168 00:09:31,559 --> 00:09:35,320 Speaker 2: the open spotship could make a killing on freight because 169 00:09:35,320 --> 00:09:37,760 Speaker 2: there wasn't really a spot market for shipping at that time. 170 00:09:37,840 --> 00:09:40,920 Speaker 3: And it evolved from that and today it's. 171 00:09:40,760 --> 00:09:45,679 Speaker 2: A much more dynamic segment where your trading spot markets 172 00:09:45,679 --> 00:09:49,920 Speaker 2: become bigger. When we started the tracks, we started basically 173 00:09:49,960 --> 00:09:52,080 Speaker 2: trading all the ships in the spot market, and then 174 00:09:53,000 --> 00:09:55,679 Speaker 2: the time charters now which used to be twenty years, 175 00:09:55,679 --> 00:09:59,280 Speaker 2: they might be three, five, seven, ten, twelve years instead, 176 00:09:59,320 --> 00:10:01,800 Speaker 2: So there's a lot of more angles to play in 177 00:10:01,840 --> 00:10:02,360 Speaker 2: the market. 178 00:10:03,240 --> 00:10:07,040 Speaker 1: So roughly, what percentage of is your flee at flex 179 00:10:07,160 --> 00:10:10,200 Speaker 1: LNG in the contract market versus the spot market. 180 00:10:10,320 --> 00:10:12,640 Speaker 2: Yeah, so we started off with one hundred percent spot, 181 00:10:13,280 --> 00:10:16,720 Speaker 2: and we were one hundred percent spot until middle of 182 00:10:16,760 --> 00:10:19,160 Speaker 2: April twenty twenty one when we fixed five ships with 183 00:10:19,240 --> 00:10:21,840 Speaker 2: gen Air and then we fixed all our audoships. So 184 00:10:22,000 --> 00:10:25,440 Speaker 2: right now we have basically zero exposures to the spot market. 185 00:10:25,520 --> 00:10:27,800 Speaker 2: We have one hundred percent coverage for this year. We 186 00:10:27,880 --> 00:10:30,400 Speaker 2: have close to fifty ers minimum backlog. But we have 187 00:10:30,559 --> 00:10:34,360 Speaker 2: one ship which is on a variable higher contract where 188 00:10:34,480 --> 00:10:37,960 Speaker 2: the higher of the ship will depend a bit on 189 00:10:38,040 --> 00:10:41,520 Speaker 2: the condition of the spot market, not directly, but to 190 00:10:41,640 --> 00:10:44,680 Speaker 2: our great extent, So that really means we're all kind 191 00:10:44,679 --> 00:10:47,520 Speaker 2: of earnings visibilities is very high today. 192 00:10:47,480 --> 00:10:49,839 Speaker 1: Right, And I guess you know what most people might 193 00:10:49,880 --> 00:10:53,680 Speaker 1: not realize is that the shipping or movement of LNG 194 00:10:53,880 --> 00:10:57,439 Speaker 1: is a little more complicated than other all commodities. Can 195 00:10:57,480 --> 00:11:01,120 Speaker 1: you talk about the process of shipping, Yeah. 196 00:11:00,960 --> 00:11:04,800 Speaker 2: So how this process works is more complicated than treading 197 00:11:04,840 --> 00:11:08,920 Speaker 2: you know, iron or coal, or oil or petroleum products 198 00:11:08,960 --> 00:11:12,480 Speaker 2: for that matter. So you basically have a source where 199 00:11:12,480 --> 00:11:15,960 Speaker 2: they have natural gas which needs to be cleaned, you know, 200 00:11:16,080 --> 00:11:21,800 Speaker 2: getting out water impurities and such, and what you want 201 00:11:21,840 --> 00:11:25,520 Speaker 2: to end up with. It's mostly methane so c H four. 202 00:11:26,440 --> 00:11:30,360 Speaker 2: You could have some ethane and opene, but for the 203 00:11:30,360 --> 00:11:33,240 Speaker 2: most part it should be methane. So then once you 204 00:11:33,280 --> 00:11:36,920 Speaker 2: have cleaned it, you cool it down to minus one 205 00:11:36,960 --> 00:11:39,880 Speaker 2: hundred and sixty two minus hundred and sixty three centigrade, 206 00:11:39,920 --> 00:11:43,840 Speaker 2: which is minus two hundred and sixty fahrenheit, so one cold. Yeah, 207 00:11:43,880 --> 00:11:46,679 Speaker 2: it's very cold, so you know, it's it's not as 208 00:11:46,720 --> 00:11:48,880 Speaker 2: cold as if you want to have a liquid hydrogen 209 00:11:48,960 --> 00:11:52,360 Speaker 2: carri ship, then you need to cool down to minus 210 00:11:52,360 --> 00:11:56,160 Speaker 2: two fifty three centigrades, which is twenty degrees from absolute zero, 211 00:11:56,440 --> 00:11:58,080 Speaker 2: but still it's very cold. 212 00:11:58,280 --> 00:12:00,040 Speaker 3: So but once you could. 213 00:11:59,840 --> 00:12:03,040 Speaker 2: It on it liquefied, it goes from a gas vapor 214 00:12:03,080 --> 00:12:06,520 Speaker 2: state to a liquid state and it compressed six hundred times, 215 00:12:06,760 --> 00:12:09,400 Speaker 2: so meaning you know when you then load it onto 216 00:12:09,400 --> 00:12:11,560 Speaker 2: a ship, you can have six hundred times as much 217 00:12:11,679 --> 00:12:15,559 Speaker 2: cargo because of the cold. 218 00:12:15,240 --> 00:12:16,760 Speaker 3: State of the gas. 219 00:12:17,480 --> 00:12:22,680 Speaker 2: Of course, having something keeping something that cold, it's not easy. 220 00:12:22,840 --> 00:12:29,160 Speaker 2: So that's why these ships are very technologically sophisticated and expensive. 221 00:12:29,480 --> 00:12:32,640 Speaker 2: Because the ship is basically a thermos, so you're taking 222 00:12:32,679 --> 00:12:35,520 Speaker 2: it and you want to keep it on that temperature 223 00:12:35,640 --> 00:12:39,800 Speaker 2: in a turmos, however, the thermos is never perfect, so 224 00:12:39,960 --> 00:12:42,760 Speaker 2: you will have some gradual heating. 225 00:12:42,480 --> 00:12:43,559 Speaker 3: Up of the cargo. 226 00:12:44,200 --> 00:12:47,360 Speaker 2: So what happened when you have this heating effect is 227 00:12:47,400 --> 00:12:50,080 Speaker 2: that it goes from a liquid state to a gas state, 228 00:12:50,400 --> 00:12:53,240 Speaker 2: and that is creating pressure. You don't want to have 229 00:12:53,320 --> 00:12:56,880 Speaker 2: it pressure because it's safety device. It's very nice to 230 00:12:56,920 --> 00:13:00,319 Speaker 2: have it at atmospheric pressure. So what you do then 231 00:13:00,440 --> 00:13:04,280 Speaker 2: is you're taking out that gas pressure, which we call 232 00:13:04,320 --> 00:13:07,920 Speaker 2: the boil off. So it goes from our gas liquid 233 00:13:07,920 --> 00:13:10,440 Speaker 2: state to a gas that is boiling off the gas 234 00:13:10,559 --> 00:13:13,640 Speaker 2: vapor and then of course you don't want to vent 235 00:13:13,720 --> 00:13:17,000 Speaker 2: that gas because meat and venting is not something you like, 236 00:13:17,160 --> 00:13:20,240 Speaker 2: and especially from an environmental point of view, But it 237 00:13:20,280 --> 00:13:24,080 Speaker 2: means you have free fuel. So that's two of course alternatives. 238 00:13:24,120 --> 00:13:26,880 Speaker 2: You could really liquefy it's taken back to the cargo, 239 00:13:27,800 --> 00:13:30,440 Speaker 2: or you could just simply use this as maritime fuel. 240 00:13:30,920 --> 00:13:34,400 Speaker 2: And generally it's cheaper than oil, it's cleaner than oil. 241 00:13:34,880 --> 00:13:38,760 Speaker 2: So we use that boil of gas to fuel the 242 00:13:38,800 --> 00:13:43,280 Speaker 2: ship to propel it to the import destination. And that 243 00:13:43,440 --> 00:13:46,280 Speaker 2: means we're just sailing the ship on what we call 244 00:13:46,320 --> 00:13:48,800 Speaker 2: the natural boil of speed. So we typically we try 245 00:13:48,840 --> 00:13:51,240 Speaker 2: to regulate that boil off to a level where it 246 00:13:51,400 --> 00:13:55,120 Speaker 2: kind of can fuel the engine at a certain speed. 247 00:13:56,000 --> 00:13:58,400 Speaker 2: Typically you know server speed on ailergy is nineteen and 248 00:13:58,400 --> 00:14:01,720 Speaker 2: a half notts, but in reality are typically doing seventeen 249 00:14:01,720 --> 00:14:04,160 Speaker 2: to eighty knots on a network boil of speed. So 250 00:14:04,200 --> 00:14:07,120 Speaker 2: then you have you have a termos where you have 251 00:14:07,160 --> 00:14:11,480 Speaker 2: a boil of fueling the engines with a better fuel 252 00:14:11,520 --> 00:14:14,800 Speaker 2: than having very low self for oil or compliant fuel. 253 00:14:15,200 --> 00:14:17,280 Speaker 2: And some of US ships they also have a partial 254 00:14:17,360 --> 00:14:20,560 Speaker 2: of fuell relick. So in case you are waiting, you 255 00:14:20,640 --> 00:14:24,800 Speaker 2: can turn on the relick system and take this boil 256 00:14:24,840 --> 00:14:28,160 Speaker 2: of gas back to the tank and once you're at 257 00:14:29,240 --> 00:14:33,240 Speaker 2: the discharge point or the import terminal, you import this 258 00:14:33,720 --> 00:14:36,520 Speaker 2: leerng to a import terminal and they can keep it 259 00:14:36,600 --> 00:14:40,320 Speaker 2: then in cold tanks or they regasify the gas and 260 00:14:40,360 --> 00:14:42,000 Speaker 2: put it into the pipeline system. 261 00:14:42,480 --> 00:14:45,720 Speaker 1: All right, that was actually very informative, especially the boiling 262 00:14:45,800 --> 00:14:48,960 Speaker 1: off stuff. That was great. I didn't realize that that's 263 00:14:49,000 --> 00:14:53,400 Speaker 1: how it worked. You know, you mentioned Fukushima being a 264 00:14:53,440 --> 00:14:57,880 Speaker 1: major disruption and how the LERG market has changed. There's 265 00:14:57,880 --> 00:15:00,040 Speaker 1: been a lot of other dislocations in the market the 266 00:15:00,120 --> 00:15:03,760 Speaker 1: last couple of years. You know, Russia's war with Ukraine. Obviously, 267 00:15:04,000 --> 00:15:06,280 Speaker 1: what's going on in the Red Sea. Can you talk 268 00:15:06,320 --> 00:15:10,520 Speaker 1: about how how those are are impacting LERG shipping. 269 00:15:10,880 --> 00:15:13,240 Speaker 2: Yeah, it seems to be something every year. Because you 270 00:15:13,320 --> 00:15:16,240 Speaker 2: also had COVID prior to that, so we're kind of 271 00:15:16,320 --> 00:15:19,360 Speaker 2: we had a huge wave of US cancelation of cargo 272 00:15:19,480 --> 00:15:23,320 Speaker 2: because we were drowning in lerg before the vaccines were 273 00:15:23,400 --> 00:15:28,040 Speaker 2: rolled out. So then after COVID, we had the invasion 274 00:15:28,120 --> 00:15:31,960 Speaker 2: of Ukraine by Russia and the curtailment of Russian pipeline 275 00:15:32,000 --> 00:15:35,680 Speaker 2: gas to Europe, which really create a volatile situation where 276 00:15:36,000 --> 00:15:41,000 Speaker 2: the price of LERG just skyrocketed to levels which were unimaginable. 277 00:15:41,560 --> 00:15:42,520 Speaker 3: So at at. 278 00:15:42,360 --> 00:15:47,200 Speaker 2: Peak, which I believe was I believe actually it was 279 00:15:47,240 --> 00:15:52,400 Speaker 2: August twenty six, twenty twenty two, the price of European 280 00:15:52,480 --> 00:15:56,960 Speaker 2: gas prices TTF, which is the hub in the Netherlands 281 00:15:57,000 --> 00:16:00,560 Speaker 2: for north impost to northwest Europe, went to one hundred 282 00:16:00,800 --> 00:16:03,800 Speaker 2: dollars per million bit two or actually exceeding one hundred 283 00:16:03,840 --> 00:16:06,560 Speaker 2: dollars per million bit two, which is basically oil at 284 00:16:06,560 --> 00:16:10,160 Speaker 2: six hundred dollars her barrel of oil. So you know, 285 00:16:10,280 --> 00:16:13,080 Speaker 2: sometimes we talk about the oil crises of seventy three 286 00:16:13,160 --> 00:16:16,440 Speaker 2: or seventy nine and prices skyrocketing, but imagine if the 287 00:16:16,440 --> 00:16:19,000 Speaker 2: price of oil went to six hundred dollars per barrel, 288 00:16:19,240 --> 00:16:21,640 Speaker 2: you would have a shock that you've never seen to 289 00:16:21,760 --> 00:16:25,400 Speaker 2: the world economy before. So I think that the positive 290 00:16:25,400 --> 00:16:29,840 Speaker 2: thing for LNG is that about two third of all 291 00:16:29,840 --> 00:16:34,320 Speaker 2: the volumes are sold at the oil price index, typically 292 00:16:34,360 --> 00:16:37,240 Speaker 2: at a discount to oil of twenty twenty five percent. 293 00:16:37,800 --> 00:16:42,200 Speaker 2: So all the Asian buyers, they had long term contracts 294 00:16:42,200 --> 00:16:47,160 Speaker 2: for more or less all the requirements. China actually because 295 00:16:47,600 --> 00:16:50,760 Speaker 2: they had actually more than they required. So those people 296 00:16:50,840 --> 00:16:54,000 Speaker 2: never have held the pinch because they were paying oil 297 00:16:54,080 --> 00:16:57,040 Speaker 2: price for the LERG at the discount. The one who 298 00:16:57,080 --> 00:17:01,760 Speaker 2: suffered was Europe because Europe had have the EU system 299 00:17:01,840 --> 00:17:06,920 Speaker 2: where you have rapid decombonization. They don't really like long 300 00:17:07,000 --> 00:17:10,679 Speaker 2: term contract because it's they want everything to be priced 301 00:17:10,720 --> 00:17:13,520 Speaker 2: at the market price, so meaning that most of the 302 00:17:13,560 --> 00:17:16,600 Speaker 2: European buyers were exposed to the spot price of energy, 303 00:17:17,240 --> 00:17:19,879 Speaker 2: and then when the spot price of natural gas or 304 00:17:20,000 --> 00:17:25,960 Speaker 2: energy is ballooned, it really created our big, big suffering 305 00:17:25,960 --> 00:17:30,240 Speaker 2: here in the European economy, miss especially Germany it's still 306 00:17:30,280 --> 00:17:33,800 Speaker 2: struggling with the insivilization where people are moving. Then new 307 00:17:33,960 --> 00:17:37,159 Speaker 2: plans to us, well it's energy is cheaper. So that 308 00:17:37,359 --> 00:17:41,240 Speaker 2: also created fantastic prices for the cargo. 309 00:17:42,040 --> 00:17:43,200 Speaker 3: So you no imagine if. 310 00:17:43,040 --> 00:17:47,239 Speaker 2: You have a full loaded leg ship and certainly at 311 00:17:47,359 --> 00:17:51,360 Speaker 2: at peak there our ler G cargo was what four 312 00:17:51,440 --> 00:17:54,919 Speaker 2: hundred million dollars and you could be buying this based 313 00:17:54,920 --> 00:17:58,160 Speaker 2: on the Henry Hub price in US, which was let's 314 00:17:58,160 --> 00:18:01,360 Speaker 2: call it three three or four dollars, and then you're 315 00:18:01,400 --> 00:18:04,560 Speaker 2: selling it at one hundred. Of course that's the maximum peak, 316 00:18:04,600 --> 00:18:07,680 Speaker 2: but people could make a killing heren and that really 317 00:18:07,720 --> 00:18:10,480 Speaker 2: dragged up also the freight rate because everybody just wanted 318 00:18:10,480 --> 00:18:12,159 Speaker 2: to have a ship and put a cargo on it 319 00:18:12,240 --> 00:18:14,080 Speaker 2: and make a killing on the orbit rush. 320 00:18:15,160 --> 00:18:16,760 Speaker 3: All these things have no subsided. 321 00:18:16,800 --> 00:18:20,920 Speaker 2: We've seen reduction in European gasman and Europe has been 322 00:18:20,920 --> 00:18:24,080 Speaker 2: incredibly lucky with two warm winters in a row which 323 00:18:24,119 --> 00:18:28,560 Speaker 2: have taken down hitting them. So now the gas market 324 00:18:28,880 --> 00:18:33,040 Speaker 2: have normalized. We have prices of ten twelve dollars, which 325 00:18:33,080 --> 00:18:36,520 Speaker 2: is equivalent to sixty seventy dollars per batrel of oil equivalent, 326 00:18:36,560 --> 00:18:38,280 Speaker 2: and we have this disc on to the oil again, 327 00:18:38,400 --> 00:18:40,000 Speaker 2: which is the normal market. 328 00:18:41,520 --> 00:18:44,199 Speaker 1: So for the allergy tanker market was the peak in 329 00:18:44,280 --> 00:18:46,879 Speaker 1: twenty twenty three, because you're saying things are kind of 330 00:18:47,840 --> 00:18:50,160 Speaker 1: I guess moderating a little bit. 331 00:18:50,600 --> 00:18:53,679 Speaker 2: I think in terms of the freight rates, peak was 332 00:18:54,720 --> 00:18:59,520 Speaker 2: twenty two winter season twenty two, and then you know 333 00:18:59,680 --> 00:19:03,200 Speaker 2: gas vices gradually from peak of autumn twenty two. They 334 00:19:03,200 --> 00:19:07,879 Speaker 2: have declined gradually over the last two years or so, 335 00:19:08,080 --> 00:19:10,280 Speaker 2: where we are all at them all normal level and 336 00:19:10,359 --> 00:19:12,600 Speaker 2: where European gas invetories are very high. 337 00:19:12,640 --> 00:19:17,240 Speaker 1: Actually right, well, consensus has your revenues going down around 338 00:19:17,280 --> 00:19:21,800 Speaker 1: two percent for flex LERG in twenty twenty four after 339 00:19:22,200 --> 00:19:25,560 Speaker 1: increasing seven percent. I guess that's mostly just done on rates. 340 00:19:25,640 --> 00:19:28,040 Speaker 2: Yeah, I think you know, as I said, we have 341 00:19:28,040 --> 00:19:32,200 Speaker 2: one hundred percent coverage this year, we have a lot 342 00:19:32,240 --> 00:19:34,520 Speaker 2: of backlob so most of our ships are coming open 343 00:19:34,600 --> 00:19:39,160 Speaker 2: twenty seven, twenty eight, twenty nine, So it really means 344 00:19:39,400 --> 00:19:43,600 Speaker 2: our income is quite stable. It was a bit last year, 345 00:19:43,840 --> 00:19:47,920 Speaker 2: as we said, seven percent or so this year down 346 00:19:48,000 --> 00:19:51,359 Speaker 2: a bit. We have had one ship which was redelivered 347 00:19:51,359 --> 00:19:53,480 Speaker 2: from our long term contract which we needed to trade 348 00:19:53,480 --> 00:19:55,879 Speaker 2: in the spot market. In Q two we had some 349 00:19:56,359 --> 00:20:00,920 Speaker 2: so so that is impacting the earnings, you know, revenues. 350 00:20:01,000 --> 00:20:05,240 Speaker 2: So but you know plus minus two percent is really flat. Yeah. 351 00:20:05,320 --> 00:20:09,800 Speaker 1: Yeah. And on the crisis in the Red Sea, do 352 00:20:09,960 --> 00:20:13,520 Speaker 1: your ships before that the crisis were they going through 353 00:20:13,560 --> 00:20:16,199 Speaker 1: the Suez Canal or I'm assuming now if that was 354 00:20:16,240 --> 00:20:18,320 Speaker 1: the case, you're you're avoiding the Suez Canal. 355 00:20:18,440 --> 00:20:22,200 Speaker 2: Yeah, so we have had two canal crisis. Now last 356 00:20:22,280 --> 00:20:26,480 Speaker 2: year it was Panama. So the dwarf in Panama by 357 00:20:26,520 --> 00:20:29,400 Speaker 2: then you really resulted in Panama had it paying. 358 00:20:29,280 --> 00:20:32,000 Speaker 3: To cut capacity of about half. 359 00:20:32,480 --> 00:20:36,080 Speaker 2: So from a kind of a name plate capacity of 360 00:20:36,119 --> 00:20:38,280 Speaker 2: twenty six transit a day, they cut it down to 361 00:20:39,040 --> 00:20:42,919 Speaker 2: around eighteen. So from me the rain came back to 362 00:20:42,960 --> 00:20:47,359 Speaker 2: Panama and Panama has no come back to normal. Then, 363 00:20:47,560 --> 00:20:51,120 Speaker 2: of course we had the situation in the Red Sea escalating, 364 00:20:52,160 --> 00:20:56,119 Speaker 2: and and and and a lot of the cargoes in 365 00:20:56,320 --> 00:20:59,879 Speaker 2: US they are typically if they're not using Panama, you 366 00:21:00,200 --> 00:21:04,280 Speaker 2: have ships routing via sewers to Asia because it's better 367 00:21:04,359 --> 00:21:08,400 Speaker 2: weather so you're less affected by the weather, and it's 368 00:21:08,400 --> 00:21:12,119 Speaker 2: shorter so you can cut off some days. Also, the 369 00:21:12,200 --> 00:21:16,160 Speaker 2: qatar Is import is exporting quite a lot to Europe 370 00:21:16,320 --> 00:21:18,760 Speaker 2: and it's much shorter route if you go via Zewus 371 00:21:18,800 --> 00:21:20,879 Speaker 2: to Europe rather than go in Cape of Good Hope. 372 00:21:21,520 --> 00:21:26,159 Speaker 2: But with the situation escalating, we stopped using the canal, 373 00:21:27,040 --> 00:21:31,040 Speaker 2: so it hasn't been used since. Really the kind of 374 00:21:31,040 --> 00:21:36,800 Speaker 2: the escalation happened with retaliation from Israel. So so right 375 00:21:36,880 --> 00:21:42,640 Speaker 2: now the only ones using the canal are people who 376 00:21:43,200 --> 00:21:47,680 Speaker 2: export cargoes to Egypt and Jordan. So Egypt, who has 377 00:21:47,720 --> 00:21:51,359 Speaker 2: been a big export of ler g, has actually turned 378 00:21:51,400 --> 00:21:55,600 Speaker 2: to become an import or now because of of of 379 00:21:55,800 --> 00:21:58,959 Speaker 2: the power needs. So we have some ships going in 380 00:21:59,000 --> 00:22:03,119 Speaker 2: the Mediterranean going through Suez to Egypt North Egypt, so 381 00:22:03,160 --> 00:22:06,119 Speaker 2: they are not close to the with the controlled areas. 382 00:22:06,280 --> 00:22:09,240 Speaker 2: And you also have some ships going in the Zeuis 383 00:22:09,280 --> 00:22:12,280 Speaker 2: Canal to Jordan and then they go back to the Mediterranean, 384 00:22:12,359 --> 00:22:15,800 Speaker 2: so they're not going through Yem and they're avoiding that area. 385 00:22:16,680 --> 00:22:19,960 Speaker 2: So nobody is really going through Suis Canal in ordinary 386 00:22:20,160 --> 00:22:23,520 Speaker 2: course of traffic, except for there's been two passages by 387 00:22:24,200 --> 00:22:26,679 Speaker 2: ships a linked to Russian interests. 388 00:22:27,000 --> 00:22:29,560 Speaker 1: Gotcha, And just going back to something you said earlier 389 00:22:29,600 --> 00:22:32,720 Speaker 1: when we were talking about you know how it was 390 00:22:32,880 --> 00:22:36,359 Speaker 1: you could, you know, finance up to one hundred percent 391 00:22:36,400 --> 00:22:39,520 Speaker 1: of a ship, you know, when they were on these 392 00:22:39,520 --> 00:22:42,679 Speaker 1: long term contracts for twenty years. When you're buying a 393 00:22:42,720 --> 00:22:45,520 Speaker 1: new ship, you know, how much are you getting from 394 00:22:45,520 --> 00:22:48,080 Speaker 1: the banks versus the equity they can cash you guys 395 00:22:48,119 --> 00:22:48,760 Speaker 1: are putting up. 396 00:22:48,960 --> 00:22:49,960 Speaker 3: Yeah, it's a good question. 397 00:22:50,040 --> 00:22:51,720 Speaker 2: Actually, at one time you could have more than one 398 00:22:51,760 --> 00:22:54,679 Speaker 2: hundred percent because one thing is the outpies, but it's 399 00:22:54,720 --> 00:22:56,960 Speaker 2: also the building cost. You have supervision and you have 400 00:22:57,080 --> 00:23:01,119 Speaker 2: interest during construction et cuch. After you know, the global 401 00:23:01,160 --> 00:23:06,240 Speaker 2: financial crisis, banks become more reluctant to to to lend 402 00:23:06,280 --> 00:23:12,399 Speaker 2: to the sector. Leverage profiles have generally gone down and 403 00:23:12,640 --> 00:23:14,120 Speaker 2: governan's been tightened. 404 00:23:14,640 --> 00:23:15,719 Speaker 3: Margin's also gone up. 405 00:23:15,760 --> 00:23:19,760 Speaker 2: For that sense, So if if you buy a ship today, 406 00:23:19,800 --> 00:23:23,760 Speaker 2: it really depends. The leverage depends on what how are 407 00:23:23,760 --> 00:23:25,960 Speaker 2: you dealing with risk? Are you buying a ship not 408 00:23:26,160 --> 00:23:29,520 Speaker 2: to take it to the spot market. I think you 409 00:23:29,560 --> 00:23:34,480 Speaker 2: will maybe get fifty percent leverage. I think even that's 410 00:23:34,480 --> 00:23:38,080 Speaker 2: a bit tough, but about fifty percent fifty sixty percent, 411 00:23:39,280 --> 00:23:42,600 Speaker 2: depending you know, depending on how you guaranteeing for your 412 00:23:43,080 --> 00:23:45,919 Speaker 2: remaining balance it. So if you're if you're doing this 413 00:23:46,000 --> 00:23:49,040 Speaker 2: on a known course, non recourse basis, maybe fifty percent. 414 00:23:49,119 --> 00:23:51,840 Speaker 2: If you're taking your whole balance it, putting it behind 415 00:23:51,920 --> 00:23:54,520 Speaker 2: it guaranteeing for for the loan, then of course that 416 00:23:54,600 --> 00:23:56,639 Speaker 2: number could be higher if you have a good balance it. 417 00:23:57,359 --> 00:24:01,520 Speaker 2: But so the most important matter exists are you building 418 00:24:01,560 --> 00:24:04,800 Speaker 2: that hip against the long term contract? So with the 419 00:24:04,960 --> 00:24:07,960 Speaker 2: new building prices going to two hundred and sixty million dollars, 420 00:24:08,600 --> 00:24:11,840 Speaker 2: the number of speculative orders have more or less disappeared 421 00:24:11,920 --> 00:24:14,679 Speaker 2: because it's it's really hard to order ship at two 422 00:24:14,760 --> 00:24:17,600 Speaker 2: hundred and sixty million, which is like peak pricing, and 423 00:24:17,640 --> 00:24:22,280 Speaker 2: then committing four years to waiting. So the ships being 424 00:24:22,359 --> 00:24:24,920 Speaker 2: ordered now recently have been for the expansion in katark 425 00:24:25,320 --> 00:24:28,440 Speaker 2: and the expansion in Abu Dhabi. So then if you're 426 00:24:29,800 --> 00:24:33,320 Speaker 2: building that chip against a ten twenty years contract, then 427 00:24:33,400 --> 00:24:36,280 Speaker 2: of course you can get leverage of maybe eighty percent, 428 00:24:36,840 --> 00:24:38,840 Speaker 2: but I think one hundred percent would be a stretch 429 00:24:38,920 --> 00:24:39,280 Speaker 2: these days. 430 00:24:39,880 --> 00:24:42,520 Speaker 1: Gotcha, And can you just talk a little bit about 431 00:24:42,520 --> 00:24:46,760 Speaker 1: the supply and demand dynamics in the LERG tanker market? 432 00:24:46,880 --> 00:24:51,000 Speaker 1: You know, is the order book rational? Where's demand heading 433 00:24:51,040 --> 00:24:52,360 Speaker 1: over the next couple of years. 434 00:24:52,600 --> 00:24:53,879 Speaker 3: Yeah, that's a good question. 435 00:24:54,000 --> 00:24:57,520 Speaker 2: It's the most important thing often in shipping is to 436 00:24:58,119 --> 00:25:02,480 Speaker 2: look at the supply side course that's mostly uncertainty while 437 00:25:02,520 --> 00:25:07,800 Speaker 2: demand is uncertain Here we have seen our big increase 438 00:25:07,880 --> 00:25:10,080 Speaker 2: in orders and that's one of the reasons why we 439 00:25:10,400 --> 00:25:13,760 Speaker 2: ship fixed ship for longer term contrast, because there are two. 440 00:25:13,560 --> 00:25:16,240 Speaker 3: Big drivers for why the order book is so big. 441 00:25:16,320 --> 00:25:19,800 Speaker 2: So let's call it today ships on water around six 442 00:25:19,920 --> 00:25:22,760 Speaker 2: hundred and fifty ships and then the order book is 443 00:25:23,359 --> 00:25:26,160 Speaker 2: three hundred and twenty five is so you have order 444 00:25:26,200 --> 00:25:29,399 Speaker 2: book in terms of numbers of ships around fifty percent 445 00:25:29,880 --> 00:25:32,800 Speaker 2: or the book to fleet, which is generally are our 446 00:25:32,840 --> 00:25:36,560 Speaker 2: warning sign. But then in general also these ships are bigger, 447 00:25:36,920 --> 00:25:41,480 Speaker 2: so in terms of cubic meters to fleet it's even higher. 448 00:25:41,760 --> 00:25:44,159 Speaker 2: So that should be a warning sign that or theer 449 00:25:44,160 --> 00:25:47,919 Speaker 2: book to fleet is it's fifty percent or even higher. 450 00:25:48,440 --> 00:25:50,840 Speaker 2: And then you have to look at trill into why 451 00:25:50,880 --> 00:25:53,840 Speaker 2: do we have such a big order book. There's two 452 00:25:53,920 --> 00:25:57,520 Speaker 2: drivers is number one, a lot of expansion projects. So 453 00:25:57,640 --> 00:26:01,919 Speaker 2: Qatar is increasing their capacity from seventy seven million tones 454 00:26:03,000 --> 00:26:06,960 Speaker 2: to one hundred and twenty six million tones, so they 455 00:26:07,000 --> 00:26:12,280 Speaker 2: are rapidly expanding their capacity US despite the murraturium from 456 00:26:12,280 --> 00:26:14,879 Speaker 2: Biden in January. There is a lot of projects in 457 00:26:14,920 --> 00:26:17,840 Speaker 2: pipeline which will require ships and where they have locked 458 00:26:17,880 --> 00:26:21,960 Speaker 2: in ships, Conn are the same and some other nations, 459 00:26:21,960 --> 00:26:26,960 Speaker 2: so there is a growth in transportation transportation need. Then 460 00:26:27,000 --> 00:26:32,080 Speaker 2: the other reason is replacement of legacy ships and these 461 00:26:32,160 --> 00:26:35,720 Speaker 2: are for the most part the steam ships which were 462 00:26:35,760 --> 00:26:40,720 Speaker 2: built about twenty years twenty three years ago. So as 463 00:26:40,720 --> 00:26:43,840 Speaker 2: I mentioned with the termos, you have this boil off 464 00:26:45,800 --> 00:26:50,600 Speaker 2: in every other single shipping segment. The steam turbine engine 465 00:26:50,640 --> 00:26:53,560 Speaker 2: has been gone and replaced a long time ago. But 466 00:26:53,680 --> 00:26:55,800 Speaker 2: when we have our LNG ship, you know you have 467 00:26:55,920 --> 00:26:59,040 Speaker 2: this natural boil off it just it's very simple to 468 00:26:59,200 --> 00:27:02,040 Speaker 2: just burn it then in a steam cooker and you 469 00:27:02,119 --> 00:27:02,920 Speaker 2: get the propulsion. 470 00:27:03,080 --> 00:27:05,359 Speaker 3: And to be honest, and back in the days the 471 00:27:05,480 --> 00:27:06,080 Speaker 3: energy was so. 472 00:27:06,200 --> 00:27:09,000 Speaker 2: Cheap, it doesn't really matter if you're burning through a 473 00:27:09,040 --> 00:27:13,080 Speaker 2: lot of gas because it's cheap. Of course, with higher 474 00:27:13,160 --> 00:27:18,920 Speaker 2: gas prices, more focus on economics and environmental reasons. 475 00:27:19,440 --> 00:27:21,119 Speaker 3: You want to have more efficient ships. 476 00:27:21,160 --> 00:27:23,160 Speaker 2: So the ships we have in off it today, which 477 00:27:23,200 --> 00:27:26,040 Speaker 2: is the modern ship, it's close to sixty percent more 478 00:27:26,080 --> 00:27:29,480 Speaker 2: efficient than a steamship in terms of how much cargo 479 00:27:29,520 --> 00:27:30,800 Speaker 2: we can transport. 480 00:27:30,359 --> 00:27:31,760 Speaker 3: In terms of the fuel consumption. 481 00:27:33,040 --> 00:27:35,680 Speaker 2: So there are about two hundred of these ships. They 482 00:27:35,720 --> 00:27:38,560 Speaker 2: have typically been fixed on twenty years contracts, and those 483 00:27:38,560 --> 00:27:42,359 Speaker 2: ships are ruling off those legacy contracts going forward and 484 00:27:42,400 --> 00:27:44,680 Speaker 2: they will not be Nobody will take those ships on 485 00:27:45,080 --> 00:27:48,320 Speaker 2: new long term contracts, so these ships will eventually be scrapped, 486 00:27:49,800 --> 00:27:53,400 Speaker 2: which is you know, makes sense because they are inefficient, 487 00:27:54,320 --> 00:27:56,360 Speaker 2: so that we are in the middle of that process 488 00:27:56,359 --> 00:27:57,040 Speaker 2: of replacing. 489 00:27:57,080 --> 00:27:59,440 Speaker 3: So that's why the order book is so big. 490 00:28:00,080 --> 00:28:03,440 Speaker 2: You have replacement of older legacy ships and the growth 491 00:28:03,480 --> 00:28:07,560 Speaker 2: of the market. But you know, generally in shipping markets, 492 00:28:07,640 --> 00:28:11,040 Speaker 2: we do know that ours gapping cycle is painful a 493 00:28:11,040 --> 00:28:12,840 Speaker 2: lot of ship owners they want to hang on to 494 00:28:12,960 --> 00:28:16,720 Speaker 2: the hope on the ship. There are some costs of 495 00:28:17,080 --> 00:28:19,679 Speaker 2: having a ship in service. Every five year. You have 496 00:28:19,720 --> 00:28:23,159 Speaker 2: to do our dry docking, which can be very costly 497 00:28:23,200 --> 00:28:26,760 Speaker 2: for older ships. So if you're not finding an each 498 00:28:26,760 --> 00:28:29,879 Speaker 2: other for those ships, you typically will scrap the ships 499 00:28:29,880 --> 00:28:33,240 Speaker 2: when they're getting close to that ride docking. But you know, 500 00:28:33,359 --> 00:28:36,159 Speaker 2: generally it can involve some pain, and that's why we 501 00:28:36,200 --> 00:28:38,480 Speaker 2: want to be insulated from that process and why we 502 00:28:38,600 --> 00:28:42,080 Speaker 2: fix most of the ships with real delivery twenty seven, 503 00:28:42,200 --> 00:28:45,040 Speaker 2: twenty eight, twenty nine. When I think a lot of 504 00:28:45,120 --> 00:28:47,600 Speaker 2: these ships will have been scrapped and a lot of 505 00:28:47,640 --> 00:28:52,000 Speaker 2: the volumes being built today is in the market. 506 00:28:53,800 --> 00:28:55,440 Speaker 1: And so what does that? What does that all mean 507 00:28:55,520 --> 00:29:00,080 Speaker 1: for rates? So where do rates go higher from here? Rates? 508 00:29:00,120 --> 00:29:02,920 Speaker 1: In your view, are they just bouncing along where they 509 00:29:02,960 --> 00:29:04,720 Speaker 1: are they're going lower? 510 00:29:04,800 --> 00:29:08,160 Speaker 2: Yeah, you have a couple of different rates. You have 511 00:29:08,200 --> 00:29:11,840 Speaker 2: the short term rate, you have the seasonal rate, and 512 00:29:11,920 --> 00:29:14,280 Speaker 2: you have the term rate. So let's start with this 513 00:29:14,640 --> 00:29:18,440 Speaker 2: spot rate, which is kind of the one people follow 514 00:29:18,520 --> 00:29:22,360 Speaker 2: the most. I would say spot rates has a seasonal trend. 515 00:29:22,520 --> 00:29:26,000 Speaker 2: Usually they are higher when you're approaching winter, so typically 516 00:29:27,480 --> 00:29:30,360 Speaker 2: they are the lowest in March April. April is the 517 00:29:30,880 --> 00:29:34,320 Speaker 2: month where you have the lowest energy consumption because you're 518 00:29:34,360 --> 00:29:37,800 Speaker 2: getting out of the winter, so you don't have heating demand, 519 00:29:37,960 --> 00:29:40,560 Speaker 2: but you're not into the summer where you have cooling demand, 520 00:29:41,280 --> 00:29:44,880 Speaker 2: so that it's a low point typically March April, and 521 00:29:44,920 --> 00:29:47,640 Speaker 2: then you have a summer market which is stable, and 522 00:29:47,680 --> 00:29:51,520 Speaker 2: then usually rates takes off during end of Q three 523 00:29:51,520 --> 00:29:55,680 Speaker 2: and two Q four where winter is creating more disruptions 524 00:29:55,840 --> 00:30:00,160 Speaker 2: water now weather disruptions. Panama usually get clogged because the 525 00:30:00,200 --> 00:30:03,080 Speaker 2: shopping season and all the container ships want to use Panama, 526 00:30:03,560 --> 00:30:06,200 Speaker 2: so that's usually so now we are at around eighty thousand, 527 00:30:06,280 --> 00:30:09,080 Speaker 2: which is kind of eighty thousand dollars per day spot 528 00:30:09,200 --> 00:30:13,640 Speaker 2: market rate for modern tonnage, which is in line with history, 529 00:30:14,520 --> 00:30:17,120 Speaker 2: and probably that number will go up to one hundred 530 00:30:17,200 --> 00:30:20,640 Speaker 2: thousand during Q four. Then you have the term rates. 531 00:30:20,840 --> 00:30:25,280 Speaker 2: So the term rates are rates for longer duration. The 532 00:30:25,520 --> 00:30:29,760 Speaker 2: general the one you see the most is people are 533 00:30:29,760 --> 00:30:32,600 Speaker 2: building a new ship for our let's say ten year 534 00:30:32,720 --> 00:30:36,600 Speaker 2: charter to Exon or Shell or whatever. That rate today 535 00:30:36,880 --> 00:30:41,440 Speaker 2: is somewhere around eighty five to ninety thousand dollars because 536 00:30:41,480 --> 00:30:43,280 Speaker 2: the new building prices are high. 537 00:30:43,640 --> 00:30:45,120 Speaker 3: So the new building prices are high. 538 00:30:45,760 --> 00:30:50,000 Speaker 2: Interest rates are high relative to where they came from, 539 00:30:50,200 --> 00:30:52,160 Speaker 2: so you need to take those into account. And what 540 00:30:52,280 --> 00:30:54,440 Speaker 2: is the economics you need in order to kind of 541 00:30:54,760 --> 00:30:57,360 Speaker 2: order a ship at two sixty it's probably around ninety 542 00:30:57,360 --> 00:31:02,920 Speaker 2: thousand dollars a day. And then the medium term rates 543 00:31:03,360 --> 00:31:06,080 Speaker 2: will depend on where do you think the direction of 544 00:31:06,200 --> 00:31:09,719 Speaker 2: the market will be. So if you're in a soft market, 545 00:31:10,320 --> 00:31:12,760 Speaker 2: typically the one year rate and three year rate will 546 00:31:12,760 --> 00:31:15,000 Speaker 2: be lower than the five year rate. If we think 547 00:31:15,040 --> 00:31:17,040 Speaker 2: we are in a booming market, the one and three 548 00:31:17,080 --> 00:31:19,080 Speaker 2: year time tootter will be higher than the five year. 549 00:31:19,600 --> 00:31:24,360 Speaker 2: So this we have had a situation nowhere medium term 550 00:31:24,440 --> 00:31:27,280 Speaker 2: rates have been lower than long term rates, and now 551 00:31:27,280 --> 00:31:30,120 Speaker 2: we have switched into a market where medium tom rates 552 00:31:30,160 --> 00:31:32,280 Speaker 2: are more or less in line with long term rates. 553 00:31:32,280 --> 00:31:35,959 Speaker 2: So there are several rates to take into consideration, as 554 00:31:36,000 --> 00:31:39,120 Speaker 2: the seasonal rate is spot rate, and short term rate, 555 00:31:39,240 --> 00:31:40,680 Speaker 2: medium tom erate and long term rates. 556 00:31:41,200 --> 00:31:44,480 Speaker 1: Gotcha, And so you know you're talking about rates you know, 557 00:31:44,520 --> 00:31:48,560 Speaker 1: anywhere between eighty to ninety thousand dollars a day. So 558 00:31:48,640 --> 00:31:54,600 Speaker 1: where's break like a break even level? For an energy 559 00:31:55,520 --> 00:31:59,280 Speaker 1: tanker operator or specifically flex Energy. 560 00:31:59,600 --> 00:32:01,400 Speaker 3: Yeah, nowso or earnings. 561 00:32:01,480 --> 00:32:04,600 Speaker 2: Last year we delivered our time charter equivalent rates it's 562 00:32:04,600 --> 00:32:07,360 Speaker 2: called about eighty thousand dollars per day, so we are 563 00:32:07,400 --> 00:32:09,880 Speaker 2: in line with kind of the rates today in the market. 564 00:32:10,640 --> 00:32:13,120 Speaker 2: Cash breck even really depends a bit on how much 565 00:32:13,200 --> 00:32:16,680 Speaker 2: leverage you're taking and an interest rate. So when we 566 00:32:16,720 --> 00:32:20,360 Speaker 2: started flexing, you know we delivered is eighteen nineteen twenty 567 00:32:20,400 --> 00:32:24,760 Speaker 2: twenty one. We were spot oriented, so if you're spot oriented, 568 00:32:24,840 --> 00:32:28,080 Speaker 2: you shouldn't take too much financial leverage. At that time, 569 00:32:28,200 --> 00:32:31,440 Speaker 2: interest rates were close to zero as well, So at 570 00:32:31,440 --> 00:32:34,040 Speaker 2: that time we had a forty five thousand cash back 571 00:32:34,080 --> 00:32:37,000 Speaker 2: even level. And you know we you know, even during 572 00:32:37,040 --> 00:32:40,600 Speaker 2: COVID when when the world disrupted, we had a time 573 00:32:40,640 --> 00:32:43,840 Speaker 2: shartter equivalent rate of sixty thousand dollars. Once we have 574 00:32:43,920 --> 00:32:48,280 Speaker 2: taken on more long term rate, long term contracts, we 575 00:32:48,360 --> 00:32:51,640 Speaker 2: have taken on operation risk, we can increase financial risk. 576 00:32:51,960 --> 00:32:55,480 Speaker 2: So we have re leveled our fleet to get kind 577 00:32:55,480 --> 00:32:58,800 Speaker 2: of replace more equity with debt and our cash back 578 00:32:58,840 --> 00:33:01,600 Speaker 2: even always like fifty five five thousand dollars driven by 579 00:33:01,680 --> 00:33:06,120 Speaker 2: higher leverage and high interest rates for most owners you know, 580 00:33:06,400 --> 00:33:10,760 Speaker 2: economic break even for a new building. It's kind of 581 00:33:11,480 --> 00:33:14,200 Speaker 2: so when you're saying that the ten year rate is 582 00:33:14,240 --> 00:33:16,440 Speaker 2: eighty five ninety thousand, that would be the kind of 583 00:33:16,560 --> 00:33:21,320 Speaker 2: economic break even because if you're investing two on sixty 584 00:33:21,360 --> 00:33:24,880 Speaker 2: million in a ship, and you need to have a 585 00:33:24,920 --> 00:33:27,240 Speaker 2: return on that money, So in order to have a 586 00:33:27,280 --> 00:33:31,120 Speaker 2: satisfactory return on that capital, you probably need an economic 587 00:33:31,600 --> 00:33:33,760 Speaker 2: rate of eighty five to ninety thousand in order to 588 00:33:33,800 --> 00:33:39,200 Speaker 2: have a sufficient satisfactory return on the equity you're putting 589 00:33:39,240 --> 00:33:41,640 Speaker 2: in it to it the project as well as the debt. 590 00:33:42,360 --> 00:33:44,440 Speaker 1: And I guess in your in the time that you've 591 00:33:44,480 --> 00:33:48,960 Speaker 1: been involved in the energy tanker market, have rates ever 592 00:33:49,000 --> 00:33:50,080 Speaker 1: been below break even? 593 00:33:50,280 --> 00:33:50,480 Speaker 3: Yeah? 594 00:33:50,560 --> 00:33:56,400 Speaker 2: Yeah, for sure, this always happens. Yeah, you had this 595 00:33:56,600 --> 00:33:59,440 Speaker 2: kind of boom market after Fukushima. It was not a 596 00:33:59,440 --> 00:34:02,600 Speaker 2: booming pond, but it was a boom in the shipping market. Therefore, 597 00:34:02,680 --> 00:34:06,480 Speaker 2: some years and what typically happens when you have a 598 00:34:06,480 --> 00:34:10,000 Speaker 2: boom in shipping, people contract too many ships. At that 599 00:34:10,120 --> 00:34:12,480 Speaker 2: time of a point of time, there was a rapid 600 00:34:12,520 --> 00:34:16,240 Speaker 2: expansion of Australia, which actually became the biggest energy exporter 601 00:34:16,360 --> 00:34:20,799 Speaker 2: in the world and so passed Katarkh. However, building in 602 00:34:20,840 --> 00:34:24,440 Speaker 2: Australia is not easy. It's a remote there's a lot 603 00:34:24,480 --> 00:34:28,239 Speaker 2: of unions and a lot of environmental rules which make 604 00:34:29,040 --> 00:34:33,480 Speaker 2: things progress quite slow. While on a shipyard it's super efficient. 605 00:34:33,640 --> 00:34:36,840 Speaker 2: So when you order a ship, actually when you ordership, 606 00:34:36,840 --> 00:34:39,319 Speaker 2: you kind of four years in the future. So let's 607 00:34:39,320 --> 00:34:41,200 Speaker 2: say I did a deal with a Korean yard now 608 00:34:41,200 --> 00:34:44,400 Speaker 2: and I could probably get like, okay, the ship's going 609 00:34:44,480 --> 00:34:49,680 Speaker 2: to be delivered September October twenty eighth, so that will 610 00:34:49,719 --> 00:34:51,879 Speaker 2: be the window of delivery for that ship, and if 611 00:34:51,920 --> 00:34:54,160 Speaker 2: it's not delivered within that they will pay a penalty. 612 00:34:54,760 --> 00:34:59,120 Speaker 2: So that's how accurate the ship building industry and efficient that. 613 00:34:59,239 --> 00:35:02,160 Speaker 2: What happened then was that all the projects in expansion 614 00:35:02,160 --> 00:35:05,799 Speaker 2: projects in Australia were the laid but the ships aren't 615 00:35:05,800 --> 00:35:09,200 Speaker 2: ever delayed or very rarely, I would say. So then 616 00:35:09,239 --> 00:35:13,240 Speaker 2: you have too many ships in the market during fourteen fifteen, 617 00:35:13,320 --> 00:35:18,759 Speaker 2: sixteen into seventeen, so you had a four year market there. 618 00:35:20,160 --> 00:35:23,200 Speaker 2: Rights were necessarily below cash black even be because that 619 00:35:23,360 --> 00:35:28,839 Speaker 2: depends on your leverage, but there was certainly not attractive. 620 00:35:30,040 --> 00:35:32,479 Speaker 2: So what happened then when you have our market, which 621 00:35:32,520 --> 00:35:37,520 Speaker 2: is contracting nobody's ordering ships on speculation. The yards have 622 00:35:37,600 --> 00:35:41,480 Speaker 2: a hard time filling their slots because few people are 623 00:35:41,520 --> 00:35:44,800 Speaker 2: contracting ships. So that's why we order ships twenty seventeen 624 00:35:44,880 --> 00:35:48,560 Speaker 2: eighteen because then you had the very low prices very 625 00:35:48,560 --> 00:35:52,680 Speaker 2: shortly time because they had ample capacity at the yard, 626 00:35:53,239 --> 00:35:56,000 Speaker 2: and then you get the ship in our market, hopefully 627 00:35:56,320 --> 00:35:57,200 Speaker 2: when it's on the wail. 628 00:35:57,640 --> 00:35:58,080 Speaker 3: Got yea. 629 00:35:58,760 --> 00:36:01,840 Speaker 1: So we were talkingking a little bit about like emissions 630 00:36:02,200 --> 00:36:05,919 Speaker 1: earlier in the IMO has some pretty lofty goals about 631 00:36:05,960 --> 00:36:11,240 Speaker 1: getting to zero. You know, how how is flex lerg 632 00:36:11,600 --> 00:36:16,960 Speaker 1: kind of focused on reaching those zero mission goals over time. 633 00:36:17,360 --> 00:36:21,839 Speaker 2: Yeah, so the original kind of they had a big 634 00:36:21,880 --> 00:36:24,960 Speaker 2: process in IMO about this. So the original goal when 635 00:36:25,000 --> 00:36:30,280 Speaker 2: it came out was to reduce the carbon intensity of shipping. 636 00:36:31,120 --> 00:36:34,120 Speaker 2: And this was a lott goal at the time. Well, 637 00:36:34,239 --> 00:36:39,240 Speaker 2: to reduce carbon intensity seventy percent by twenty fifty compared 638 00:36:39,280 --> 00:36:43,319 Speaker 2: to two thousand and eight. So you know, at that 639 00:36:43,440 --> 00:36:47,280 Speaker 2: time people thought seventy percent was a big production because, 640 00:36:48,520 --> 00:36:51,520 Speaker 2: as ulia I said in the podcast as well, this 641 00:36:51,680 --> 00:36:55,600 Speaker 2: is the most efficient form of transporting big volumes of 642 00:36:55,640 --> 00:36:59,799 Speaker 2: goods by far. You know, It's keep in mind that 643 00:36:59,800 --> 00:37:01,920 Speaker 2: the ship is going through water, so you have a 644 00:37:01,920 --> 00:37:07,480 Speaker 2: lot of friction from the boat, the sea and wind, 645 00:37:08,200 --> 00:37:10,839 Speaker 2: but still it's by far the most difficient way. That's 646 00:37:10,840 --> 00:37:13,759 Speaker 2: why eighty percent of goods in the world are transpotted 647 00:37:13,800 --> 00:37:18,839 Speaker 2: by ships. So how we dealt with it was that, 648 00:37:19,239 --> 00:37:22,759 Speaker 2: as I mentioned initially in two thousand and eight, all 649 00:37:22,880 --> 00:37:27,560 Speaker 2: basically the whole fleet was steamships, so we contracted them 650 00:37:27,600 --> 00:37:31,279 Speaker 2: in seventeen eighteen, these modern ships. So number one, they 651 00:37:31,280 --> 00:37:35,480 Speaker 2: are more they're bigger, so you can have more tournage 652 00:37:35,560 --> 00:37:38,760 Speaker 2: or cargo on board, and then they have our engine, 653 00:37:38,800 --> 00:37:42,360 Speaker 2: which is much more efficient. So as steam turbine typically 654 00:37:42,600 --> 00:37:47,319 Speaker 2: terminal efficiency thirty thirty five percent, we have a UI 655 00:37:47,440 --> 00:37:49,879 Speaker 2: fuel diesel electric or two stroke. 656 00:37:50,120 --> 00:37:51,480 Speaker 3: Direct drive engine. 657 00:37:51,800 --> 00:37:56,680 Speaker 2: Efficiency of these are comparable to our on shore natural 658 00:37:56,680 --> 00:38:00,920 Speaker 2: gas power plant. So yeah, we have typically thermal efficiency 659 00:38:01,000 --> 00:38:04,160 Speaker 2: is a bit above fifty percent. So what that means 660 00:38:04,200 --> 00:38:07,120 Speaker 2: is you have the combination of bigger cargo capacity and 661 00:38:07,200 --> 00:38:11,080 Speaker 2: more efficient engine. You're reducing your fuel consumption by close 662 00:38:11,120 --> 00:38:14,640 Speaker 2: to sixty percent. And then of course you can fine 663 00:38:14,719 --> 00:38:20,040 Speaker 2: tune with speed optimization and just saving devices. So even 664 00:38:20,120 --> 00:38:23,000 Speaker 2: when we kind of got the ships delivered between eighteen 665 00:38:23,040 --> 00:38:26,720 Speaker 2: and twenty one, we could already deliver our sixty percent 666 00:38:26,880 --> 00:38:30,759 Speaker 2: reduction in carbon intensity compared to the ship's sailing in 667 00:38:30,760 --> 00:38:33,120 Speaker 2: two thousand and eight, and we had kind of a 668 00:38:33,239 --> 00:38:37,080 Speaker 2: band to reduce those by seventy percent, much ahead of 669 00:38:37,120 --> 00:38:41,880 Speaker 2: the IMO timeline. However, the timeline and the ambition of 670 00:38:42,000 --> 00:38:45,280 Speaker 2: IMO is changing all the time, so now as seventy 671 00:38:45,320 --> 00:38:48,640 Speaker 2: percent reduction isn't good enough, so now they want to 672 00:38:48,640 --> 00:38:52,120 Speaker 2: have one hundred percent production by twenty fifty, so that's 673 00:38:52,160 --> 00:38:55,440 Speaker 2: going to be hard. We already are we were way 674 00:38:55,480 --> 00:38:59,600 Speaker 2: ahead of the curve, but now the curve have changed. 675 00:39:00,160 --> 00:39:03,799 Speaker 2: I think you know eventually if you're going to get 676 00:39:03,800 --> 00:39:09,040 Speaker 2: to one hundred percent reduction, there's two options. Carbon capture 677 00:39:09,120 --> 00:39:14,120 Speaker 2: on the ships, maybe combined with pomethane. As I said, 678 00:39:14,760 --> 00:39:19,680 Speaker 2: energy is primarily methane, So the chemical formal for methane 679 00:39:19,760 --> 00:39:24,520 Speaker 2: is H four, meaning that's one carbon atom and four 680 00:39:24,680 --> 00:39:28,960 Speaker 2: hydrogen atoms. So if you take out the carbon atom, 681 00:39:29,080 --> 00:39:32,160 Speaker 2: what are you left with H What this edge is hydrogen. 682 00:39:32,840 --> 00:39:35,600 Speaker 2: So that's really how you can deal with kind of 683 00:39:35,640 --> 00:39:39,919 Speaker 2: getting to zero. We do see some ships now where 684 00:39:39,920 --> 00:39:42,719 Speaker 2: they are putting in pilot plant for carbon captures, so 685 00:39:42,880 --> 00:39:45,120 Speaker 2: really where you have to capture this is in the 686 00:39:45,160 --> 00:39:48,680 Speaker 2: exhaust gas, so you have to add additives in order 687 00:39:48,719 --> 00:39:53,000 Speaker 2: to capture that carbon. There are also some other experimental 688 00:39:53,040 --> 00:39:56,680 Speaker 2: ways where instead of burning the gas with air, you 689 00:39:56,719 --> 00:40:01,160 Speaker 2: could burn it with pure oxygen and easily capture the carbon. 690 00:40:01,239 --> 00:40:03,760 Speaker 2: But you know, the basis is you need to capture 691 00:40:03,800 --> 00:40:08,080 Speaker 2: the carbon. For every tone of you burn, you produce 692 00:40:08,160 --> 00:40:11,839 Speaker 2: two point seven tons of CO two, So it means 693 00:40:11,880 --> 00:40:15,160 Speaker 2: that you know, we typically let's say you're burning it's 694 00:40:15,239 --> 00:40:18,800 Speaker 2: about one hundred tons of fuel every day, you're producing 695 00:40:18,800 --> 00:40:21,799 Speaker 2: two hundred and seventy tons of CO two. So we 696 00:40:21,920 --> 00:40:25,120 Speaker 2: have to put all this so you need to somehow 697 00:40:25,239 --> 00:40:28,360 Speaker 2: compress it. So one good thing with LANGI ship you 698 00:40:28,400 --> 00:40:32,640 Speaker 2: have a minus one hundred and sixty two in your 699 00:40:32,640 --> 00:40:35,960 Speaker 2: cargo deck, so you have kind of access to cold, 700 00:40:36,120 --> 00:40:38,799 Speaker 2: so you don't have to generate cold so that you 701 00:40:38,800 --> 00:40:42,640 Speaker 2: could liquefy the CEO two or you know, another another 702 00:40:42,640 --> 00:40:45,120 Speaker 2: alternat is to pressurize it. But you have to make 703 00:40:45,120 --> 00:40:49,920 Speaker 2: a logistic for this CEO two while capturing it. And 704 00:40:49,960 --> 00:40:52,239 Speaker 2: then also once you get into I import of this 705 00:40:52,800 --> 00:40:55,880 Speaker 2: child port, you have to offload this CO two to somebody. 706 00:40:56,480 --> 00:40:59,640 Speaker 2: But you know, I think you know some people are 707 00:41:00,040 --> 00:41:03,279 Speaker 2: starting with plants where you maybe kepture twenty twenty five 708 00:41:03,360 --> 00:41:05,239 Speaker 2: percent of the CEU two and where you try to 709 00:41:05,239 --> 00:41:05,960 Speaker 2: scale this up. 710 00:41:06,280 --> 00:41:10,799 Speaker 1: Gotcha, So just switching gears as we wrap up here. 711 00:41:10,840 --> 00:41:12,520 Speaker 1: So how did you get into shipping? 712 00:41:13,040 --> 00:41:13,279 Speaker 3: Oh? 713 00:41:13,400 --> 00:41:16,440 Speaker 2: You know this, This is Norway. We have one of 714 00:41:16,480 --> 00:41:19,160 Speaker 2: the biggest coast clients in the world, a lot of 715 00:41:19,239 --> 00:41:23,479 Speaker 2: US fishermen's and so last time I checked, I think 716 00:41:23,600 --> 00:41:27,160 Speaker 2: Norway in terms of fleet. When you look at fleet 717 00:41:27,200 --> 00:41:29,760 Speaker 2: in terms of value of fleet, being controlled from Norway 718 00:41:30,000 --> 00:41:33,480 Speaker 2: is number four. So you have Japan, China, Greece and Norway. 719 00:41:33,520 --> 00:41:37,480 Speaker 2: They are the big kind of maritime powers. So shipping 720 00:41:37,760 --> 00:41:40,840 Speaker 2: is a dominant industry here and always been since the Vikings. 721 00:41:41,080 --> 00:41:46,040 Speaker 2: So that really makes while. If you are in New York, 722 00:41:46,320 --> 00:41:48,360 Speaker 2: people will wonder why the hell are you in shipping? 723 00:41:48,600 --> 00:41:51,080 Speaker 2: That's such a boring industry and a niche, But therein 724 00:41:51,120 --> 00:41:56,520 Speaker 2: always quite quite attractive in terms of employment. So I 725 00:41:57,040 --> 00:41:59,279 Speaker 2: didn't have really any big plans about it. I went 726 00:41:59,320 --> 00:42:01,319 Speaker 2: to a job into you and they started asking me 727 00:42:01,400 --> 00:42:03,839 Speaker 2: how would you value a tanker And I said, okay, 728 00:42:03,920 --> 00:42:06,160 Speaker 2: that really depends on what kind of tanker is it 729 00:42:06,320 --> 00:42:09,279 Speaker 2: to dose the tanker has a time charter, you know, 730 00:42:09,480 --> 00:42:11,520 Speaker 2: and then they are okay, make you assumption I would 731 00:42:11,520 --> 00:42:14,640 Speaker 2: be calling some ship focus on. Certainly I ended up 732 00:42:15,520 --> 00:42:19,280 Speaker 2: working with tankills and alergy ships eighteen years ago. 733 00:42:19,960 --> 00:42:22,880 Speaker 1: Right, well, I don't think there's anything boring about shipping, 734 00:42:22,880 --> 00:42:24,840 Speaker 1: that's for sure. A lot of booms and. 735 00:42:24,880 --> 00:42:28,040 Speaker 2: Bus Yeah, which tried in this flex company, we kind 736 00:42:28,080 --> 00:42:31,920 Speaker 2: of try to buy risk management take out that boom bust. 737 00:42:32,200 --> 00:42:34,279 Speaker 2: Of course, we have taken risk in the past. Now 738 00:42:34,320 --> 00:42:36,719 Speaker 2: we have de risked the company with the backload. So 739 00:42:36,760 --> 00:42:39,919 Speaker 2: I'm running out another company, which is Advance Gas, where 740 00:42:39,960 --> 00:42:44,319 Speaker 2: we have a lot more spots. Basically everything is bought, 741 00:42:44,640 --> 00:42:47,720 Speaker 2: so it's kind of commoded shipping, but where we recently 742 00:42:47,719 --> 00:42:51,600 Speaker 2: announced the sale of the fleet to or competitor BW, 743 00:42:52,080 --> 00:42:55,000 Speaker 2: so we basically de risk by asset sales instead of 744 00:42:55,080 --> 00:42:57,280 Speaker 2: the risking by contracts. 745 00:42:57,520 --> 00:43:00,720 Speaker 1: All right, great, I've seen a really appreciate shaate your time. 746 00:43:00,960 --> 00:43:03,839 Speaker 1: This is really interesting, so, you know, thanks for your 747 00:43:03,880 --> 00:43:04,600 Speaker 1: insights today. 748 00:43:04,640 --> 00:43:06,920 Speaker 3: Okay, thank you Lee for having me on, and I want. 749 00:43:06,800 --> 00:43:08,960 Speaker 1: To thank you for tuning in. If you liked the episode, 750 00:43:09,000 --> 00:43:11,960 Speaker 1: please subscribe and leave a review. We have lined up 751 00:43:12,000 --> 00:43:14,400 Speaker 1: a number of great guests for the podcast, so please 752 00:43:14,480 --> 00:43:18,799 Speaker 1: check back to hear conversations with C suite executives, shippers, regulators, 753 00:43:18,800 --> 00:43:21,880 Speaker 1: and decision makers within the freight market. Also, if you 754 00:43:21,920 --> 00:43:24,680 Speaker 1: have an idea for a future episode, please hit me 755 00:43:24,760 --> 00:43:27,720 Speaker 1: up on the Bloomberg terminal, on LinkedIn or on Twitter 756 00:43:27,880 --> 00:43:30,680 Speaker 1: at logistics Lee. Thanks everyone and take care.