LNG Carrier Orders Rise Despite Geopolitical Risks

Key Moments

Order Activity Recovers as Fleet Modernization Continues

SINGAPORE – New contracts for liquefied natural gas carriers (LNGCs) are picking up this year following a slowdown in 2025, as rising LNG production and a shift toward more efficient vessels underpin ordering activity, according to industry executives and analysts.

This renewed momentum in LNGC construction is emerging even as the U.S.-Iran war raises concerns about potential short-term disruptions to LNG shipping demand and downward pressure on freight rates.

Since late last year, shipyards in South Korea and China have seen a clear improvement in business, with 35 LNGC orders placed in the first quarter alone, data from consultancies Poten & Partners and Drewry show.

That early-year tally nearly matches the 37 LNGCs ordered during all of 2025, though it still trails the record 171 vessels contracted in 2022, according to Drewry. Each LNG tanker is priced between US$250 million and US$260 million and requires more than three years to construct.

Pratiksha Negi, Drewry’s lead analyst for LNG shipping, said that upcoming LNG supply from the U.S., Africa, Canada and Argentina is expected to drive additional tanker requirements. She added that requirements for higher fuel efficiency and faster scrapping of older vessels are also key factors, with steam turbine and diesel-electric units ⁠expected to be phased out.

Global LNG carrier newbuild orders are set to rebound in 2026.

Structural Drivers: Supply Growth and Fleet Transition

The worldwide LNGC fleet comprises more than 700 vessels that transport in excess of 400 million tons per annum (mtpa) of LNG.

Fraser Carson, principal analyst, global LNG at Wood Mackenzie, noted that 72 mtpa of new LNG capacity received final approval globally last year. He added that more than 120 mtpa of additional U.S. LNG volumes are slated to come onstream over the next three to four years.

Carson said the expansion of U.S. LNG and the availability of flexible LNG supply are reshaping trade routes in ways that necessitate more shipping capacity.

U.S. LNG is often sold on a free-on-board basis with destination flexibility, enabling cargo diversions while en route. Such diversions can extend voyage durations and keep vessels occupied for longer periods.

Japan’s Mitsui O.S.K. Lines, identified as the world’s largest LNGC fleet owner with 107 vessels, sees fresh U.S. LNG investments as a catalyst for further tanker orders, CEO Jotaro Tamura said.

The company plans to expand its LNGC fleet to roughly 150 vessels by around 2035.

At the same time, the pace of scrapping older steam-propelled LNGCs has accelerated. Drewry data indicated that demolitions have increased since 2022, reaching a record 15 vessels last year. That trend has been driven by weaker economics and more stringent emissions rules.

Uma Dutt, vice president, LNG at global ship management firm Anglo-Eastern, said that a proposed International Maritime Organization framework aimed at reducing shipping emissions ⁠is further supporting demand for new tonnage, as the market moves toward dual-fuel ships capable of running on LNG.

Key LNG Market and Fleet Metrics

War in Iran Creates Mixed Signals for LNG Shipping

The Iran war has added a layer of complexity to LNG shipping fundamentals, creating both supportive and negative forces for vessel demand.

On one side, supply disruptions are pushing Asian buyers to seek replacement cargoes from alternative sources, including Atlantic basin suppliers. Such shifts can increase voyage distances, boosting ton-mile demand. Carson of Wood Mackenzie said the conflict could also make LNG projects in other regions more attractive, ultimately underpinning requirements for a larger carrier fleet.

However, the war has also ⁠interfered with LNG traffic through the Strait of ⁠Hormuz and sidelined 12.8 mtpa of Qatari ⁠output for three to five years, Carson noted. That reduction in available volumes could dampen shipping demand and exert downward pressure on freight rates at a time when what he described as an “avalanche” of new vessel supply is poised to enter the market.

Carson added that Qatar, which already has more than 100 LNGCs in operation, intends to add 70 to 80 new carriers over the next three to four years. Over the same period, the UAE’s ADNOC is expected to expand its LNGC fleet to 18 vessels within 36 months, effectively doubling its current size.

“Most of these ​new build vessels were ⁠earmarked to serve under-construction LNG projects that are now facing delays,” he said.

“The longer those delays persist, the more likely it is that these ships are offered to the market on sublet arrangements -softening rates considerably.”