Oystein Kalleklev: I think our main competitor is coal. And as I have shown on the graph here, coal consumption is a lot in Europe. It’s not only up in Europe. It’s up a lot in China. 2022 peak coal consumption in the world. And actually, we see people are expanding more on the coal side as well because it’s affordable. And of course, if you are a developing country maybe you are not able to pay the price for LNG. The price of LNG will come down I feel in Europe today. We are at such low prices on the natural gas, oil, and LNG that we are getting into the territory of coal to natural gas switching which is a long time we have seen, because in Europe you have carbon prices as well. And if you are burning coal, it’s twice as much CO2 emissions.
And you need to buy more of this carbon permits which is costing close to €100 per tonne. So, with lower prices — we actually prefer prices because that stimulate demand and usually stimulate demand more in Asia which is driving sale in businesses. In terms of EGS, this — what we are trying to do is to replace coal with natural gas which is reducing CO2 but also cleaning up the local air quality soaks in particle matters and NOx which is reduced 85% to 99%. So, that is also a side factor of it. Another element is that CO2 pricing, which I mentioned in Europe, that will also now start soon for shipping. That means ships calling European cost will have to pay CO2 price for their emissions for that voyage. And of course, our ships are much more efficient than the older steam generation of ship.
So, our CO2 footprint compared to older steamship is down about 60%. That means that if you are shipping a cargo on our ships into Europe, you have less CO2 tax on it. And that will improve further our competitive advantage towards older generation of ships. And we do think that eventually CO2 prices will spread to other parts of the world and just Europe. And also Europe is signaling that if other countries are not doing this, they will then start to collect that tax for full voyage and not just the half of the voyage which has so far been suggested.
Knut Traaholt: Then there is a question if our revenues are sensitive to the LNG commodity price.
Oystein Kalleklev: Now, we have 12 of our ships are on fixed heir rates. So, the rate is fixed. It is not linked to the commodity. One ship is on verbal heir. Contract is not linked to the commodity price. It’s linked to spot rates for freight. So, no, that’s not the case.
Knut Traaholt: Then there is a final question if we are having a balance sheet optimization program Phase 3? Maybe, I can take it. We have done Phase 1 and 2. And now, we introduced 2.1. So, you can say it’s Phase 3, but now we have refinanced the — all of the 13 vessels. And long-term maturity dates. And we are pleased with what we have. So, you will pause on that for now.
Oystein Kalleklev: Yes, that’s good.
Knut Traaholt: So, that concludes the Q&A round. And then the big question is who is the winner?
Oystein Kalleklev: Who is going to sleep well at night, and it’s going to be . Thank you for the questions. You have not only sent questions today. But I have been getting questions from you for the last two years or so. And really like your engagement whereby sending us questions in the middle of the night U.S. time. So, we will send over some bed linen kits to you and also two T-shirt. So, you can enjoy that as well and sleep even better. So, that concludes today’s presentation. Once again, I would thank you for joining. I would like to thank our financers providing about $2 billion of new financing. I would like to thank all you investors. And not least, I would like to thank our onshore and offshore personnel making this possible, making the propellers turn everyday despite all the challenges we have had with COVID.
As I’ve shown today, we have perfect time and quality record. So, thank you very much, and we wish you a very good Valentine’s Day, and we will be back for more updates in May when we’re doing our Q1 presentation. Thank you.
Knut Traaholt: Thank you.
