LNG shipping is Set to Double in Size

Over the years, LNG has been gaining acceptance across the maritime industry. While it is not yet the standard bunker fuel, it is making fast steps towards becoming the industry standard. A significant number of vessels are LNG-fuelled today. In the same line, IMO regulations regarding acceptable emissions levels are pushing many maritime companies to alternative fuel sources such as LNG.

According to DNV GL, the industry is ripe for a doubling in the uptake of LNG. It is predicted that by the year 2022, there will be over 1,000 vessels that will be running on LNG fuel. Even if the figure will not have been reached within the timeline, over five per cent of the vessels operating around the world will indeed use the fuel alternative. So far, a quarter of these vessels has been certified as LNG-ready and may adopt the fuel any time in the future. This will accelerate the speed of LNG uptake.

What is Fuelling the Uptake?

Several conditions are leading to the acceleration of LNG uptake. One of the major steps is the opening of several bunkering facilities across the world, which is making refuelling cheaper. Currently, there are over 60 supply facilities scattered across the world, including the Middle East, Europe, the Caribbean and Singapore. Several more facilities are in the pipeline in the coming future.

There are has also been an increase in the number of bunker vessels that operate around the world. Major players in the LNG world like ENN, Gas Natural Fenosa, Shell, Total and Statoil have all set vessels in various locations around the world with several more planning to have their LNG bunker vessels. Therefore, key locations across Europe, the Americas and along the Mediterranean will be covered.

Besides, governments across the world are supporting alternative sources of fuel in a bid to deal with air and water pollutions. Governments in South Korea, China and Japan have set budgets for the growth of LNG fuel as they look for ways to reduce the greenhouse effect. On the other hand, several suppliers across the world are waiting for the right time to activate various facilities. The growth of the demand for LNG fuel is most likely to spur further growth as it will justify investing in related facilities. Many organisations are also jostling to secure a major client to support their operations.

The regulatory environment is also favouring the growth of LNG uptake. IMO has planned the year 2020 as the start of the rule to cap the amount of sulphur content that should be contained in fuels. This decision has a major backing from political muscles across the world, which makes it unlikely that the plans will be shelved any time soon.

Many ship owners have been having a hard time evaluating the competitive edge that comes with adopting LNG. Several scenarios may complicate matters further. However, the IMO’s regulations have brought some clarity to the industry and ship owners as they switch to alternative fuels.

Several organisations, such as SGMF and SEA\LNG, have been promoting LNG uptake across the world. These organisations believe that the inflection point is close as many investors are at the last mile stretch to bring LNG closer to the ships. It is believed that with the bulk structure in place, the presence of regulations and competitive advantages, there will be a bigger push to switch to LNG after the year 2020.

In early 2019, DNV GL signed a framework agreement with Keppel Marine and Deepwater Technology to boost the liquefied natural gas uptake among the ship owners. The agreement covers potential areas in growing LNG fuel uptake such as the increase in LNG bunker vessels, floating storage regasification units and small-scale LNG carriers. They are also looking at hybrid technologies involving natural gas.

The LNG carries have a 7,500 cubic metres capacity. They come with a modular arrangement of the decks and systems to ensure safety during transport and filling of other vessels. In addition, various players in the industry have met to strengthen LNG fuel value chain from the shipbuilders, operators and designers to gas and banker suppliers.

 

Conclusion

With the introduction of IMO SOx regulations in the year 2020, increased infrastructure, cost advantages and government support, LNG is expected to be the best alternative to the fossil fuels used by maritime organisations today. Its intake is expected to double as the world approaches the year 2020 and reach a whopping 23 per cent by the year 2050, according to the DNV GL Energy Transition report published in the year 2018.

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