DNV GL: huge potential for LNG as fuel in Iberian Peninsula

A study by the classification society DNV GL shows that there is a “huge” potential LNG as a marine fuel in the Iberian Peninsula. 

DNV GL noted that current spare capacity of the existing LNG terminals could contribute to the development of the LNG fuel market in Spain and Portugal.

With the global fuel sulphur limit of 0.5 percent entering into force in 2020, the interest towards LNG as a marine fuel is increasing. One of the main obstacles to the accelerated uptake of LNG, however, is the uncertainty regarding future market volumes for LNG, an issue DNV GL addressed in its market study.

DNV GL conducted the market study on behalf of the six-year CORE LNGas hive project, which aims to provide an investment plan for LNG fuelling in Spain and Portugal. The €33 million ($37.6 million) project is coordinated by Enagas, and co-funded by the European Commission.

The DNV GL market study has forecasted the potential future demand for LNG as a ship fuel and the required future infrastructure for the areas around Spain and Portugal, covering the Mediterranean, Atlantic and Gibraltar Strait peripherical regions.

Despite LNG fuelled shipping being high on the agenda in the maritime industry, the market drivers are seen to change. From previously being encouraged by a lower price of LNG compensating for the added cost for installation of the LNG fuel equipment, results from interviews conducted by DNV GL indicate a shift towards compliance with emissions regulations to be the main motivation, DNV GL said.

The results show that by 2030 up to 2 million cubic meters of LNG per year would be bunkered by ships with the volume to reach 8 million cbm by 2050.

However, the study shows that the existing terminals would have to develop break bulk capacity to allow for loading LNG to small carriers and LNG bunker vessels.

In most ports, development of local intermediate storage capacity needs to be synchronized with increasing LNG demand by larger vessels. Besides bunker stations and local storage facilities, small carriers for delivering batches of LNG to ports over sea will play an important role for the times ahead.

However, in order to realize the predicted LNG supply chain in 2030, about €1 billion of capital expenditures investment will be needed, adding up to a total cost of €3.7 billion in 2050, the study says.

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