Interview: Insufficient Finances Blocking Development of LNG Bunkering

The LNG shipping market has been faced with lower rates amid growing LNG carrier fleet, a drop in liquid fuel prices and a lower demand for LNG in Asian markets. 

On the other hand, lower shipping rates are good news for sellers and end users of LNG, which is becoming ever more popular as an alternative marine fuel.

World Maritime News spoke with Nick Brown, Brand and External Relations Manager at Lloyd’s Register to find out more about the market expectations and the way forward for LNG as both the cargo and marine fuel.

Lloyd’s Register is involved in providing services in various LNG-related sectors including FLNG, classification services for shipbuilding and is working with ports on six continents – all but Antarctica on LNG bunkering.

WMN: LNG is gaining in popularity among key industry players, including in the cruise shipping industry with Carnival’s recent order for the world’s first LNG-fuelled cruise ships. How would you describe the demand for LNG as marine fuel at the moment and what is needed to remove the infrastructural obstacles at ports?

Brown: Demand is certainly growing and, to date, has been focused in niche and specialised ship type sectors such as ferries, tugs, short-sea cargo shipping and, now, cruise shipping. To remove the infrastructural obstacles is a question of ensuring that technical and commercial risks can be reconciled with the potential. By far the biggest blocker is financial – providing investors with the likelihood of returns.

Speaking of the infrastructural readiness of global ports for LNG as marine fuel, Brown said that the highest degree of readiness is in Northern Europe in ports such as Stockholm – where the 2,800 passenger Viking Line ferry, Viking Grace, calls every 24 hours.

WMN: U.S carrier TOTE Maritime recently took delivery of the first ever LNG-powered container ship, the 3,100 TEU Isla Bella, which will operate between Jacksonville, Florida, and San Juan, Puerto Rico. Is the LNG infrastructure in this region developed sufficiently to provide bunkering services to the Isla Bella and her soon-to-be-delivered sister ship the Perla del Caribe?

Brown: Point to point, or short sea -trades, like the TOTE services – with regular calls in the same ports and modest volume demands– are able to develop required infrastructure relatively easily. It is providing large scale, large volume supply for deep sea ships in key locations that is the real challenge.

WMN: What are the key rising LNG markets to look out for seeing that there is a pause in commitments to new LNG projects as demand in Asia weakens?

Brown: We are highly focused on US export potential and LNG bunkering in ports worldwide – so we see global opportunities.

WMN:  The Australasian LNG construction boom is coming to an end, according to a Douglas Westwood forecast, which says that global spending on LNG carriers is set to decrease as well. Has the supply side reached its full potential or is there room for more newbuilds?

Brown: Demand for seaborne gas trades is expected to grow and we can anticipate that more new ships will be required – it’s probably not an issue of ‘if’ but ‘when’ is the right time to invest.

WMN: As the Panama Canal sets sights on opening its doors to LNG carriers, what would you say are the key technical and operational challenges for delivering LNG to Pacific markets via the Panama Canal and the Northern Sea Route?

Brown: For Panama Canal transits there are size limitations and that would make some of the very large LNG carriers not able to transit. Panama Canal’s capacity matching the traffic demand may need to be considered. Certain features on equipment need to be considered by the operators for their ships and this is already known to most and presented in relevant SIGTTO guidelines.
And for Northern Sea Route the key will be winterisation and ice class structural questions to be addressed effectively.

WMN: Spain’s Port of Barcelona announced plans to invest in LNG infrastructure to tackle rising air pollution in its metropolitan area. The port says that the move is also a preparation for the expected increase in vessels powered by LNG. Are predictions that 20% of commercial and cruise ships will be powered by LNG by 2030 realistic?

Brown: If you mean 20% of newbuildings, it’s possible for cruise shipping but far less likely for deep sea ships. Our GMFT 2030 report indicated that 11% of deep sea (containership, bulk carrier and tanker) newbuildings could be gas fuelled by 2030 – in the most optimistic scenario. But with the right investment and regulatory drivers now, LNG fuelled deep sea shipping could take off although most activity is likely to remain in the sectors like ferries, tugs, short-sea cargo shipping and cruise shipping.

World Maritime News Staff