Interview: LNG Bunkering No Longer a ‘Chicken and Egg’ Situation
- Business & Finance
One of the key commercial barriers to liquefied natural gas (LNG) becoming the marine fuel of choice for the shipping industry has been the concern about its availability due to the lack of LNG bunkering infrastructure.
“We used to say that it was a chicken and egg situation as the bunker suppliers were waiting for the market, while the market, on the other hand, was waiting for the infrastructure. But the situation has moved past that now and we are seeing new LNG-fueled projects coming in,” Stavros Niotis, Senior Engineer, Global Gas Solutions Group, American Bureau of Shipping (ABS), told World Maritime News on the sidelines of the Posidonia trade show.
Niotis added that there has been a lot of interest lately in developing the necessary infrastructure, resulting in an increase in availability of LNG in major global ports.
“We have seen oil and gas majors like Shell launch projects to create the necessary infrastructure so at least LNG could be available,” he said.
Speaking about the way of encouraging owners to speed up the uptake of LNG as marine fuel, and potential incentives to make that happen, Niotis said:
“From a commercial point of view, I would definitely agree that there needs to be some sort of financial support in that respect. From the technical and operational point of view, the key issue continues to be LNG bunkering infrastructure.”
The number of LNG bunkering vessels has grown from one at the beginning of 2017 to six in early 2018, with these numbers expected at least to double by 2020, according to multi-sector industry coalition SEALNG, whose member is ABS. The coalition forecasts that in the next five years 30 LNG bunker vessels could be operating worldwide.
The interest in LNG as marine fuel is growing especially ahead of the entrance into force of the IMO’s 2020 global sulphur cap.
“The 2020 sulphur cap has definitely been a driving force for owners to look into alternatives to the heavy-fuel oil. LNG has always been there as a fuel for marine application and when this driving force came through the IMO regulations for SOx emissions, the LNG emerged as an important alternative solution,” he added.
However, making the decision about investing in LNG as fuel is driven by Capex, Niotis highlighted, meaning the cost for the necessary equipment that needs to be installed on board. Another issue that needs to be thoroughly analysed is whether fitting such equipment would have any impact on the basic design of the ship.
“There are some ship types that are easier to retrofit from the standard design, while other ship types are not so flexible. At the end of the day it is a matter of investment,” he added.
The role of ABS in the process of making ships compliant with the new environmental regulations is to provide companies with the fact-based information to support them in their decision-making.
“We evaluate various solutions for complying with the new regulations. Selecting the optimal solution for your vessel is not an easy thing and there is no silver bullet for all the ship types. Therefore, we need to look at each specific ship type and its specific operation and analyze individual cases separately. These comparison studies help our clients decide whether to burn low-sulphur fuel oil, go with the scrubbers, or choose LNG or LPG as a fuel.
“As a class society we are not here to promote the one or the other solution. We feel that every solution is applicable in complying with the new regulations but you need to optimize your ship design and ship operation for that solution,” he concluded.
Interview by Jasmina Ovčina Mandra, Image by WMN