LR, Penn Oak partner on LNG-fueled vessels industry

Lloyd’s Register North America said it has teamed with Penn Oak Energy Corp to help companies raise capital and mitigate the technical risks associated with retrofitting ships fuelled by LNG. 

Ships that are fuelled by LNG can greatly reduce operating costs while meeting stricter environmental regulations, LR said in a statement.

Historically, the leading expense for ship operators is fuel and personnel. The challenge to building these new ships has been that shipowners are unwilling to invest in LNG-fuelled ships if supplies of LNG bunker are difficult to obtain, but that has started to change as more LNG facilities are built. LR’s LNG Bunkering Infrastructural Survey 2014 indicates that major ports around the world are either planning for, or are anticipating, the wide-scale development of LNG bunkering. The other challenge for shipbuilders is the large initial capital costs to build these new ships.

“LNG as a fuel has emerged as one of the most considered choices for a new generation of vessels. The infrastructure to support this new class of ships has started to mature, and we have seen great strides in companies willing to convert their existing ships to this new fuel or constructing new ships in the U.S. Emission Control Areas,” said LR’s Rafa Riva, Marine Business Development Manager.

Through this new approach of project finance methods Penn Oak is able to apply its expertise to the financial structuring of LNG conversions for the maritime industry. Penn Oak Energy intends to add value to ship-owners and their fleets is through a fuel procurement agreement, where they can spread the cost of the LNG conversions and the upfront capital requirements for these conversions over the life of the project.

LR as a classification society will provide training on the key practical aspects of modern LNG carriage by sea and risk management services to support safe LNG bunkering, as well as support the new fleet of gas-fuelled ships – and help them to operate safely and efficiently.

LNG World News Staff; Image: Penn Oak Energy