LNG Bunkering: High Flying In Europe But Its The East That Will Make it Soar

It is estimated that the global sales of bunker fuels will surpass 350 million tonnes in 2013.
Thats roughly analogous to the metric tonnage of the entire proven oil reserves of Syria,
topping up the worlds marine fleets every year.
In fiscal terms, global spend on bunkering for 2012 was approximately $2.6 billion with the
top 10 bunker ports below controlling more than 35 per cent of total global bunkering
volume.

Liquefied natural gas (LNG) has been used as a transport fuel since the 1930s and the first
shipment of LNG by tanker would cross the Atlantic in 1959. The "boil off" of LNG cargo
would be used as a fuel source for boilers in the first generation LNG tankers to produce
steam for the ships turbines. Half a century later, LNG is beginning to rival traditional fuel
oil as the marine propellant of choice for the worlds domestic and international commercial
fleets.
As of Q4 2013, Norwegian classification society Det Norske Veritas (DNV) stated that there
were currently 83 LNG-fuelled ships in operation or on the drawing board worldwide.
January 2015 will see the entry into force of the International Maritime Organisation (IMO)s
stricter sulphur oxide (SOx) emissions requirements in emission control areas (ECAs)
outlined under the International Convention for the Prevention of Pollution from Ships
(MARPOL) Annex VI. The 0.1 per cent sulphur limit that will come into force as of 2015 will
directly affect in the region of 40% of the world fleet.
In line with this, growth in LNG-powered vessels is set to skyrocket by more than 3700 per
cent through 2025 (see below) with around 3,200 ships set to be commissioned over the
next 12 years.

This prodigious rise in LNG-based marine traffic will entrain a concomitant rise in the need
for LNG bunker fuelling stations, prompting a 72 million tonnes rise in LNG usage at an
increase of an average of six per cent per annum.

In the same time period, the European Commission (EC) - the executive body of the
European Union (EU) that is responsible for proposing and ratifying legislation - will make
major investments into LNG-fuelling infrastructure to be installed in all 139 major EU
maritime and inland ports.

Although the EU is leading the way with regards to funding and affirmative action in the LNG
bunkering story, positive moves in the rest of the world are changing the tide with regards
to the speed of adoption of LNG as a primary bunker fuel.
Movements in Asia Pacific

The above chart shows the distribution of bunkering demand with regards to geographical
location. As the main bunkering port for the Asia Pacific region, the Maritime and Port
Authority (MPA) of Singapore accounts for almost one fifth of the worlds bunkering
demand and fulfils 38 per cent of the market share of the top 10 bunkering ports combined.
In November 2013, the MPA signed a Memorandum of Understanding with two Belgian
ports, Antwerp and Zeebrugge, to work together on research, regulations, and other
frameworks for LNG bunkering.
The announcement follows the commissioning of the island city-states first LNG terminal on
Jurong Island in Q2 2013, at a cost of $1.38 billion USD. Its two trains currently have a
throughput capacity of 3.5 million tonnes per annum and will reach 6 million tonnes per
annum by the end of 2013 on completion of a third train and complimentary plant and
docking facilities.
Competing bunker hubs
MPA is in direct competition with two of its main rivals in the bunkering world to introduce
LNG solutions - the Port of Rotterdam in the Netherlands and the Port Of Fujairah on the
United Arab Emirate's Indian Ocean coast.

In October 2013, Rotterdam was awarded 74 million-worth of subsidies by the European

Union to fully develop the market for LNG as a fuel and to open an LNG hub in Rotterdam
before the end of 2015. In the fifth largest Emirate in the UAE, the first land-based LNG
regasification facility received government approval in November 2013. The terminal will
have a projected throughput capacity of 1.2 billion cubic feet (34 million m) of natural gas
per day, and will be constructed and operated by EmiratesLNG, a joint venture of
International Petroleum Investment Co. (IPIC) and Mubadala Petroleum for 2015.
One month before approval was given for the commencement of this megaproject, a
venture between Shell and Dubai Maritime City (DMC) was announced for developing
sustainable and environment friendly sources of energy in the maritime sector."
Perhaps the Roman poet Ovid summed up the ethos of competition: A horse never runs so
fast as when he has other horses to catch up and outpace.
China: A superpower of the high seas?
Another factor in the global move towards LNG bunkering is the changing environmental
perspective of the Middle Kingdom. It is estimated that by 2030, the Peoples Republic of
China alone will own up to one quarter of the world commercial fleet, increase its carrying
capacity from nine billion tonnes per year to between 19 and 24 billion tonnes a year.
Since the first trialling of diesel dual technology in 2010, Chinese maritime companies have
commissioned and put into service 30 dual fuel vessels at a rate of ten per year, including
the world's first tugboats operated on diesel-LNG engines. In June 2013, Chinas growing
commitment to LNG powered vessels was affirmed by the classification of six 174,000 m3
dual fuel diesel engine (DFDE) LNG tankers to all hit the waves by 2017.
In a statement released in 2013 by Chinas Ministry of Transport (MOT), the Government of
the People's Republic stated its intention to have two per cent of the domestic Chinese
inland fleet operating on LNG dual fuel vessels by 2015, doubling that number fivefold to
ten per cent by 2020. The MOT has targeted the construction of between 200 and 500
vessels solely fuelled by LNG by 2030.
The gasification of the Yangtze, the third longest river in the world is also of great import
to the LNG bunkering story in the East. The Yangtze River Delta generates as much as 20 per
cent of Chinas GDP and in 2012, 1.78 billion tonnes of cargo was transported along Asias
longest river - three times more cargo as the Mississippi and five times as much as the Rhine.
In September 2013, Haiqi Ganghua Gas Development constructed the first offshore LNG
bunker station along the Yangtze in Nanjing.
Natural gas services operator China Gas Holding has also promised to begin LNG bunkering
on the Yangtze River in 2014. In a statement to the press, the company's Vice President,
Liang Yongchang, said: There are lots of vessels which will be converted to LNG power, so
there is a big potential in the LNG bunkering market.