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LNG Bunkering

The bunker balance – owners consider LNG in advance of 2020

Owners and charterers will need to be prepared for reviewing new bunker contracts, advise Wikborg Rein lawyers.

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The following article is written by Eleanor Midwinter and Ina Lutchmiah of international law firm Wikborg Rein, and shared with Singapore bunker publication Manifold Times:

Using LNG rather than fuel oil is one of a range of options available to owners seeking to comply with IMO 2020. Given that shipbrokers have long predicted the emergence of a two-tier shipping market with 'greener' ships commanding a premium over older less eco-friendly vessels, what then is the future for LNG bunkering and what challenges does it present?

The shipping trade press initially took a somewhat pessimistic view of LNG bunkering as a solution to the IMO 2020 problem with forecasts suggesting that high costs and technical difficulties would present a commercial barrier to LNG bunkering being adopted across the industry. Despite the forecasts however, in the past year we have seen an interesting series of "world firsts" for new-build and retro-fitted LNG powered vessels in different sectors including cruise ships, ferries and more general commercial carriers. For example, Maritime Executive reported in March of this year on the retrofitting of the "SAJIR", which will be the first mega-container vessel to be converted to a dual-fuel system. Various innovations are also underway, including Cryo Shipping's conversion of platform supply vessels into LNG tankers for STS supplies, which may help ease congestion at LNG bunker ports or provide supplies in areas not serviced by such ports. These reports, together with commitments from large owners such as CMA CGM and MSC, suggest that owners may be more receptive to LNG bunkering than was initially expected. The world fleet of LNG powered has jumped in size since 2017 from 118 vessels to 143 vessels, with around 135 LNG-powered vessels also on order (Source: Maritime Executive as previous).

Whether owners choose to adopt LNG bunkering as a solution to the IMO 2020 problem or adopt one of the other available options such as using low sulphur fuel or installing scrubbers depends on a myriad of factors with owners adopting different solutions, sometimes even within their own fleets. This is essentially because there is no perfect solution. Owners have needed to be sensitive to trading patterns and available infrastructure. Using low sulphur fuel leaves owners at the mercy of oil and freight volatility. Scrubber retrofits may not provide a fully predictable outcome – with new geographical restraints having emerged since their introduction – including the ban on open loop scrubbers in Singapore, China and Fujairah, and the anticipated ban in the Norwegian fjords. Likewise, given the high cost of LNG retrofitting, it would not make sense to undertake it on vessels close to scrapping age or those operating without ready access to LNG bunkering ports. LNG bunkering is therefore best suited for owners ready to invest in new vessels, or for retrofitting less elderly vessels which will operate in areas where there is existing LNG bunkering infrastructure, such as Northern Europe.

A report from Jack Sharples of the Oxford Institute for Energy Studies had this to say in his 2019 report on LNG bunkering: "…the introduction of more stringent environmental regulations can solve the ‘chicken and egg’ dilemma of energy companies not wishing to invest in LNG bunkering infrastructure until there is substantial demand for LNG as a marine fuel". This seems to be reflected in the increased activity in projects to support LNG bunkering not only in areas traditionally supplying LNG but across many major transport hubs. This means that LNG fuelled vessels will likely become far more attractive to owners.

But for vessels already on the water, what issues does a retrofit present? One perhaps unforeseen issue is that IMO 2020 has added to tightening of availability at shipyards for retrofit solutions. The resulting pressure to move quickly to secure slots leads to negotiating constraints. This impacts on timing and cost and can also create legal problems. Often, there is a shift in bargaining power from owners to the yard in times of high demand and less attention is paid to the finer points of contract drafting. We see the effects of this in an increasing number of disputes and difficulties under retrofit contracts and related charters. Owners should therefore keep in mind that a retrofit contract requires consideration of similar issues to a full shipbuilding or conversion contract with special attention needing to be paid to items that are likely to impact on earnings under associated vessel charters, such as the warranty for the work (including where warranty work can be done), the amount of liquidated damages and related delay provisions. Clarity, as always, is key. Where there needs to be flexibility, such as for modifications and regulatory change, this must be supported by appropriately drafted triggers for change, remedies and dispute resolution procedures. Any existing charter obligations must be reviewed and added to as needed, for example, to deal with anticipated unexpected loss of use of the vessel.

There will also be different safety procedures to take into account, for example, ISO 20519:2017 (Ships and marine technology – Specification for bunkering of liquefied natural gas fuelled vessels) and the IGF Code (International Code of Safety for Ship Using Gases or Other Low-flashpoint Fuels). Both are designed to provide standards for ships operating using gas i.e., as a fuel, whether newly built or converted, rather than being aimed at more traditional gas carriers. 

Finally, owners/charterers will need to be prepared for reviewing new bunker contracts. Traditionally, contracts for the sale and purchase of LNG are more detail oriented than say, heavy fuel oil contracts. One option is to adapt existing bunker agreements that owners/charterers are already comfortable with, but this does require specialist drafting. Specifications and tolerances will need to be updated. Attention also needs to be paid to LNG-specific terms, such as transfer of title for return vapour, commingling considerations, the effect of off-specification gas, and related operational issues. Help may soon be at hand however from BIMCO, who announced that they would be working on a new LNG Bunker Purchase Contract and LPG voyage charter for the Asian market as of January 2019. This is expected to be ready for publication within 18 months. Whether or not an owners' organisation can create a form that finds favour with brokers and suppliers has yet to be seen. In the meantime, we have specialist trading and LNG lawyers available to assist with bespoke solutions and contract reviews.

We will be watching with interest to see the extent to which LNG bunkering continues to be adopted by the industry and the impact this has on spot trading of LNG and of course hire rates for LNG carriers and LNG fuelled vessels and will report back on this in further issues of Update.

Source: Wikborg Rein
Published: 12 July, 2019

 

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Alternative Fuels

Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

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Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Taiwanese shipping firm Yang Ming Marine Transport Corporation (Yang Ming) and South Korean shipbuilder Hanwha Ocean on Wednesday (2 September) signed a shipbuilding contract for six 13,000 TEU class LNG dual-fuel container vessels. 

The contract was signed by Dr. Chuck Tsai, Chairman of Yang Ming, and Mr. Charles Kim, CEO of Hanwha Ocean. The vessels are scheduled for delivery between 2028 and 2029. 

They will complement Yang Ming’s existing fleet of 10,000+ TEU vessels and serve as key vessels on East-West services, with deployment flexibility across trade lanes connecting Asia with the East and West Coasts of North America, South America, and the Mediterranean. 

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

“As Yang Ming transitions toward net-zero emissions, LNG provides a relatively mature and economically viable alternative fuel solution, capable of reducing greenhouse gas emissions by approximately 20%,” the company said. 

“At the same time, ammonia can serve as a carbon-free fuel by utilising converted LNG storage facilities, while offering relatively lower conversion costs and comparatively well-developed supply chains and infrastructure. The Ammonia Fuel Ready design will therefore provide Yang Ming with greater flexibility in responding to increasingly stringent international regulations on greenhouse gas emissions.”

In addition, the vessels will be equipped with Type B LNG fuel tanks with a design pressure of 1.0 bar to enhance the safety and efficiency of LNG operations, together with a range of energy-saving technologies, including Wind Shields, Rudder Bulbs, Pre-Swirl Stators, and Shore Power Systems. Smart ship technologies and cybersecurity protection features will also be incorporated to enhance operational efficiency, safety, and reliability while effectively reducing fuel consumption and greenhouse gas emissions.

Deliveries under Yang Ming’s next-generation fleet optimization plan commenced earlier this year. By 2030, a total of 24 new vessels are expected to enter service. 

This includes 18 LNG dual-fuel vessels—comprising five 15,500 TEU, seven 16,000 TEU, and the six 13,000 TEU vessels under this contract—alongside six 8,000 TEU methanol dual-fuel-ready ships. 

 

Photo credit: Yang Ming Marine Transport
Published: 4 September, 2026

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Alternative Fuels

LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Both secured AiP for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

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LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Lloyd’s Register (LR) and the Marine Design and Research Institute of China (MARIC) on Thursday (3 September) have secured Approval in Principle (AiP) for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

Announced at SMM 2026, the concept addresses one of the biggest investment challenges facing shipping today: the need to develop vessels and capabilities that can support a range of alternative fuel options and pathways as technologies, infrastructure and regulations evolve.

While LNG is already a mature fuel pathway, methanol and ammonia remain at an earlier stage of development, with questions around global fuel availability, infrastructure development, economics and long-term adoption.

The 114,000 DWT tanker concept has been designed as a product and crude oil carrier that can accommodate future conversion to LNG, methanol or ammonia as technologies, regulations and fuel supply chains mature. By incorporating conversion readiness at the design stage, the concept aims to reduce future retrofit complexity and provide owners with greater confidence when planning long-term fleet investments.

The design concept was reviewed against LR’s July 2026 class rules and regulations, including requirements relating to ships using gases and other low-flashpoint fuels, alongside relevant IACS Common Structural Rules for oil tankers. Final classification and statutory approval remain subject to full compliance with all applicable rules and regulations.

Theo Kourmpelis, Global Business Director for Tankers, Lloyd’s Register, said: “Shipowners are being asked to make major investment decisions today despite continued uncertainty around which fuels will dominate in the decades ahead. Alternative fuel solutions each offer potential pathways to compliance, but fuel infrastructure, regulation and economics continue to evolve at different speeds around the world.

“Designs that preserve flexibility will be critical in helping owners manage risk while preparing for multiple future scenarios.”

Si Nan, Marine & Offshore Marketing Department Vice Director, MARIC, said: “As the industry explores different decarbonisation pathways, shipowners need vessel designs that can adapt alongside technological and regulatory developments. This concept was developed specifically to provide greater fuel flexibility and long-term resilience, allowing owners to respond to changing market requirements without being locked into a single fuel strategy.

“Receiving Approval in Principle from Lloyd’s Register is an important milestone that validates the design concept and supports its future development.”

 

Photo credit: Lloyd’s Register
Published: 4 September, 2026

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Alternative Fuels

DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

LNG-fuelled vessels accounted for the vast majority of August activity while the strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year.

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DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

Latest data from classification society DNV’s Alternative Fuels Insight (AFI) platform alternative-fuelled vessel ordering was strong in August, with 52 new vessels added to the platform.

This is the highest monthly total since October 2024 and follows another active month in July, when 47 vessels were added to the database.

LNG-fuelled vessels accounted for the vast majority of August activity, with 46 orders recorded. The container segment led the way with 30 orders, while the car carrier segment contributed a further 12 LNG-fuelled vessels. In addition, four ethanol-fuelled bulk carriers and two hydrogen-powered bulk carriers were added during the month, as well as one LNG bunker vessel.

The strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year. In total, 242 alternative-fuelled vessel orders have been placed in the first eight months of 2026, representing a 27% increase compared with the same period in 2025.

LNG remains the dominant fuel choice, accounting for 63% of all alternative-fuelled vessel orders registered so far this year. Container vessels represent the largest share of these LNG orders (59%), followed by car carriers (30%).

Jason Stefanatos, Global Decarbonization Director at DNV Maritime, said: “The past two months have been particularly strong for alternative-fuelled vessel ordering, with August recording the highest monthly total we’ve seen since October 2024. This has helped lift year-to-date orders to a level well above the same period last year.

“LNG remains the leading fuel choice, driven largely by activity in the container and car carrier segments. These sectors have been among the earliest adopters of alternative fuels, supported by predictable liner operations and increasing demand from cargo owners to reduce emissions across supply chains. 

“For many owners, LNG offers a combination of emissions reductions, fuel availability and future flexibility while the longer-term fuel landscape continues to evolve. 

“At the same time, the latest figures include orders for ethanol- and hydrogen-fuelled vessels, highlighting that owners continue to explore a range of decarbonization pathways. Different segments are making different fuel choices, but the overall level of activity demonstrates continued investment in lower-emission shipping.”

Screenshot 2026 09 04 at 12.29.26 PM Screenshot 2026 09 04 at 12.29.36 PM

 

Photo credit: DNV
Published: 4 September, 2026

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