LNG Bunkering

SEA-LNG: LNG pathway offers best returns under IMO Net-Zero Framework

SEA LNG’s calculations show that under the Net-Zero Framework, investments in LNG dual fuel vessels offer shipowners a significantly shorter payback period than methanol, ammonia or VLSFO.

Published

1 year ago

May 15, 2025

Admin

Industry coalition SEA-LNG on Wednesday (14 May) said it has completed its initial analysis of the IMO Net-Zero Framework following MEPC 83 by using the independent Z-Joule cost of compliance calculator to assess the commercial implications of the new regulations.

The calculations show that under the Net-Zero Framework investments in LNG dual fuel vessels offer shipowners a significantly shorter payback period than methanol, ammonia or VLSFO. LNG ships also give shipowners a commercial advantage through fuel optionality and access to widespread established infrastructure.

The complex IMO Net-Zero Framework now requires further detailed analysis and feedback from the industry, as well as coordination with EU initiatives and the specific concerns of other member states, prior to formal ratification later this year. There are also critical details surrounding the IMO Net Zero Fund and the zero and near-zero-emission fuels (ZNZ) Reward Mechanism that will not be addressed before 2027.

SEA-LNG’s research examines the investment case for a 14,000 TEU container vessel operating a trans-Pacific route from Japan to the US West Coast. It compares LNG, ammonia and methanol dual fuel vessels against a vessel fuelled by VLSFO over a 15-year investment period.

The total cost of the different fuel pathways is driven by CapEx, the carbon intensity of the fuels, and the fuel price. For both fuel price forecasts and carbon intensity values, SEA-LNG used assumptions from DNV’s analysis (MEPC 82/INF.8/Add.1) of the candidate mid-term measures discussed at MEPC 82.

Both high-pressure and low-pressure LNG dual fuel engines offer a relative payback period of between 4.5 and 5 years compared with VLSFO because of lower compliance costs due to LNG’s lower greenhouse gas fuel intensity (GFI). Methanol and ammonia fuelled vessels do not pay back over the 15-year investment horizon.

SEA-LNG also modelled the investment case for a 14,000 TEU containership operating on the Rotterdam-Singapore trade route using the same fuel price forecasts. In this case, the vessel is subject to both IMO and EU decarbonisation regulations – the latter for 50% of the voyage. Here the payback for LNG fuelled vessels was reduced to about 3.5 years mainly due to the effect of FuelEU Maritime in the early years of the analysis period.

Steve Esau, Chief Operating Officer of SEA-LNG, said: “While many details need to be decided, the IMO Net-zero Framework provides a clear basis for maritime decarbonisation and should, in principle, enable all fuel pathways – be they LNG, methanol or ammonia – to compete on a level playing field. For this to continue, it is imperative that the ZNZ Reward Mechanism is designed in a fuel agnostic and technology neutral way.”

Peter Keller, Chairman of SEA-LNG, concluded: “The industry continues to make major investments in the LNG pathway. These ships can use LNG, bio-methane and e-methane, and reduce greenhouse gas emissions and cut local pollution today. The IMO position, as well as the EU regulations, both affirm the pathway is heading in the right direction and offers a practical and realistic route to compliance, starting right now.”

This research is the first in a series of costs of compliance analyses SEA-LNG is developing using the Z-Joule calculator.

The IMO Net-Zero Framework is the first in the world to combine mandatory emissions limits and GHG pricing across an entire industry sector. 

Approved by the Marine Environment Protection Committee during its 83rd session (MEPC 83) from 7 to 11 April 2025, the measures include a new fuel standard for ships and a global pricing mechanism for emissions.

These measures, set to be formally adopted in October 2025 before entry into force in 2027, will become mandatory for large ocean-going ships over 5,000 gross tonnage, which emit 85% of the total CO2 emissions from international shipping. 

Note: The full SEA-LNG analysis can be read here.

Photo credit: Venti Views on Unsplash
Published: 15 May, 2025

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Alternative Fuels

ENGINE on Fuel Switch Snapshot: LSMGO surges to greater premium over biofuel

B100 discount to LSMGO widens to $541/mt in Rotterdam; Singapore’s B100 drops to $106/mt below LSMGO; Rotterdam LBM at $639-833/mt discounts to LSMGO.

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ENGINE on Fuel Switch Snapshot: LSMGO surges to greater premium over biofuel

Once a week, bunker intelligence platform ENGINE will publish a snapshot of alternative and conventional bunker fuel prices in the world’s two biggest bunkering hubs. The following is the latest snapshot:

20 July 2026

B100 discount to LSMGO widens to $541/mt in Rotterdam
Singapore’s B100 drops to $106/mt below LSMGO
Rotterdam LBM at $639-833/mt discounts to LSMGO

B100’s premium over HSFO in Rotterdam has narrowed by $50/mt over the past week to $64/mt, while its discount to VLSFO has widened by $83/mt to $105/mt.

B100 has become far more competitive against LSMGO in Rotterdam, with its discount widening by $180/mt over the past week to $541/mt, as a surge in conventional fuel prices left B100 broadly unchanged by comparison.

B100’s price has risen by $109/mt in Singapore, but its discount to LSMGO has still widened by $102/mt to $106/mt, as LSMGO surged by an even greater $211/mt.

Rotterdam’s LNG premium over VLSFO has widened by $35/mt to $201/mt for vessels with Otto medium speed (Otto MS) engines. For vessels with diesel slow speed (diesel SS) engines, LNG has flipped to a $15/mt premium over VLSFO, from a $22/mt discount the prior week.

Liquefied biomethane (LBM) discounts to VLSFO in Rotterdam have narrowed by $50-52/mt to $203-396/mt over the past week. Against LSMGO, LBM discounts have widened by $45-47/mt to $639-833/mt, depending on engine type.

In Singapore, LNG is now $42/mt cheaper than LSMGO for vessels with Otto MS engines, and $134/mt cheaper for vessels with diesel SS engines.

ENGINE on Fuel Switch Snapshot: LSMGO surges to greater premium over biofuel

Liquid fuels

HSFO and VLSFO prices in Rotterdam have jumped by $66/mt and $99/mt respectively over the past week, while LSMGO has surged by an even steeper $196/mt. A $9.69/bbl ($71/mt) rise in front-month ICE Brent futures, to $87.94/bbl ($645/mt), drove bunker prices sharply higher across the board.

Bunker fuel availability is tight for prompt delivery dates in the ARA ports, with buyers advised to enquire about stems between 5-7 days ahead to get good coverage, a trader said.

Rotterdam’s B100 price has risen by $16/mt over the past week. Dutch ZRE A ticket prices were unchanged at €107.50/mtCO2e.

Singapore’s HSFO and VLSFO prices have risen by $130/mt and $132/mt respectively, while its LSMGO price has gained an even steeper $211/mt over the past week.

VLSFO availability in Singapore has been tight, with several suppliers reporting low stock levels. Recommended lead times have widened from 13–17 days last week to 14–19 days now.

Liquid gases

Rotterdam’s LNG prices have surged by $134-136/mt over the past week, while its LBM prices have climbed by $149-151/mt.

LBM discounts to LNG in Rotterdam have narrowed by $15/mt to $404-411/mt.

Singapore’s LNG bunker benchmarks have surged by $196-197/mt over the past week.

By Erik Hoffmann

Photo credit and source: ENGINE
Published: 21 July, 2026