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Argus Media: LNG bunkering market weathers high prices

Even though there has been an astronomical price differential between conventional fuels and LNG, the shipping sector still has belief in LNG as a bunker fuel, says Kanfer Shipping MD Stig Hagen.

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Record high global LNG prices of last year weighed heavily on LNG bunkering demand throughout 2022, but environmental incentives leave firms seeing a robust future for LNG as a marine fuel.

2 February 2023

High prices fed straight through to the spot LNG bunkering market, prompting many firms to operate dual-fuel vessels on alternative fuels, or let LNG-fuelled vessels run warm, in a bid to avoid the substantial costs and volatility involved with LNG fuelling. Many firms were also able to increase utilisation of other ships.

Spot LNG delivered-on-board (dob) prices were often at wide premiums to corresponding marine gasoil (MGO) prices in 2022.

The high prices have also prompted some firms to reconsider their plans to use LNG as a marine fuel. Costly LNG prompted Norwegian ferry operator Fjord Line to announce it was going to add MGO as a fuelling option to two LNG-fuelled ferries. Last year also saw some cancellations of orders for both LNG-powered ships and LNG bunkering vessels or projects.

That said, LNG prices have held at much lower levels in 2023, with the Argus prompt LNG dob price around 78pc lower in recent weeks compared with its all-time high in August, though they remain higher than in 2020 and much of 2021. As soon as prices were making broadly consistent falls, the "phone began ringing", Jacob Granqvist, vice president of maritime operations at Finnish firm Gasum, tells Argus. Firms are still open to indexing contracts to the Dutch TTF gas hub but some have shifted approaches to pricing supply, with more demand for fixed priced deals, he adds.

And high prices have not deterred some firms from ordering new LNG-powered vessels and planning new LNG bunkering projects. Around 108 LNG-fuelled vessels were delivered last year, bringing the global fleet to around 361, compared with 246 on the water in 2021 and 186 in 2020, according to Norwegian shipping certification society DNV. A further 500 LNG-powered vessels are set to be delivered by the end of 2026.

"Even though there has been an astronomical price differential between conventional fuels and LNG, the shipping sector still has belief in LNG as a marine fuel", Norwegian firm Kanfer Shipping managing director Stig Hagen says. Kanfer sees LNG prices likely falling in the coming years, as global LNG production steps higher in the middle of the decade, while more environmental incentives to switch away from traditional fuels are being introduced by authorities globally, which could further boost demand for LNG as a marine fuel.

Granqvist takes a similar view on the prospects for LNG bunkering, as new environmental regulations drive firms to boost usage of LNG in their fleets. The inclusion of maritime shipping in the EU's emissions trading system (ETS) will require shipowners to pay for 40pc of their emissions from 2025, 70pc from 2026 and 100pc from 2027. But the use of LNG as a fuel in fleets will enable operators to compensate for emissions, meaning that "lesser emitting vessels such as LNG-fuelled vessels can compensate for dirtier conventional vessels", Granqvist says.

In the short term, tighter availability of alternative marine fuels such as MGO may also lead to stronger demand for LNG use as a bunkering fuel. The EU ban on Russian oil products set to come into force on 5 February could have a knock-on effect of limiting MGO supplies.

LNG bunkering availability needs to grow

As the number of dual-fuel vessels and LNG-fuelled vessels is set to increase sharply in the coming years, the bunkering sector is trying to keep up.

Gasum has its eyes on a global LNG bunkering network, partnering with China's CNOOC and Singapore's Pavilion Energy under a preliminary agreement signed in November last year, seeking to strengthen ties across the world's main bunkering hubs from the Nordics and northern continental Europe.

Kanfer's Hagen similarly sees a need for more strategic LNG bunkering hubs around the world, with the firm targeting high traffic shipping routes. Kanfer plans to start up an LNG bunkering facility at the Suez Canal, tapping into one of the busiest shipping corridors in the world, and sourcing LNG from Egypt. The firm aims to reach an final investment decision (FID) on the Suez Canal project in the first half of this year and to bring the facility on line in mid-2025. "Existing hubs in Singapore and northeast Asia do not produce LNG, meaning they have to import LNG then resell it onto the maritime market," Hagen says, but Egypt's own production capabilities give it the "competitive edge".

The firm also has preliminary plans to develop an LNG bunkering project in the Panama Canal, with potential LNG supply likely available from the US' expanding liquefaction capacity. More LNG bunkering availability in the US Gulf coast could come from Texas' Freeport export terminal, which aims to bring on line its marine barge by early 2025.

And China has plans to build on its LNG bunkering presence, with state-controlled firms receiving support from local authorities, with its southern city Shenzhen aiming to become Asia's largest offshore bunkering centre.

By Ellie Holbrook

 

Photo credit and source: Argus Media
Published: 3 February, 2023

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Biofuel

PIL vessel in bio bunker fuel trial transports containers with PSA Singapore

Containers, bound for Mitsui Chemicals Asia Pacific’s beneficial cargo owner, were transported via PIL’s vessel “Kota Ratna” and PSA’s coastal terminal and rail nodes in Singapore, Qinzhou and Chongqing.

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PIL transports containers using bio bunker fuel in trial with PSA Singapore

PSA Singapore (PSA) and Pacific International Lines (PIL) on Wednesday (29 May) announced the completion of their first trial of low-carbon green shipments, in a joint effort to build a more sustainable end-to-end supply chain ecosystem.

This pilot trial is part of the Memorandum of Understanding signed in October last year between the two long-standing partners to collaborate on green and sustainability solutions to decarbonise supply chains. 

The pilot consists of warehouse-to-warehouse cargo flow from Singapore to Chongqing via the International Land-Sea Trade Corridor. The containers, bound for Mitsui Chemicals Asia Pacific, Ltd’s beneficial cargo owner, were transported via PIL’s vessel Kota Ratna and PSA’s coastal terminal and rail nodes in Singapore, Qinzhou and Chongqing.

Green levers utilised in this pilot include the use of biofuel on Kota Ratna as well as landside supply chain optimisation by PSA.

The biofuel used for this trial, a blend of 24% used cooking oil with very low sulphur fuel oil, abated about 100 tonnes of carbon, equivalent to planting 4000 trees, and reduced the emissions of greenhouse gases (GHG) by 84.1%.

With first-hand data on carbon emissions obtained from this pilot trial, PIL will be better equipped to assess how it can further lower emissions from its vessel operations, not just for its existing ships but also for its eight new LNG dual-fuel container vessels that will be progressively delivered from end 2024.

The PSA Port Ecosystem Business Division leveraged container barging, a greener mode of transportation as compared to trucking, to haul cargo from PSA Jurong Island Terminal to Pasir Panjang Terminal for onward shipment towards Chongqing. 

In addition, the use of container handling equipment powered by electricity and greener alternative fuels at PSA’s ports reduced emissions in the port area.

The collaborative efforts by both partners across the end-to-end supply chain translated to planting one tree for every laden container moved across this value chain.

Philbert Chua, Managing Director, Container Division, PSA Corporation Ltd, said, “The successful completion of this green pilot project with PIL is an important step forward for the maritime and supply chain sector.”

“Combating climate change is one of our urgent priorities and PSA is committed to work with like-minded partners to put these words into action.”

“This concerted teamwork illustrates a step-by-step measurable approach to further decarbonise supply chains and has unlocked opportunities for accelerated action to achieve our net zero goal.”

Abhishek Chawla, Chief Marine Officer, PIL, said, “PIL is pleased to receive promising results from this low-carbon green shipments pilot trial with PSA.”

“With sustainability at the core of PIL’s operations, we are happy to join forces with PSA as we take concrete action to drive a sustainable future. The valuable insights obtained from this trial will empower PIL to further reduce our vessel emissions in the future, as part of our goal of achieving net zero by 2050.”

“Working hand in hand with like-minded partners, we can augment each other’s sustainability efforts in creating greener shipping and providing a sustainable net zero model to our customers soon.”

 

Photo credit: PSA Singapore
Published: 30 May 2024

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Alternative Fuels

China: Chimbusco, Suzhou Fengbei Biotechnology to conduct bio bunker fuel research

Both parties will comprehensively promote the use of biodiesel in the bunker fuel market and contribute to green and low-carbon shipping.

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China: Chimbusco, Suzhou Fengbei Biotechnology to conduct bio bunker fuel research

China Marine Bunker (Petro China) Co., Ltd. (Chimbusco) and Suzhou Fengbei Biotechnology Co., Ltd. on Thursday (23 May) signed a strategic cooperation agreement to jointly carry out research on the application of marine biofuels and promote pilot projects on the application of biodiesel. 

Both parties will comprehensively promote the use of biodiesel in the bunker fuel market and contribute to green and low-carbon shipping.

Suzhou Fengbei Biotechnology Co., Ltd. has long been committed to the research and development of comprehensive utilisation of natural oil resources, forming an oil resource recycling industry chain of "industrial oils-biofuels (biodiesel)-biobased materials". 

Qin Ling, secretary of the Party Committee and general manager of Chimbusco said with the implementation of increasingly stringent emissions laws and regulations, the company is actively responding to and adapting to domestic development needs. 

“Through strategic cooperation, the company is locking in the future demand for biofuels,” he said. 

Pingyuan, chairman of Suzhou Fengbei Biotechnology Co., Ltd. said that both firms will rely on their respective advantages and resources and seize new opportunities for carbon reduction in shipping. 

Disclaimer: The above article published by Manifold Times was sourced from China’s domestic market through a local correspondent. While considerable efforts have been taken to verify its accuracy through a professional translator and processed from sources believed to be reliable, no warranty is made regarding the accuracy, completeness and reliability of any information.

 

Photo credit: Zhangjiagang Bonded Zone (Jingang sub-district) Party and Government Office
Published: 30 May 2024

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Wind-assisted

MOL to install wind propulsion system on seven newbuildings

MOL has measured the performance of the Wind Challenger on a vessel “Shofu Maru” continuously on actual voyages and confirmed Wind Challenger sail reduced daily fuel consumption by up to 17%.

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MOL to install wind propulsion system on seven newbuildings

Mitsui O.S.K. Lines, Ltd. (MOL) and its group company MOL Drybulk Ltd. on Monday (27 May) announced their intent to install wind propulsion systems on a total of seven newbuilding bulk carriers and multi-purpose vessels, which will be operated by MOL Drybulk. 

MOL has measured the performance of the Wind Challenger on a vessel Shofu Maru continuously on actual voyages and confirmed that the Wind Challenger sail reduced daily fuel consumption by up to 17%.

The fuel saving and GHG reduction effect of the Wind Challenger depends on various conditions such as the type of vessel and the shipping route.

MOL Group will have a total of nine Wind Challenger-equipped vessels, bringing the total number of vessels equipped with wind propulsion systems to 11.

Among the seven vessels to be equipped with wind propulsion systems, six new bulk carriers will each be equipped with one Wind Challenger. Construction contracts have already been signed with Oshima Shipbuilding Co., Ltd. for three of the six vessels, and preparations are under way for construction contracts for the remaining three vessels.

In addition, MOL Drybulk has decided to install two Ventfoils, a foldable and autonomous unit for wind-assisted ship propulsion, manufactured by Dutch firm EconoWind B.V., on one of its new multipurpose vessels slated for delivery 2025 and operation under a time charter.

MOL has established the "MOL Group Environmental Vision 2.2" and has set the target of achieving net zero greenhouse gas (GHG) emissions by 2050. One of the key strategies to achieve this target includes the "introduction of clean energy, further energy-saving technologies," and the group plans to launch 25 vessels equipped with the Wind Challenger by 2030 and 80 vessels by 2035.

 

Photo credit: Mitsui O.S.K. Lines
Published: 30 May 2024

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