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Argus Media: LNG discount to methanol renews LNG bunker interest

Premium for LNG compared with grey methanol flipped to a discount in February and maintained it through March, a shift that could restore ship owners’ interest in LNG for bunkering fuel.

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The premium for LNG compared with grey methanol flipped to a discount in February and maintained it through March, a shift that could restore ship owners' interest in LNG for bunkering fuel.

4 April 2023

Some ship owners that had been considering LNG for bunkering shifted their sights to methanol last year after LNG prices soared while grey methanol prices did not have as dramatic an upswing. LNG prices in northwest Europe, Asia-Pacific and the US Gulf coast spiked over $2,100/t very low-sulphur fuel oil equivalent (VLSFOe) in August 2022 as uncertainty around Russian winter natural gas exports to Europe intensified. By comparison, grey methanol last year peaked in March at $1,002/t in Asia-Pacific and below $962/t in northwest Europe and the US Gulf coast.

As the 2022/2023 winter season wound down, European natural gas stockpiles remained high. As a result, LNG prices in northwest Europe, Asia-Pacific and the US Gulf coast fell to under $601/t VLSFOe in March, compared with over $720/t VLSFOe for grey methanol in these regions.

Even though LNG and grey methanol are both sourced from fossil feedstock, their CO2 emissions differ. LNG emissions from combustion and full lifecycle are about 21pc and 28pc lower, respectively, compared with emissions from conventional marine fuels. Grey methanol combustion lowers CO2 emissions by only 7pc compared with conventional marine fuels and grey methanol full lifecycle emissions are higher than conventional bunkers. Despite the higher LNG price volatility, LNG provides ship owners with higher CO2 reduction than grey methanol. Methanol also has lower energy content per volume than LNG, and requires fuel tanks approximately 1.3 times larger than equivalent LNG tanks. A vessel owner interested in methanol could opt out of a smaller tank in exchange for shorter voyages.

But, in addition to lower price volatility, methanol has other advantages. It is a liquid fuel at ambient temperatures, which makes it easier to store and handle on board of a vessel compared with LNG, which has to be maintained at least below -177°F to remain liquid. As a result, methanol's operational costs are lower. Methanol is also biodegradable if spilled into water, while an LNG leak could be flammable and explosive. A newbuild vessel with LNG-burning engine costs about 22pc more to build than conventional marine fuel-burning vessel, while an methanol-burning vessel costs about 10pc more to build. Building a methanol bunkering terminal is cheaper than an LNG terminal.

The typical life of a dry bulk carrier, tanker or container ship is about 25 years. A vessel built this year, would end its service by about 2048. When commissioning a vessel with over 5,000 gross tonnage, ship owners travelling the EU territorial waters should consider a requirement considered by the EU to decrease the greenhouse gas intensity of marine fuels by at least 2pc from 2025, 6pc from 2030, 14.5pc from 2035, 31pc from 2040, 62pc as of 2045, and 80pc by 2050, from a 2020 baseline. The EU also agreed to include maritime shipping in its emissions trading system (ETS). Ships will have to pay for 40pc of their emissions from 2024, 70pc from 2025, and 100pc from 2026.

Bio-LNG is fully interchangeable with LNG derived from fossil feedstock. Similarly, bio-methanol is fully interchangeable with grey methanol. Bio-LNG and bio-methanol could be carbon natural, if produced from sustainable biomass. Ship owners who opt to build LNG-burning vessels could burn a blend of bio-LNG with LNG to meet EU's fuel intensity rule and keep their ETS costs down. Ship owners who opt for methanol-burning vessels could burn a blend of bio-methanol with grey methanol. Global production of both bio-LNG and bio-methanol requires scaling up to meet marine fuel demand. Ship owners who choose methanol would have lower vessel building and operational costs. This is countered by the LNG-grey methanol price discount, when LNG-burning vessels owners would see immediate CO2 emissions reductions at lower price.

To hedge their bio-fuel costs and ensure availabilities, ship owners are inquiring about long-term bio-LNG or bio-methanol offtake agreements, looking into partnering with fuel suppliers, or offering their customers more expensive low-carbon freight rates. For example, Danish ship owner Maersk had entered in eight green methanol production partnerships and by 2025 it plans to source over 730,000t of green methanol.

By Stefka Wechsler

LNG less grey methanol $/t VLSFO-equivalent

LNG less grey methanol $/t VLSFO-equivalent

 

Photo credit and source: Argus Media
Published: 10 April, 2023

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LNG Bunkering

Malaysia: Port of Tanjung Pelepas achieves milestone with first SIMOPS LNG bunkering op

LNG bunker vessel “MT Paolina Cosulich” refuelled LNG dual-fuel container ship “Bangkok Express”, operated by Hapag-Lloyd AG at the port.

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Malaysia: Port of Tanjung Pelepas achieves milestone with first SIMOPS LNG bunkering op

Port of Tanjung Pelepas (PTP) on Sunday (16 February) said it successfully conducted its first Simultaneous Operations (SIMOPS) of liquefied natural gas (LNG) bunkering.

This significant achievement involved the LNG dual-fuel container ship Bangkok Express, operated by Hapag-Lloyd AG, and the LNG bunker vessel MT Paolina Cosulich.

“This milestone underscores PTP's dedication to enhancing our competitive edge in the global market by facilitating clean and efficient maritime operations,” the port said in a social media post.

“We are proud to have partnered with PETCO Trading Labuan Co., Ltd. (PTLCL) and Hapag-Lloyd on this pioneering initiative.”

Manifold Times previously reported the port also achieving its first LNG bunkering operation last year. 

The port completed its first-ever ship-to-containership methanol bunkering operation in November last year. 

Manifold Times previously reported the port achieving its first LNG bunkering operation last year. 

Related: Malaysia: Port of Tanjung Pelepas achieves milestone with first methanol bunkering op
Related: Malaysia: Port of Tanjung Pelepas completes first LNG bunkering operation
Related: Malaysia: Tanjung Pelepas selected to join P41 initiative to achieve green bunkering hub ambition
Related: Port Of Tanjung Pelepas joins G2G decarbonisation scheme between Malaysia and Australia

 

Photo credit: Port of Tanjung Pelepas
Published: 18 February, 2025

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LNG Bunkering

Kunlun Energy wraps up first STS offshore LNG bunkering operation in Hong Kong

Kunlun Energy, a red-chip controlled by PetroChina, said its bunkering vessel refuelled container ship “Zim Haifa Blue Stone” with 2,200 metric tonnes of LNG bunker fuel in a seven-hour operation.

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Kunlun Energy wraps up first STS offshore LNG bunkering op in Hong Kong

Kunlun Energy, a red-chip controlled by PetroChina, on Monday (17 February) said it completed Hong Kong’s first ship-to-ship (STS) offshore liquefied natural gas (LNG) bunkering operation on 14 February. 

Kunlun Energy's 8,300 m3 capacity LNG bunkering vessel refuelled the container ship Zim Haifa Blue Stone with 2,200 metric tonnes (mt) of LNG in a seven-hour operation. 

The bunkering vessel involved in the operation is operated by a Kunlun Energy subsidiary. 

According to a PetroChina official, the receiving vessel Zim Haifa Blue Stone departed from Busan, South Korea, on 3 February and passed through Qingdao, Shanghai, and Ningbo before arriving in Hong Kong on 12 February. 

Its final destination is Istanbul, Turkey. This refuelling operation can meet the ship's fuel needs for the entire journey. 

“The successful implementation of this "ship-to-ship" offshore LNG bunkering operation is another example of Kunlun Energy's efforts to help improve the international shipping hub of the Guangdong-Hong Kong-Macao Greater Bay Area,” Kunlun Energy said. 

“It is expected to attract more green-fuel vessels to pass through Hong Kong, encourage more environmentally friendly companies to conduct business in Hong Kong, accelerate transformation and technological innovation in the shipping industry, and promote the construction of Hong Kong as a green and smart port.”

“This operation holds significant importance for Hong Kong's push toward a green and sustainable shipping industry.”

 

Photo credit: Kunlun Energy
Published: 18 February, 2025

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Biofuel

Wallenius Wilhelmsen successfully completes its first biofuel bunkering trial in Japan

“M/V Tamesis” bunkered 400 metric tonnes of B24 VLSFO blended biofuel, supplied by Mitsubishi Corporation Energy at Port of Yokohama.

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Wallenius Wilhelmsen successfully completes its first biofuel bunkering trial in Japan

Wallenius Wilhelmsen on Monday (17 February) said it has successfully completed its first biofuel bunkering trial at the Port of Yokohama in Japan.

M/V Tamesis bunkered 400 metric tonnes (mt) of B24 VLSFO blended biofuel, supplied by Mitsubishi Corporation Energy. 

This milestone is part of Wallenius Wilhelmsen’s ongoing efforts to reduce its environmental impact and promote sustainability in shipping.

“As part of our commitment to reducing greenhouse gas emissions, we have expanded our locations for biofuel supply. Since 2023, the expansion has included key ports in Belgium, Korea and Singapore,” the company said.

“Expanding to Japan enhances our ability to operate more efficiently and sustainably across our global network.”

Wallenius Wilhelmsen has set ambitious emission reduction targets to reach net-zero by 2040. This includes a 40% absolute reduction of well-to-wake greenhouse gas emissions by 2030 compared to our 2022 baseline, as approved by the Science Based Targets initiative.

Yasuyuki Sakurai, Senior Manager, the Orcelle Accelerator taskforce at Wallenius Wilhelmsen, said: “Achieving these targets require a major shift in energy sources from conventional fuels to low and zero-carbon alternatives. Expanding supply locations and securing sufficient biofuels remain a priority, and we are pleased to have conducted our first B24 VLSFO blended biofuel bunkering trial in Yokohama.”

“While our Reduced Carbon Service customers fully support our mass-balance concept, ensuring sufficient biofuel usage across our entire fleet and trade lanes is key to achieving our long-term sustainability goals.”

Mitsuo Ueda, General Manager of Mitsubishi Corporation Energy, said: “In anticipation of growing demand for biofuel in the marine sector, we have begun storing biofuel at our oil terminal in Onahama (Fukushima Prefecture) and supplying B24 in Tokyo Bay using our barges.:

“We deeply admire Wallenius Wilhelmsen’s leadership in the decarbonisation of the shipping industry and remain committed to playing our part in creating a more sustainable future. We will continue striving to meet industry needs through a stable supply of biofuels and contribute to the realisation of a carbon-neutral society.”

This milestone was achieved through close collaboration between Wallenius Wilhelmsen’s Energy Sourcing team and the Orcelle Accelerator taskforce, which has worked for the past two years to establish biofuel bunkering capabilities in Japan.

 

Photo credit: Wallenius Wilhelmsen
Published: 18 February, 2025

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