Nikos Kokolinakis of global energy and commodity price reporting agency Argus Media on Monday (16 November) published an article highlighting newbuilding orders for LNG dual-fuel vessels overtaking LNG-ready ships:
Shipowners’ growing confidence in LNG as a bunker fuel has pushed them towards ordering new dual-fuelled vessels rather than LNG-ready ones, according to shipbroker SSY.
A dual-fuelled LNG vessel can burn LNG as a bunker fuel. An LNG-ready ship, despite its name, burns standard fuel oil and needs to be retrofitted with equipment that allows it to switch to LNG.
LNG-ready ships were the preferred model — there are around 43 in existence, compared with around 30 LNG dual-fuelled tankers in existence. But shipowners are placing new orders for LNG dual-fuel vessels as refuelling infrastructure improves, and this could tilt the balance.
SSY said that around 10pc of the total tanker orders made so far in 2020 were for LNG dual-fuelled vessels. These brought the total number of LNG dual-fuelled ships under construction to 55, which includes three very large crude carriers (VLCC), nine Suezmaxes, 22 Aframaxes, four Long Range 2 (LR2) and three Medium Range (MR). There are no LNG-ready style ships currently under construction.
South Korean shipyards continue to be the main focus for these orders. Shipowners have ordered tankers totalling 845,000 deadweight tonnes (dwt) so far this year — two VLCCs and two Suezmaxes, which account for half of the total dwt on order, with the others ordered elsewhere are considerably smaller.
But Chinese shipyards have increased their presence and, over the past year, shipowners have ordered around 628,000 dwt or 39pc of the total orderbook in dwt terms — four LR2s, four Handysize and four smaller tankers.
This shift comes at a time of a global push for more stringent environmental shipping standards. The International Maritime Organization (IMO) is targeting a reduction in CO2 emissions of 40pc by 2030 and 70pc by 2050, both from a 2008 baseline. The IMO is also aiming at a 50pc reduction in overall greenhouse gas (GHG) emissions from the same baseline by 2050, which is encouraging shipping to explore and adopt new propulsion technologies.
But LNG-fuelled tankers are only likely to be a medium-term solution, because the fuel only cuts a vessel’s GHG emissions by around 20pc. Alternatives like hydrogen, ammonia, bio-methanol and biofuels will have to be developed further for the shipping sector to meet the IMO targets, and this restricts new tanker ordering now, SSY.
Orders for tankers utilising LNG propulsion technologies orders still take up a small percentage of the overall order book, which stands at 485, down from 519 at the same point in 2019.
Photo credit and source: Argus Media
Published: 17 November, 2020
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