There could be a lack of liquefied natural gas (LNG) supply if 10% of the world’s fleet adopt the material as a bunker fuel, says a recent report from maritime advisory Drewry Shipping Consultants.
“The next big question is whether shipowners will order enough vessels, and whether there will be enough LNG to cope with demand if they do,” says the report LNG: fuel of the future?
The firm created a quantitative model to estimate total demand generated by LNG as bunker fuel from major segments such as dry bulk, tankers and containers in 2022; the model also assumed some large vessels in the segments with age below 15 years retrofitting LNG engines.
“We have made three scenarios, low case assuming 5% of the identified fleet retrofits LNG engines, base case assumes 10%, and high case presumes 15% of the total fleet,” it finds.
“Adding the confirmed new LNG projects to the current capacity in the market, we estimate that annual supply will be about 72 million tonnes by 2022.
“Demand is lagging behind that figure, but the high case (15% of vessels retrofitting) will add an extra 10 million tonnes demand in 2022, and even the 10% base case will push demand beyond expected supply.
“More LNG projects will need to come on-line and more bunkering facilities will need to be completed in a short period of time if the industry is to cope with demand for LNG bunkering.”
The report, meanwhile, notes the use of low sulphur marine gas oil (LS MGO) to be a “less problematic” solution for shipowners to meet the 0.5% sulphur cap by 2020.
Further, it appears that an International Maritime Organization (IMO) appointed consultant has reported that fears of a possible distillate shortage have been exaggerated.
“But even if the IMO is right, Drewry reckons that about a million barrels a day will be needed, so operators will have to pay a premium in the early years.”
Photo credit: Drewry Shipping Consultants
Published: 2 May, 2018
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