Business

Glander International Bunkering: Who will drive future bunker fuels demand – customer or supplier?

Race is now on for producers and consumers to work in tandem to develop future bunker markets and those that move fastest to guarantee supply and demand for the new fuels will reap the largest rewards.

Published

1 year ago

September 6, 2023

Admin

Global bunker trading firm Glander International Bunkering, which recently received ISCC EU and ISCC Plus certificates for its biofuel operations in Norway and Geneva offices, discusses the key question hanging over the maritime industry on what drivers are needed for a viable market in the various alternative bunker fuels to emerge at ports around the world:

The pace of change in the bunker industry is accelerating rapidly.

Where in the past, residual fuel oil remained the dominant bunker grade for decades, with only relatively minor adjustments to its viscosity and sulfur content, a wide range of new fuels is now emerging.

With the IMO now having announced that shipping’s GHG emissions will be reduced to net zero by about 2050, little doubt remains over whether these new fuels will come to overtake fossil bunkers in time.

Shipowners that find their solution to the decarbonisation puzzle, and implement their strategy early, will reap the rewards in the years to come.

But the key question hanging over the industry is, what drivers are needed for a viable market in the various alternative fuels to emerge at ports around the world?

Biofuels

The emergence of a biofuel bunker market will be – and to some extent has already been – an easier prospect than for other alternatives.

As a drop-in replacement for conventional bunker fuels, biofuel blends have significant advantages.

Because they can run in today’s engines with only minor adjustments, they need little in the way of investment by either the supplier or customer; new ships and new delivery infrastructure are not needed.

When taking into account the full lifecycle of these fuels, they can deliver major GHG emission savings compared to fossil fuels, while remaining largely familiar in their chemical properties and quality considerations.

Shipowners have already been carrying out trials of biofuel blends at locations around the world to test their performance in marine engines, and little in the way of objections have emerged so far.

With demand already largely in place, the key challenge for this market is the development of supply.

Therefore, biofuel suppliers will play a pivotal role in ensuring that biofuel blends become a widely adopted alternative fuel.

Suppliers for the maritime industry must understand the variety and suitability of feedstocks, their

availability and compliance with IMO, EU and other regulations, and to develop competitive supply chains and the last-mile delivery of these low-carbon fuels to the relevant ports.

LNG

The history of LNG’s use as a marine fuel provides a clear picture of how suppliers and their customers working together can develop an alternative fuel’s supply chain and bring its market to maturity.

Gas-powered ships have been in operation for several decades now, but it has only been over the past ten years or so that LNG has emerged as a prominent alternative bunker fuel.

Ten years ago, presentations at marine fuel conferences on the advent of LNG bunkering invariably brought up the ‘chicken and egg problem’: the question of which should come first, demand for this alternative fuel or supply.

The issue at question was whether shipowners would consider purchasing gas-fuelled vessels before suppliers set in place LNG bunker delivery infrastructure, and vice-versa.

In the end, the chicken and egg made a simultaneous appearance. The biggest single event driving the emergence of the LNG bunker market was the announcement from French container line CMA CGM and energy producer Total that they would work together to develop both supply and demand.

In early 2017, the two French firms started to sign multi-year deals for LNG bunker supply, at the same time as CMA CGM was starting to make large gas-powered ship orders. The size of the arrangement was large enough to make it worth Total building a delivery vessel even if it would only end up serving CMA CGM’S boxships.

For this market, the next stage will be to develop similar deals for bio- and synthetic LNG. The ships running on and delivering fossil LNG today will be able to use these fuels already, but new production facilities will be needed.

Methanol and Ammonia

If supply chains are established effectively, green methanol and ammonia have great potential. These fuels require production facilities, tankers to transport them, delivery infrastructure and new ships capable of burning them.

An approach similar to that taken with LNG will be needed: producers and consumers need to make deals guaranteeing both supply and demand at around the same time.

Methanol is further along this path than ammonia. As it remains liquid at ambient temperature and pressure, existing storage facilities and delivery vessels require much lower retrofit costs and time to be prepared to carry methanol.

Building a dual-fuelled vessel capable of burning both methanol and conventional bunkers, rather than LNG or ammonia, should also be cheaper.

The approach of buyers collaborating with sellers to develop the market is already bearing fruit for methanol as a marine fuel, with container shipping company AP Moller-Maersk signing supply deals with a wide range of producers at the same time as ordering ships capable of methanol propulsion. Since these deals were announced, several more shipping companies have felt the confidence to order methanol-fuelled tonnage, and data from classification society DNV show methanol-fuelled ship orders have outnumbered those of gas-powered tonnage for several months over the past year.

The ammonia bunker market is at an earlier stage, with much more research and development work into how to handle ammonia’s toxicity needed first. Here, an intervention from local regulators and port authorities may be needed before the market can take off: a declaration from an authority the size of Singapore’s MPA that ammonia bunkering can be safely carried out in the city-state’s waters would do much to kick-start this market’s development.

But ammonia remains widely assumed to become one of the largest marine energy carriers towards the middle of this century, despite its toxicity and the higher infrastructure costs associated with its chemical properties; the lack of carbon in its molecule remains highly attractive, a property not shared by any of the other alternative fuel options.

Conclusion

Ultimately, it’s not going to be the chicken or the egg that comes first with the more expensive alternative bunker fuel markets: the regulations precede everything.

With the IMO’s 2050 net zero target and the EU’s emissions trading system and FuelEU Maritime regulation now adopted, the shipping industry has been given clear instructions to extricate itself from fossil fuel consumption.

The race is now on for producers and consumers to work in tandem to develop the bunker markets of the future. Those that move fastest to guarantee supply and demand for the new fuels will reap the largest rewards.

Photo credit: Glander International Bunkering
Published: 6 September, 2023

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Legal

Shell MGO bunker heist: Bunker clerk gets jail time for helping Sentek acquire misappropriated fuel

Wong Wai Meng was sentenced to seven years, four months and two weeks’ jail on 10 January for helping the company acquire more than 28,000 mt of the misappropriated fuel worth USD 13.58 million.

Published

13 hours ago

January 13, 2025

Admin

A bunker clerk, who was previously employed by Sentek Marine & Trading (Sentek), was sentenced to seven years, four months and two weeks’ jail for helping the company acquire more than 28,000 metric tonnes (mt) of the misappropriated fuel worth USD 13.58 million (SGD 18.26 million), The Straits Times reported on Friday (10 January).

Wong Wai Meng, was working for Singapore-based firm Sentek at the time of the offences.

Wong, who received more than USD 286,000 from the company for his assistance, pleaded guilty in November 2024 to 12 counts of intentionally helping the company acquire the misappropriated fuel.

He committed the offences over 46 occasions between August 2014 and December 2017.

Wong is among the three bunker clerks previously employed by Sentek, who were charged for offences under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) and the Prevention of Corruption Act (PCA).

Another bunker clerk among the three charged, Wong Kuin Wah, 61, was sentenced to seven years and six months’ jail on 18 November for his role in misappropriating more than 27,000 tonnes of gas oil worth around USD 12.8 million (SGD 17.2 million).

The third individual who was charged, Boo Pu Wen, reportedly passed away in July 2023 and had his charges abated following his death, meaning Boo’s court proceedings over his 19 charges at the time came to an end.

Former Shell employees, who were key members of a group who dishonestly misappropriated fuel from Shell Pulau Bukom, were sentenced to jail in court earlier.

Earlier coverage of developments by Manifold Times regarding the Shell MGO bunker heist can be found below:

Photo credit: Katrin Bolovtsova
Published: 13 January, 2025

Winding up

Singapore: Liquidator issue notice of intended dividend for Parakou Shipping

Creditors will need to produce proofs of debt to liquidator of Parakou Shipping by 24 January, according to Government Gazette notice.

Published

13 hours ago

January 13, 2025

Admin

A notice to declare intended dividend of Parakou Shipping Pte Ltd to its creditors has been posted on the Government Gazette on Friday (10 January).

The following are the details of the notice of intended dividend for the first dividend:

Name of Company : Parakou Shipping Pte Ltd (In Creditors’ Voluntary Liquidation)

Address of Registered Office : c/o KordaMentha, 16 Collyer Quay, #30-01, Singapore 049318

Last Day of Receiving Proofs : 24 January 2025 (if not already lodged)

Name of Liquidator : Cameron Duncan

Address : c/o KordaMentha, 16 Collyer Quay, #30-01, Singapore 049318

Photo credit: steve pb from Pixabay
Published: 13 January, 2025

Alternative Fuels

DNV: LNG dominates alternative-fuel vessel orderbook for 2024

According to DNV, LNG was the industry’s alternative fuel of choice by year-end; 264 LNG vessel orders were placed in 2024, over double that of 2023 which was 130 orders.

Published

13 hours ago

January 13, 2025

Admin

The maritime industry’s exceptional newbuilding year 2024 drove a significant rise in orders for alternative-fuelled vessels, according to the latest data from DNV’s Alternative Fuels Insights (AFI) platform.

A total of 515 such ships were ordered, representing a 38% year-on-year increase compared to 2023, underscoring the industry's growing commitment to decarbonization.

The growth in alternative-fuelled vessel orders has been heavily driven by the container and car carrier newbuild boom over the last three years. In 2024, 69% of all container ship orders were for ships capable of being powered by alternative fuels, driven by cargo owners responding to consumer demands for more sustainable practices and liner companies preparing to replace older tonnage. The preferred fuel choice for this segment was LNG (67%). In total the container and car carrier segments made up 62% of all alternative fuel orders in 2024.

Knut Ørbeck-Nilssen, CEO Maritime at DNV, said: “As we work towards decarbonizing the industry, we are encouraged by the growth in alternative fuel vessels over the past few years. While recent figures are promising, we must keep pushing forward.”

“The technological transition is underway, but supply of alternative fuel is still low. As an industry we need to work with fuel suppliers and other stakeholders to ensure that shipping has access to its share of alternative fuels in the future. It is also important that the safety of seafarers is ensured as we make this transition. This will require investment in upskilling and training.”

LNG was not the only fuel on shipowners’ minds as 2024 saw them betting on multiple alternative fuels. 166 methanol orders were added (32% of the AFI orderbook), reflecting shipping’s growing interest in a diverse fuel pool as it strives to reduce greenhouse gas emissions. Most of these methanol orders (85) were in the container segment.

While methanol drove newbuilding orders for alternative-fuelled vessels at the beginning of the year, LNG was the industry’s alternative fuel of choice by year-end. The number of LNG vessel orders placed in 2024 was 264, over double that of 2023 (130).

Ammonia saw promising momentum in the earliest months of the year and continued to grow throughout 2024. A total of 27 orders were placed for ammonia-fueled vessels. The first non-gas carrier ammonia-fuelled vessels orders were placed in 2024 (10), mainly in the bulk carrier segment (5). While still in its early stages, this provides further evidence of ammonia's emergence in the alternative fuel market.

Deliveries and bunkering

The number of LNG-fuelled ships in operation doubled between 2021 and 2024, with a record number of deliveries (169) in 2024. By the end of 2024, 641 LNG-powered ships were in operation. According to the AFI orderbook, this number is expected to double by the end of the decade.

While the bunkering infrastructure for some alternative fuels remains underdeveloped, LNG bunkering is maturing. The number of LNG bunker vessels in operation grew from 52 to 64 over the last year, with continued growth expected in 2025. The significant gap between LNG bunkering supply and demand is expected to widen over the next five years based on the AFI orderbook.

Addressing this challenge by developing the appropriate infrastructure for alternative fuels – both for vessels and bunkering - can create demand signals to stimulate long-term fuel production. With the EU regulatory package, Fit for 55, setting requirements on a large network of ports to have LNG bunkering infrastructure, it is expected that the availability of LNG in ports will increase.

Jason Stefanatos, Global Decarbonization Director at DNV, said: “Market conditions, infrastructure development, fuel production updates, and cargo owners' needs are all shaping the demand for different fuels, both in the short and long term.”

“The shifting trends in LNG and methanol orders this year might be due to the slow development of green methanol production. In the long run, green methanol has potential to be part of the energy mix along with ammonia.”

“In parallel, LNG offers a vital bridging fuel option benefiting from existing infrastructure and short-term emissions reductions while being capable of acting as a long-term solution as well, assuming RNG (Renewable Natural Gas) will be available and provided at a competitive price.”

Photo credit: DNV
Published: 13 January, 2024