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ITF/OCED assess Japan’s goal to be LNG bunkering hub

30 Apr 2018

The International Transport Forum, an organisation within the Organisation for Economic Co-operation and Development (OECD), in late April published a policy analysis report to assess Japan’s ambition to become an international bunkering hub for liquefied natural gas (LNG).

The report Fuelling Maritime Shipping with Liquefied Natural Gas: The Case of Japan is based on desk research and focuses specifically on bunkering facilities in the Tokyo Bay area, notably the Port of Yokohama.

In summary, it noted the success of Japan’s depending on four conditions:

Uptake of LNG as ship fuel
There are currently 118 LNG fuelled vessels in the world and the number is expected to grow and almost double by 2020. A trend of LNG-fuelled vessels will increase the prospects for bunkering of LNG-fuelled ships on main East-West trade lanes. Competitive LNG prices can further incentivise alternative fuel investment strategies by firms.

Availability of LNG bunkering facilities worldwide
Ship-owners and operators will need a network of ports where they can take on board LNG. These facilities are becoming increasingly available in Europe, and to a lesser extent in North America and Asia.

Recent and future emissions regulations
Stricter requirements in Emission Control Areas as of 2015 have boosted LNG-fuelled coastal shipping in Northern Europe and North America. The global 0.5% sulphur cap from 2020 will likely drive the use of LNG fuelled ships in other parts of the world as well.

Strategic location close to trade routes
The Port of Keihin (Yokohama, Tokyo and Kawasaki), which has developed the technical and infrastructure requirements for LNG bunkering, is located at one end of the North Pacific trade route as a first port for loading and unloading. This gives it a locational advantage to become a major LNG bunkering hub.

According to the report, Japan has the potential to become a major LNG bunkering hub. However, some uncertainties exist.

“Emission regulations have so far focused on reducing SOx and NOx emissions from ships, but will soon target maritime greenhouse gas emissions as well,” it says.

“In that context, LNG has advantages over conventional fuels but is not the ideal solution to reduce CO2 emissions from ships.”

It explains that LNG can reduce carbon dioxide emissions by 20%, but the use of the material also presents a risk of methane slip, which is the releases of methane from unburnt gas in the engine exhaust.

Further, handling of LNG at each stage of the supply chain leads to fugitive emissions. Global standards on the safe handling of LNG on the shore side will also be required.

“The analysis confirms the strategic importance for Japan to invest in LNG bunkering facilities in anticipation of the 0.5% global sulphur cap,” it concludes.

“The sulphur regulations in the Emission Control Areas in Northern Europe have generated orders and deliveries for LNG-fuelled ships operating in coastal trades.

“With the sulphur cap imminent, this might also happen in Japan. Given its current level of infrastructure, experience and geographical position, Japan will most likely secure a competitive advantage vis-à-vis other Asian ports that are developing similar bunkering facilities for LNG.

“With these in place, the ports in the Tokyo Bay area in particular will strengthen their current position as key regional and international ports and enable the emerging East-West traffic by LNG-fuelled ships traffic to trade in Japan.”

A full copy of the report is available in the link below:
https://www.itf-oecd.org/sites/default/files/docs/maritime-bunkering-lng-japan.pdf

Photo credit: ITF/OCED
Published: 30 April, 2018

 

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