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Port of Barcelona set sights on becoming LNG bunkering hub in Mediterranean

Barcelona is consolidating itself as an LNG bunkering hub in the Mediterranean; Port of Barcelona also hopes to become a bunkering hub for new zero-carbon bunker fuels.

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PierNext, a digital knowledge hub spearheaded by Port of Barcelona, on Thursday (23 February) published an article on LNG as a transition fuel and Barcelona consolidating itself as an LNG bunkering hub in the Mediterranean. The following is an excerpt from its article titled ‘LNG: a fuel for energy transition’:

LNG, KEY TO THE DECARBONISATION PLAN

"When the policy of introducing LNG at the Port of Barcelona began in 2014, there were practically no ships powered by this fuel. Nor were there any specific supply logistics and the numerous reluctances to use it made its implementation practically impossible," explains Jordi Vila, head of the Environment at the Barcelona Port Authority.

Today, however, the situation is completely different. "Since 2017, LNG bunkering operations have been carried out from tanker trucks, in the truck-to-ship mode, and since 2019, in the ship-to-ship mode, always safely and without any accidents," says Vila.

Vila also adds that the introduction of LNG in the port of Barcelona has helped to break the pre-established patterns and inertia acquired over decades of using traditional fuels. Thanks to the implementation of pilot projects, such as Cleanport or Core LNGas hive, the necessary risk analyses have been carried out for the safe supply of the fuel. Furthermore, the development of the logistical supply chain has been facilitated.

"The port community, shipowners and the Port Authority itself were able to experience that the fuel was technically viable and safe, facilitating its subsequent penetration as a fuel for LNG-powered ships and opening up the future introduction of other fuels of equal or greater complexity from the safety point of view, such as hydrogen or ammonia," explains the head of the Environment.

LNG IN NUMBERS

In 2021, LNG bunkering operations at the Port of Barcelona accounted for almost 11% of total bunkering operations. In 2022, however, the figures reduced. "It has been complicated by the global rise in LNG prices, aggravated by the war in Ukraine. This has meant that LNG carriers, having dual engines, reduced their LNG usage," explains Daniel Ruiz, Environment technician at the Port of Barcelona.

In total, 26,400 cubic metres of LNG were supplied in 32 operations, compared to 65,000 cubic metres and 236 operations in 2021 (a year in which the effects of the crisis caused by the COVID-19 pandemic were still there). "It is estimated that, when prices normalise and regulatory measures penalising the use of diesel start to be applied, LNG use will return to levels higher than those of 2021," concludes Vila.

In addition, LNG use is expected to increase as more ships are built using LNG. In turn, more vessels will use it when the logistics chain is implemented in other shipping routes. "Currently the average life of a ship is around 25 to 30 years, so in order to order a ship with a new fuel, the shipowner must be sure that the fuel will be available on all its routes, throughout this time and at a reasonable price," says Vila.

"Although LNG is a fossil fuel, it is the only technologically mature fuel that can reduce air pollution and CO2 emissions which has a logistics chain in place in many ports. This allows shipowners to be sure about its supply," he explains.

A BUNKERING HUB IN THE MEDITERRANEAN、

Since the beginning of 2023, the Haugesund Knutsen has been permanently based at the Port of Barcelona. This is the first LNG bunkering vessel to be built in Spain and the first to be permanently based in a Spanish port.

Until now, vessels supplying LNG to other ships in the Port of Barcelona were not based there, but had to make long journeys - sometimes from Gibraltar, the Canary Islands or the Netherlands - to reach their destination. The Haugesund Knutsen, however, will be based in the Mediterranean port, which will facilitate and reduce the costs of these operations.

The vessel itself has been designed for agile and flexible deliveries. "It has bunker stations on both sides, as well as amidships and at the stern of the vessel, which allows it to supply port and starboard to different types of receiving vessels and to operate in a wide range of terminals for loading LNG," explains Daniel Ruiz.

"It has two bi-lobe C-type tanks with a total capacity of 5,000 cubic metres of LNG and has been designed with a low overhead draft, which allows it to dock with cruise ships below the lifeboat line. This avoids the use of a breakaway pontoon between the supply vessel and the receiver, saving costs and operating time," he adds.

The vessel, owned by Knutsen and Enagás subsidiary Scale Gas, was built as part of the LNGHive 2 Barcelona project. According to the Port of Barcelona's environmental managers, participation in this project has led to improvements in the drafting of a new set of specific specifications for the supply of LNG as a port service, which will be published in a few months and which has enabled the existing supply regulations to be improved.

"This and other advances will help to consolidate the port of Barcelona as an LNG bunkering hub in the Mediterranean. Furthermore, our wish is that in the future it will also be consolidated as a bunkering hub for the new zero-carbon fuels," says Ruiz.

Note: The full article ‘LNG: a fuel for energy transition’ can be found here.

 

Photo credit: Port of Barcelona
Published: 28 February, 2023

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LNG Bunkering

Titan completes first STS LNG bunkering operation in Cuxhaven

Port of Cuxhaven in Germany had previously only seen LNG operations conducted via truck and currently only permits LNG bunkering at one berth, says Titan.

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Titan completes first STS LNG bunkering operation in Cuxhaven

LNG bunker fuel supplier Titan on Thursday (11 July) said it completed the first-ever LNG bunkering operation by ship in the port of Cuxhaven.

Titan’s bunker vessel Optimus successfully delivered LNG to dredger Vox Ariane operated by its long-term client Van Oord. 

“Our ship-to-ship bunkering in Cuxhaven represents a pioneering step in the region's LNG infrastructure development, as the port had previously only seen LNG operations conducted via truck and currently only permits LNG bunkering at one berth,” it said in a social media post. 

“LNG infrastructure development is part of a broader trend, with more ports across Germany adopting LNG operations to support shipping’s clean fuels transition.”

Titan added the improved LNG bunkering capabilities in Cuxhaven, a Niedersachsen Ports GmbH & Co. KG port, also opened up the pathway to maritime decarbonisation via liquified biomethane (LBM) and then renewable e-methane going forward.

 

Photo credit: Titan
Published: 12 July, 2024

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LNG Bunkering

UECC “Auto Achieve” receives first LNG bunker fuel delivery by barge in home country

Firm said it received the first ever supply of LNG by barge to their multi-fuel LNG battery hybrid car carrier in the Port of Drammen, Norway.

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UECC “Auto Achieve” receives first LNG bunker fuel delivery by barge in home country

Norwegian roll-on/roll-off shipping line United European Car Carriers (UECC) on Wednesday (10 July) said it received the first ever supply of LNG by barge to their multi-fuel LNG battery hybrid car carrier Auto Achieve in the Port of Drammen on 4 July.

The firm said this was the first time UECC received LNG by barge to any of their vessels in their home country Norway. 

“We also believe that it was the first time LNG was delivered by barge to any vessel in Drammen, and most likely the entire Oslofjord,” UECC said in a social media post.

The LNG was supplied by the Molgas Energy Holding vessel Pioneer Knutsen, owned by Knutsen Group OAS.

“UECC is very pleased to see the expansion of the LNG barge network in Norway,” it said. 

 

Photo credit: UECC
Published: 12 July, 2024

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FuelEU

OceanScore reveals ship segments set to feel EUR 1.3 billion sting of FuelEU penalties

Container segment will bear the brunt of FuelEU costs, accounting for 29% of gross penalties, followed by RoPax on 14% with tankers and bulkers each on 13%, says firm.

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OceanScore Managing Director Albrecht Grell

Hamburg-based technology platform OceanScore on Tuesday (9 July) said the financial impact of FuelEU Maritime is focusing the minds of shipping companies as they face potential penalties for non-compliance with greenhouse gas (GHG) intensity reduction targets - and OceanScore has identified those segments set to be hit hardest.

The following is an article by OceanScore elaborating on the matter:

Vessels in the passenger/cruise, container, RoPax, bulker and tanker segments will have significant cost exposure from the complex regulation due to be implemented from 1 January next year, despite a relatively modest initial target of a 2% cut in GHG intensity, according to OceanScore.

The firm’s data analytics team has calculated that shipping will rack up total FuelEU penalties of €1.345 billion in 2025 through analysis of the 13,000 vessels over 5000gt trading within and into the EU/EEA that are subject to the regulation. This is based on data on trading patterns and fuel mix from 2022 - the last full year currently available.

Containers bear burden

The team has been able to determine FuelEU compliance balances and resulting penalties for each vessel using OceanScore’s proprietary data modelling incorporating AIS data, Thetis emissions data, bunker intelligence and advanced analytics/AI. It has factored in the likely fuel mix for each vessel between EU ports and to/from the EU, as well as in ports.

Vessels will be hit with a penalty of €2400 per tonne of VLSFO-equivalent for failing to meet the initial 2% reduction target relative to a 2020 baseline for average well-to-wake GHG intensity from fleet energy consumption of 91.16 gCO2e per megajoule (MJ) - or emissions per energy unit. The GHG intensity requirement applies to 100% of energy used on voyages and port calls within the EU/EEA and 50% of voyages into and out of the bloc.

As with the EU Emissions Trading System (EU ETS), it is the container segment that will bear the brunt of FuelEU costs, accounting for 29% of gross penalties, followed by RoPax on 14% with tankers and bulkers each on 13%.

“It is critical for shipping companies to determine a baseline for expected FuelEU costs to secure proper planning and budgeting processes to compare different mitigation options, as well as to decide what to do with outstanding compliance balances,” says OceanScore Managing Director Albrecht Grell.

“This will require, to a higher degree than the EU ETS, a corporate strategy to determine how to reduce the compliance balance/deficit, how to commercialise a surplus and deal with deficits that remain.”

Wide spread of vessel liabilities

OceanScore has found that liabilities per vessel will differ widely across the various segments due to increasingly diversified fuel choices, including greater uptake of biofuels and LNG. Passenger vessels will be penalised the most with an average of €520,000 per vessel annually, followed by RoPax at €480,000 and RoRo at €314,000, with an average penalty for container ships of only €214,000, according to OceanScore.

Grell points out there are also massive discrepancies between vessels within these segments, with a number of ships in the passenger and RoPax segments exposed to penalties of between €1.8m and €2.5m, and payment obligations for some container ships approaching €1m. This is driven by higher energy consumption simply due to vessel size and trading profile.

While penalties will arise from so-called compliance deficits for vessels using conventional fuels, surpluses totalling an estimated €669m will be generated mainly by vessels fuelled by LNG and LPG with significantly lower carbon intensity.

LNG carriers will account for 78% of the total market surplus and gas carriers 8%, while a further 8% will be generated by container ships that have seen a modest uptake in alternative fuels in recent years.

Pooling can halve costs for the industry

Taking into account this estimated compliance surplus, the net cost of FuelEU penalties for shipping from 2025 would be €680m, which indicates that pooling of vessels can roughly halve the gross burden for the industry.

Penalties will, in segments typically using conventional fuels with comparable carbon intensities such as HFO, LFO or MDO, be roughly proportional to the overall fuel consumption, thus correlating with the EU ETS cost.

Initial costs of FuelEU for most conventionally fuelled vessels, prior to pooling, will be around one-third of those associated with the EU ETS next year when the latter regulation will have 70% phase-in. But ultimately FuelEU is likely to prove a much more costly affair as the requirement for GHG intensity cuts rises to 6% by 2030 and then accelerates to reach 80% by 2050.

“It is therefore incumbent on shipowners to define their strategies not only towards fuel choices and the use of onshore power but also towards handling of residual compliance balances such as pooling, banking and borrowing of balances, to mitigate the financial impact of FuelEU. However, pooling will also come at a cost, while banking and borrowing will incur interest costs and only push liabilities into the future,” Grell explains.

‘Sound administrative processes’

He further points out that pooling compensations paid between different shipping companies will effectively divert cash flow away from the EU that it would otherwise have earned from FuelEU penalties – but that this effect is intended by the regulator to “reward” early adopters of clean fuels.

Another factor that will curb potential income for the EU from this regulation is that the compliance gap has been reduced to only 1.6% by 2022, as average GHG intensity from shipping has come down by 0.4% to 90.82 gCO2e per MJ, mainly due to increased LNG carrier calls to Europe after gas supplies via pipelines from Russia were halted when the latter invaded Ukraine. Given this trend and increasing adoption of biofuels, the 2% compliance gap will probably be closed before the first tightening of reduction targets in 2030.

Grell says the priority for shipping companies, especially at this early stage while cost exposure is relatively low, is to get to grips with the complexity of the regulation and tackle the risks arising from the fact the party liable for penalties - the DoC holder, or possibly shipowner - is not the one responsible for emissions, which is typically the charterer.

“As well as having costs oversight, companies require reliable monitoring and reporting mechanisms with high-quality emissions data. They must also have in place complex contractual arrangements and sound administrative processes to manage compliance and mitigate the financial consequences of the new regulation,” Grell concludes.

Related: FuelEU: New regulation leaves DoC holder with fuel liabilities risk, says OceanScore
Related: ‘Big opportunity’ for bunker traders, suppliers on upcoming FuelEU regulation, forecasts OceanScore

 

Photo credit: OceanScore
Published: 12 July, 2024

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