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            december 05, 2019

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LNG bunkering could ease demand for low sulphur marine fuel


The use of liquefied natural gas (LNG) as a bunker fuel could take the lid off demand for low sulphur fuel oil (LSFO) to meet the International Maritime Organization's global rule that will cap sulphur content in marine fuels at 0.5 per cent from January 2020, reports Shipping Gazette. However, LNG is perceived as a long-term solution rather than an immediate one.
Shipowners will have to either switch to LSFO, continue to use high sulphur fuel oil (HSFO) with scrubbers as another means of compliance, or adopt alternative fuels such as LNG to comply with the IMO 2020 rule.
As a marine fuel, LNG is chiefly suitable for vessels with fixed trading routes as LNG bunkering infrastructure needs to be further developed at the ports, INTERTANKO's environmental manager Elfian Harun told attendees of S&P Global Platts' 3rd Annual Bunker and Shipping Asia Conference in Singapore.
LNG might make more sense for container shipping lines, but it may not be that viable for bulkers and tankers except for LNG product tankers, Mr Harun was cited as saying in a report by London's S&P Global.
To enable LNG to be used as fuel for existing ships requires significant retrofitting, meaning this option does not appear to be a very attractive, except for newbuilds, he said.
While there is momentum around LNG bunkering, its contribution in the global bunker fuel mix is only anticipated to be a maximum of 10 per cent by 2030, 2020 Marine Energy senior partner Adrian Tolson said.
"Ultimately, everybody will want to buy the cheapest form of the product for compliance, which will be blended VLSFO [very low sulfur fuel oil]," he added.
Still, some participants at the event said that once the tipping point is crossed, LNG would be a widely adopted solution.
LNG is amply available, another positive factor for its increased acceptance, industry sources said, adding that it also addressed other environmental emissions targets, such as the IMO's target to cut the shipping sector's greenhouse gas (GHG) emissions by 50 per cent by 2050, compared with 2008's level.
Compared with existing heavy marine fuel oils, LNG emits 90 per cent less nitrogen oxide. Through the use of best practices and appropriate technologies to minimise methane leakage, GHG can be realistically cut by 10-20 per cent, with expectations for a potential reduction of up to 25 per cent, according to industry sources.
Petro Summit's deputy general manager Oliver Yasuhito Imaizumi highlighted that LNG infrastructure was improving rapidly.
LNG is available at major bunkering ports worldwide, including Asian ports in Singapore, South Korea, China, Malaysia and Japan.
The major issues for shipowners to take into account, while selecting compliant marine fuel options for 2020, is to ascertain which fuel is more efficient and more economical, Mr Imaizumi said.
He took the example of a 120,000 deadweight tonnage (dwt) neo-Panamax to assess the price competitiveness of LNG bunkers to LSFO.
The annual fuel consumption for this vessel would be 20,000 million tonnes of LSFO compared with 15,381 mt with LNG, he said.
Assuming a base capital expenditure of US$65 million for this vessel with a dual fueled LNG engine, and using Platts JKM prices from June 2018 to May 2019, on average, the annual fuel cost using LNG would be $9.49 million, he said.
This compares with an annual bunker fuel bill of $11.68 million, if LSFO is used instead, he noted.

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