LNG Demand to Drive Offshore Growth in Asia

Press Release
Wednesday, March 21, 2012

Singapore – Soaring demand for liquefied natural gas (LNG) across Asia is driving major new investments into exploration and infrastructure capabilities. This will stimulate growth in the region’s rapidly expanding offshore and marine sector, as new developments will require additional offshore assets and support services from regional players. Furthermore, due to the synergies between Asia’s gas reserves and ship-design capabilities, the region could pioneer a long-term move toward more LNG utilization to reduce vessel emissions and fuel bills of the offshore support vessels supporting these projects. However, seizing these growth opportunities and moving towards gas-powered vessels of the future, will require multi-party collaboration between energy companies, vessel operators, shipyards, technology providers, marine fuel suppliers and governments to realize the mutual benefits. 

This was the consensus reached at a recent industry roundtable in Singapore, comprising experts from across Asia’s offshore marine industry, to identify the major growth drivers and opportunities of the sector in Singapore and around the region. Hosted by Seatrade, the event was a curtain-raiser to the first Seatrade Offshore Marine Asia conference and exhibition, set to take place in Singapore between April 25-27, 2012, to complement Maritime Week.

Demonstrating a strong appetite to source and convert LNG, in 2010, two of the three largest countries based on total liquefaction capacity came from within the region, in the form of Indonesia and Malaysia . Globally, Japan leads the way with the most LNG receiving terminals in the world, 28 in operation at the end of 2010.

There are several terminals currently being built within the region. Singapore is looking to position itself as a regional LNG trading hub, and recently announced plans for a LNG terminal on Jurong Island worth $1.7 billion, while State-run Indian Oil Corporation (IOC) has signed an agreement with the Dhamra Port Corporation (DPCL) to develop a LNG terminal on the east coast of India. There are other LNG terminals proposed for Indonesia, Malaysia and Thailand. Vietnam’s first LNG import terminal is also expected to be completed by 2015. This demonstrates a desire to adopt this revolutionary fuel source, and these investments in LNG capabilities and infrastructure will generate demand for more marine assets, such as FPSO’s, rigs, offshore support vessels and supporting technology, which the region, with its capability to provide high standards of support services, such as innovation into research and development, shipbuilding and design, as well as the manufacture of drilling rigs and support vessels, is well positioned to meet.

Simultaneously, the increasing numbers of offshore support vessels servicing these projects are facing a major fuel challenge. Incoming global International Maritime Organization (IMO) legislation will require vessels to cut sulphur (SOx) emissions to 0.1 percent and reduce nitrogen oxide (NOx) on new vessels by 80 percent by 2015. This poses a complex and unresolved issue for the international marine industry and will require major changes for vessel operators working on offshore projects in the likes of China and Malaysia, as these countries will be required to implement increasingly stringent emissions control areas. Combined with this, vessel operators, including those in the offshore sector, are facing continued high and volatile marine fuel prices, in excess of $700 per ton, and prices are set to rise further, as requirements to use cleaner marine fuels are introduced within the Asia Pacific.

“Replacing conventional shipping fuel with LNG could hold the key to a cost-effective and environmentally-efficient industry, and Asian operators are looking to lead the way,” said Captain Michael Meade, CEO, M3 Marine Group Pte Ltd. “LNG offers significant benefits over traditional fossil fuels. It is cost-efficient to transport over long distances by sea and is a clean-burning fuel, so it contributes to reducing emissions. The marine industry has been engrained at the heart of the region’s economy for decades; and, by increasing its ability to produce and to utilize LNG in vessels being built, South East Asia could lead the way in terms of innovation in this sector.”

Research and fuel spot price dynamics show that LNG could present a more financially and environmentally favorable solution, compared to using scarce distillate fuels or emissions-cleaning technologies, providing the supply and infrastructure can be established. This is already being seen in Norway, where many offshore support vessels are effectively using LNG as a fuel source.  However, with fuel volumes likely to soar in the South and East of Asia, energy providers in the region are well-placed to address this by expanding their product portfolio and ability to supply and potentially produce LNG-based marine fuel. Collectively, this creates a symbiotic relationship of mutual demand between LNG suppliers and the vessels contracted to support exploration.

Increasing LNG capabilities and usage on board offshore vessels requires overcoming a myriad of challenges, which requires cross-party collaboration across the energy and marine sectors.

“For South East Asia to really innovate in the use of LNG as a fuel, there needs to be a collaborative effort,” said Denys Hickey, Head of Energy and Offshore Group, Asia Pacific Region, Ince & Co. “Ship owners, yards and engine builders need to invest in the technology required, and bunkering facilities need to be constructed to allow LNG to become viable as a fuel source.”

South East Asia faces certain challenges in terms of its capacity to produce and store LNG. Existing LNG terminal and storage facilities are still small in size and number, and distribution networks are limited. Also, the majority of vessels are not designed to store or use LNG, which could mean major capital expenditure to convert. The cost to retrofit existing vessels to use LNG is high, which means that storage is likely to only be incorporated into new builds. However, the group flagged that a more viable alternative option would be to introduce LNG-diesel hybrid vessels, which could enable greater flexibility to use alternative fuel sources in ports around the region which currently do supply LNG. Similarly, the sentiment of the discussion highlighted a greater need for government tax incentives and investment to stimulate the growth of LNG production and use in vessels in the region.

“When talking about fuelling ships, South East Asia is rich in gas and has the technical knowledge to build vessels designed to utilize LNG,” said Chris Grieveson, Partner, Wikborg Rein. “If, as an industry, we work together, there is a real opportunity for the region to convert to 100 percent LNG within the next five years.”

 

 


Shipbuilding

Matson Orders Two ConRo Ships from NASSCO

Matson Navigation Company, Inc., a subsidiary of container shipper Matson, Inc., has signed a contract with U.S. shipbuilder General Dynamics NASSCO to build two

MN100: Conrad Shipyard

The Company: Conrad Shipyard was established in 1948 and is headquartered in Morgan City, Louisiana. The company designs, builds and overhauls tugboats, ferries,

Heavy Lifting: Giant Pipe Racks Shipped for New FPSO

From Brazil to China and then back to Brazil, five pipe racks and three modules weighing a total of 1,871.51 metric tons and measuring 24,075 m³ will be transported

Tanker Trends

Hellenic Petroleum Profits Rise on Higher Exports

Hellenic Petroleum, Greece's biggest oil refiner, posted a 20 percent rise in second-quarter core profit on Thursday, with higher exports offseting lower refining margins.

Alfa Laval Launches DuroShell LPG/E Cargo Condenser

With the new Alfa Laval DuroShell plate-and-shell heat exchanger, Alfa Laval aims to strengthen its offering in LPG/E cargo reliquefaction with a construction that

Navy Discovers Malaysian Tanker

Indonesia's navy has found a tanker carrying almost US$400,000 worth of diesel that was taken by its own crew last week due to a commercial dispute, says a report in AFP.

Energy

Hellenic Petroleum Profits Rise on Higher Exports

Hellenic Petroleum, Greece's biggest oil refiner, posted a 20 percent rise in second-quarter core profit on Thursday, with higher exports offseting lower refining margins.

J.F. Lehman Acquires Oldenburg's Heavy Equipment Group

J.F. Lehman & Company (JFLCO) informs it has signed a definitive agreement with Oldenburg Group Incorporated to acquire its Heavy Equipment Group, including both its defense and mining business units.

Wärtsilä Re-gasification system for Norwegian Ship Conversion

Wärtsilä has been contracted to supply the re-gasification system for an FSRU (Floating, Storage, Re-gasification Unit) conversion project that Höegh LNG plans to carry out on a modern LNG vessel.

LNG

SMM 2016: World Premieres from around the Globe

Some 50,000 trade visitors from the whole of the world are expected in Hamburg for the start of SMM in less than two weeks. And once again, it is fully booked – with a total of more than 2,

Wärtsilä Re-gasification system for Norwegian Ship Conversion

Wärtsilä has been contracted to supply the re-gasification system for an FSRU (Floating, Storage, Re-gasification Unit) conversion project that Höegh LNG plans to carry out on a modern LNG vessel.

Höegh LNG Speeds up FSRU Conversion

Höegh LNG Holdings Ltd. today announced that it has signed agreements with Wärtsila Oil and Gas (EPCIC regas) and Moss Maritime (engineering) for its first FSRU conversion project,

News

NOAA Engineers a Better Current Sensor for Mariners

Navigating into seaports is now safer and more efficient for mariners thanks to improved NOAA technology that ships rely on to give them information about currents.

Matson Orders Two ConRo Ships from NASSCO

Matson Navigation Company, Inc., a subsidiary of container shipper Matson, Inc., has signed a contract with U.S. shipbuilder General Dynamics NASSCO to build two

Iran Vessels Make 'High Speed Intercept' of US Ship

Four of Iran's Islamic Revolutionary Guard Corps (IRGC) vessels "harassed" a U.S. warship on Tuesday near the Strait of Hormuz, a U.S. defense official said, amid

 
 
Maritime Security Maritime Standards Naval Architecture Navigation Offshore Oil Port Authority Salvage Ship Simulators Shipbuilding / Vessel Construction Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1326 sec (8 req/sec)