LR: LNG's Global Viability Hinges on Price

Press Release
Friday, August 31, 2012

Global acceptance of LNG as a marine fuel will depend on pricing, according to a comprehensive study conducted by Lloyd’s Register; Study on LNG bunkering infrastructure also suggests some owners would be wise to consider fuel flexibility.
 
After 12 months of research and analysis, Lloyd’s Register has concluded its 2011-12 study on LNG bunkering and newbuilding demand for deep-sea shipping.
 
Outside of the niche markets, the study finds that the establishment of LNG bunkering infrastructure capable of supporting most of the world’s consumers will be highly sensitive to the price of LNG relative to alternative fuels. The full report will be made available in October in time for Gastech in London.
 
”The obstacles to the adoption of LNG as a marine fuel are practical factors, but they are not technical. They are commercial,” said Hector Sewell, the Head of Marine Business Development for Lloyd’s Register. ”Establishing safe, reliable global LNG bunkering capability is feasible. But it will require considerable investment and risk management, and it will have to cover significant operational costs to challenge existing fuel-oil delivery systems.”
 
Latifat Ajala, Lloyd’s Register’s Senior Market Analyst, built a dynamic demand model for the study that was rigorously tested and validated with key stakeholders, including shipowners, ports and engine manufacturers.
 
”We use a model based on LNG supply, trade routes, ship-type fuel consumption, port locations and bunkering demand, as well as shipowner and port surveys. We then applied three demand and price-driven scenarios,” said Ajala. ”What we found was that the likelihood of global LNG bunkering facilities being established will depend on high demand for LNG-fuel on deep-sea trades, which will be driven by the price of LNG relative to current and future alternatives.”
 
The study’s base-case scenario predicted that by 2025 there could be 653 deep-sea, LNG-fuelled ships in service, consuming 24 million tonnes of LNG annually. These ships are most likely to be containerships, cruise vessels or oil tankers.
 
When the study modelled relatively cheap LNG -- for example, 25% lower than current market prices -- the projected number of LNG-fuelled ships rose to approximately 1,960 units in 2025. If the cost of LNG increased 25% against current prices, the model found that hardly any new LNG-powered tonnage would hit the water.  
 
”Excluding smaller ferries and local trades where there are local market, fiscal and regulatory drivers -- such as in parts of the Baltic and Norwegian shelf – it was the container-ship and cruise-ship markets that were the most likely to adopt LNG,” said Ajala. “This is because of their relatively high energy requirements, the demands of customers in these two sectors, their regular trading patterns and the time those ships spend in emission-control areas.”
 
”The difficulty for those looking to make decisions is that forecasting energy prices has always been a dangerous business,” she said. “For shipowners looking to make these decisions, flexibility may be the key. Choosing engines that can burn both gas and fuel oil, or that can be converted, may be one way to manage the regulatory and commercial issues involved with fuel choices.”

 

Maritime Reporter April 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Marine Propulsion

Volvo Penta Offers Extended Warranty

Volvo Penta has doubled the warranty on Genuine Volvo Penta Parts and Accessories that are purchased and installed at a Volvo Penta dealer — creating even better protection for customers.

Kongsberg Maritime to Equip Yinson Genesis FPSO

Kongsberg Maritime has been selected to supply a complete Electrical, Instrument and Telecom solution, including E- house, for the new Yinson Production (West Africa) Pte Ltd FPSO, ‘Yinson Genesis’.

ClassNK releases PrimeShip-GREEN/ProSTA

ClassNK released PrimeShip-GREEN/ProSTA, making it the world’s first classification society to develop software which analyzes and calculates a ship’s speed

Finance

Research Award to Honor Outgoing ABB Chairman Gruenberg

ABB, the leading power and automation technology group, has created an international research award to honor Hubertus von Gruenberg, who is stepping down after

BP Shipping Marks its 100th Year

BP Shipping today celebrates its 100-year anniversary, making it the longest continually operating company in the BP group. Formed on April 30, 1915 as the British Tanker Company,

Myanmar Awards Statoil, Conoco Phillips Deepsea Exploration Contract

Myanmar has awarded contracts to international oil majors Statoil and ConocoPhillips for oil and gas exploration in a deepwater offshore block, the official Kyemon Daily said on Sunday.

Environmental

Thuraya Debuts Most Advanced Satellite Phone

Thuraya Telecommunications Company today launched the industry's most advanced satellite phone, the Thuraya XT-PRO. Targeted at professional users across a range

Research Award to Honor Outgoing ABB Chairman Gruenberg

ABB, the leading power and automation technology group, has created an international research award to honor Hubertus von Gruenberg, who is stepping down after

DNV GL's Walk to Work Guidelines for Offshore Personnel

Offshore facility operators can now consider an alternative and more cost-effective means to transfer personnel to and from their facilities, which is safe, efficient and regulatory compliant.

Classification Societies

DNV GL's Walk to Work Guidelines for Offshore Personnel

Offshore facility operators can now consider an alternative and more cost-effective means to transfer personnel to and from their facilities, which is safe, efficient and regulatory compliant.

ABS Reports ‘Stellar Growth’ in 2014

Classification society American Bureau of Shipping (ABS) hosted its Annual Meeting in New York on April 28, 2015.   “2014 was a year of firsts and excellence in performance for ABS,

ClassNK releases PrimeShip-GREEN/ProSTA

ClassNK released PrimeShip-GREEN/ProSTA, making it the world’s first classification society to develop software which analyzes and calculates a ship’s speed

 
 
Maritime Contracts Maritime Security Navigation Offshore Oil Pipelines Pod Propulsion Ship Electronics Ship Repair Ship Simulators Shipbuilding / Vessel Construction
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: 0.3288 sec (3 req/sec)