Total to supply LNG for CMA CGM's Future Boxships

 

Total will supply liquefied natural gas (LNG) to CMA CGM to fuel the container shipping group's future very large vessels, the French companies said on Monday.

 

CMA CGM had said last month it would use LNG to power the nine extra-large vessels it has on order, a first such move in a shipping industry grappling with how to comply with tougher rules on emissions.

 

Under the 10-year agreement, oil and gas major Total will supply around 300,000 tonnes of LNG per year to CMA CGM, starting in 2020, the companies said in a statement.

 

Financial terms were not disclosed.

 

CMA CGM's future container ships, to be among the largest ever built, are due to be delivered from 2020.

 

Total said it was considering chartering on a long-term basis an LNG bunkering vessel that would deliver fuel both to CMA CGM and other customers in Europe.

 

LNG has been promoted as an alternative to bunker fuel oil for shipping lines facing a 2020 deadline to meet new international standards on emissions.

 

The new rules notably reduce maximum sulphur content in fuels to 0.5 percent from 3.5 percent now, and CMA CGM says LNG allows a 99 percent reduction versus standard shipping fuel.

 

"LNG is the fuel of the future for shipping," Rodolphe Saade, chairman and chief executive of CMA CGM, said in the statement.

 

CMA CGM, which is controlled by the Saade family, has said previously that infrastructure is a challenge for adopting LNG. It has received the backing of the French government, which wants to promote LNG fuelling in ports.

 

CMA CGM and Total also said they had reached an agreement in principle on the potential supply of lubricants for the nine future ships.

 

The two groups had signed a memorandum of understanding earlier this year which called for Total to become a multi-fuel supplier to CMA CGM, providing LNG as well as fuel oil with 0.5 percent sulphur content.

 

Total Chairman and CEO Patrick Pouyanne said in Monday's statement that wider use in shipping fuel was an important part of the group's LNG strategy.

 

It last month announced the acquisition of the upstream LNG interests of Engie in a $1.5 billion deal set to make Total the world's second-largest player in the LNG market.