A senior executive at French liquefied natural gas (LNG) player
Engie says demand for LNG bunker fuel could surge over the next 10 to 15 years if the International Maritime Organization's (IMO) Marine Environment Protection Committee (MEPC) agrees to implement a global cap on sulphur content.
The MEPC is meeting in London this week to decide whether to impose a 0.5% global sulphur limit on 1st January 2020 or 1st January 2025. If implemented, it would mean ships would either have to run on regulation-compliant distillates, ultra-low-sulphur fuel oil (ULSFO) or alternative fuels such as LNG, liquefied petroleum gas (LPG), methanol, ethane or biofuels. Alternatively, ships could also have scrubbers installed and continue to use marine fuel with a sulphur content above 0.5%.
According to
Denis Bonhomme, senior vice president at Engie in Singapore, demand for LNG marine fuel could rise to 30 million tonnes per annum by 2025-30.
"If you have to invest into new ships, why go in between when you know in [a few] years you will anyway have to switch to LNG," Bonhomme is quoted as saying by Reuters.
"A lot of the shipping lines do not have a very young fleet so they have to renew it anyway, so that is a good opportunity," he added.
Earlier this year,
Nick Brown, Marine & Offshore Director at Lloyd's Register Marine, said that heavy fuel oil (HFO) would continue to be the dominant bunker fuel in 2030, but that LNG use would grow to 11 percent.
"Our studies suggest that while heavy fuel oil will continue to be the most popular in terms of usage by the shipping industry, there will be an increase in the diversity of the fuel mix with LNG predicted to account for up to 11 percent of deep sea shipping fuel," he remarked.
"Regardless of any geopolitical scenario, global tonnage is predicted to double by 2030. We are working with designers, owners and equipment manufacturers to ensure their specific projects are considering all different alternatives including LNG as a viable alternative," Brown added.
Cross-industry coalition SEA\LNG said earlier this month that there are already 86 LNG-fuelled ships in operation worldwide (excluding LNG carriers) and a further 95 on order.
Highlighting the key factors that shipping firms will examine when considering whether to switch to alternative fuels,
Theodosis Stamatelos, Europe Area Manager for Lloyd's Register Marine, said in June: "The two key drivers that will convince owners to convert to alternative fuels or order ready newbuildings is regulation and the commercial fuel split, with the latter being on everybody's lips in terms of what will be the difference in price between low sulphur heavy oil versus LNG."
An increase in LNG bunker fuel consumption would be positive news for the currently oversupplied LNG sector. Back in February, Singapore-based consultancy
Tri-Zen predicted that despite the "fog of artificially low oil pricing", LNG would be the fuel to take shipping into the coming decades.
"Current low oil and gas prices result largely from an oversupply in the market and the situation is not due to change anytime soon," the consultancy said, adding: "We expect this runaway pessimism in the oil markets to hit the rocks, with demand and supply approaching balance by 2018 resulting in a return to higher oil pricing and a clearer economic incentive for gas.
"When demand starts to close in on supply, the current low cost energy ride will come to a bumpy end and the fog will evaporate. Oil prices will hike significantly and quickly. Gas and LNG will follow less abruptly, with spot availabilities eventually tightening and those with guaranteed supply contracts enjoying an advantage."
In reference to future LNG bunker demand, Tri-Zen said: "The surge in demand for LNG-fuelled propulsion will see this capacity taken up fast. The future will also likely be marked by opportunistic build cost premia. Structurally, LNG is 50% cheaper than its compliant alternative, low sulphur marine diesel oil, and those left paying diesel prices for fuel will be seriously uncompetitive."
