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Shell to supply LNG for cross-Atlantic car shipments

5 Oct 2017, 8.59 pm GMT

Shell to supply LNG for cross-Atlantic car shipments

Houston, 5 October (Argus) — Shell has signed a long-term agreement to sell LNG bunker fuel to two newbuild vessels that will deliver Volkswagen vehicles from Europe to the United States.

The deal announced today with shipper SIEM Car Carriers will further grow Shell's LNG bunkering business. Shell, one of the world largest LNG traders, has become a leader in supplying the fledgling LNG bunker fuel market, especially in Europe.

The SIEM vessels are expected to be delivered in 2019. Shell plans to refuel the ships in northwest Europe and a second supply point in the US.

Shell and SIEM did not respond to Argus inquiries asking how much LNG would likely be sold under the deal and where the specific supply points would be.

The SIEM vessels would be among the first LNG-fueled ships to operate between Europe and the US. The also would be among the first car-carrying ships to be powered by LNG.

Although low oil prices since mid-2014 have slowed the momentum to convert high-horsepower engines to run on LNG instead of diesel, the LNG bunkering industry has progressed because of stricter limits on sulfur and nitrogen oxide emissions from vessels. The International Maritime Organization in 2020 will implement a global 0.5pc sulfur cap on emissions, from the current cap of 3.5pc. Emissions control areas in US and Canadian territorial waters, as well as Europe's North and Baltic seas, since January 2015 have limited sulfur emissions to 0.1pc.

"This agreement is an important development for Shell's growing LNG fuels business," said Lauran Wetemans, Shell's general manager of downstream LNG. "We are pleased to be working with SIEM Car Carriers to provide a cleaner burning fuel and look forward to future opportunities for collaboration."

The Gate LNG import terminal in Rotterdam, the Netherlands, could be a potential supply point. Shell in July 2014 committed to buy capacity at the terminal to help fund an expansion, including a new jetty, to increase the availability of LNG fuel for transport.

Shell in July took delivery in Rotterdam of the Cardissa LNG bunkering vessel, which has capacity of 6,500m³, equivalent to about 134mn cf (3.8mn m³) of gas. In August Shell concluded a time-charter agreement with European bunker suppliers Victrol NV and Compagnie Fluviale de Transport for a 3,000m³ LNG bunker barge that would be based in the Rotterdam area.

In October 2016 Shell signed a deal to start selling in 2019 LNG to Miami-based Carnival cruise line for two vessels that would operate mostly in Europe. In April 2017 it signed a deal with Russian state-owned shipper Sovcomflot to supply beginning in the third quarter of 2018 the world's first four Aframax crude oil tankers that would be powered by LNG.

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