Ample availability and competitive pricing have made LNG an attractive mid-term bunkering option for the maritime sector's net-zero goals, panellists said at the 8-10 October Singapore International Bunkering Conference and Exhibition (SIBCON).
"The reason why everyone is moving to LNG as a pathway is because it has the lowest cost to reach carbon reduction," a fuel supplier said, but noted that more could be done within regulations to recognise its well-to-wake (WTW) emissions.
The use of LNG as a bunkering fuel represents a 20-25pc emissions reduction in greenhouse gases (GHG), a trading firm said, compared with conventional marine fuels.
"While we are waiting for new technologies to come into the market at [an] economic cost, let's continue to invest in LNG for GHG reductions, a trading firm said. LNG-burning vessels are well positioned to have the lowest costs in 2025, when the EU tightens its emissions trading system (ETS) and the new FuelEU regulation kicks in.
The Argus-assessed very-low sulphur fuel oil (VLSFO) bunker and LNG des Northeast Asia (ANEA) prices stood at $594.35/t dob and $12.955/mnBtu on 14 October, respectively.
But delegates also mentioned that factors like limited port infrastructure and the capital-intensive nature of LNG projects are still barriers for the entry of some vessel owners. Shipowners hesitate to use LNG because of concerns pertaining to supply security and whether their investments would be maximised, a trading firm said, adding that the whole lifecycle of LNG is capital intensive.
"One of the key things that we see now is the very attractive prices of LNG, but there is still insufficient barging infrastructure to be able to cope with demand," another trading firm said. Bunker barges at many ports are traditionally old, panellists said, noting that suppliers need to modernise their barge fleet to keep up with environmental regulations.
Conference participants suggested that emissions regulations like International Maritime Organisation's CII rating and EU-led emissions trading system should also be revised to consider developments for LNG-operated vessels. They must be updated, as there are different levels of GHG emissions, depending on the source of LNG, according to a shipowner representative.
LNG bunkering market
The LNG bunkering market is projected to rise at a compound annual growth rate of 63.6pc over 2021–2031, according to Transparency Market Research (TMR).
In its 2024 edition of Maritime Forecast to 2050, DNV said that LNG-fuelled ships represent 6.7% of the tonnage for vessels in operation, and 36% of the tonnage in the order book can use LNG as fuel. In total, 1,239 LNG-capable vessels are currently sailing, while 832 are on order.
This includes Canadian shipping firm Seaspan ordering 23 dual-fuelled container ships for delivery over 2027-28 and container shipping firm Hapag Lloyd plans of ordering up to 24 dual-fuelled container vessels for delivery over 2028-29.
There has also been a rise in LNG sales at the world's largest bunkering hub, Singapore, where the consumption of LNG increased by threefold over January-September to 337,600t, according to data from Maritime and Port Authority of Singapore, singalling higher adoption of LNG as a bunkering fuel by the maritime sector over the period.
Efforts are continuing to expand LNG-bunkering capabilities in Asia, with China's Tianjin Port becoming the fourth domestic port capable of operating a bonded LNG business at end-September, following Shenzhen, Ningbo and Shanghai.
Ships uitilising LNG can remain FuelEU compliant through to 2034, said Shell's head of marine LNG business development Krishna Achuthanandam in September this year.
