<article><p class="lead">Shipowners' growing confidence in LNG as a bunker fuel has pushed them towards ordering new dual-fuelled vessels rather than LNG-ready ones, according to shipbroker SSY.</p><p>A dual-fuelled LNG vessel can burn LNG as a bunker fuel. An LNG-ready ship, despite its name, burns standard fuel oil and needs to be retrofitted with equipment that allows it to switch to LNG.</p><p>LNG-ready ships were the preferred model — there are around 43 in existence, compared with around 30 LNG dual-fuelled tankers in existence. But shipowners are placing new orders for LNG dual-fuel vessels as refuelling infrastructure improves, and this could tilt the balance.</p><p>SSY said that around 10pc of the total tanker orders made so far in 2020 were for LNG dual-fuelled vessels. These brought the total number of LNG dual-fuelled ships under construction to 55, which includes three very large crude carriers (VLCC), nine Suezmaxes, 22 Aframaxes, four Long Range 2 (LR2) and three Medium Range (MR). There are no LNG-ready style ships currently under construction.</p><p>South Korean shipyards continue to be the main focus for these orders. Shipowners have ordered tankers totalling 845,000 deadweight tonnes (dwt) so far this year — two VLCCs and two Suezmaxes, which account for half of the total dwt on order, with the others ordered elsewhere are considerably smaller.</p><p>But Chinese shipyards have increased their presence and, over the past year, shipowners have ordered around 628,000 dwt or 39pc of the total orderbook in dwt terms — four LR2s, four Handysize and four smaller tankers.</p><p>This shift comes at a time of a global push for more stringent environmental shipping standards. The International Maritime Organization (IMO) is targeting a reduction in CO2 emissions of 40pc by 2030 and 70pc by 2050, both from a 2008 baseline. The IMO is also aiming at a 50pc reduction in overall greenhouse gas (GHG) emissions from the same baseline by 2050, which is encouraging shipping to explore and adopt new propulsion technologies.</p><p>But LNG-fuelled tankers are only likely to be a medium-term solution, because the fuel only cuts a vessel's GHG emissions by around 20pc. Alternatives like hydrogen, ammonia, bio-methanol and biofuels will have to be developed further for the shipping sector to meet the IMO targets, and this restricts new tanker ordering now, SSY.</p><p>Orders for tankers utilising LNG propulsion technologies orders still take up a small percentage of the overall order book, which stands at 485, down from 519 at the same point in 2019.</p><p class="bylines">By Nikos Kokolinakis</p></article>
