BHP selects Shell for iron ore carrier LNG supply deal

UK-Australian resources firm BHP has awarded a five-year LNG bunker supply contract to Shell to fuel five of its LNG-powered vessels carrying iron ore from Western Australia (WA) to China from 2022, following a tender process it issued last year.

The contract is BHP's first such LNG supply agreement. Its pivot towards LNG is part of a plan to lower carbon emissions and meet International Maritime Organisation regulations on a 0.5pc sulphur limit in marine fuels that took effect on 1 January this year.

The firm expects its LNG supply contract "to form up to 10pc of forecasted Asian LNG bunker demand in [fiscal year] 2023," BHP chief commercial officer Vandita Pant said, without providing further details.

The supply agreement with Shell comes three months after BHP awarded a five-year term charter contract to Eastern Pacific Shipping for five LNG-powered Newcastlemax bulk carriers to transport iron ore from WA to China.

BHP sees the deal contributing towards its "2030 goal to support 40pc emissions intensity reduction of BHP-chartered shipping of our products," Pant said. The firm also expects a reduction in carbon emissions by 30pc for each LNG-fuelled voyage between WA and China compared with a voyage fuelled by conventional fuels.

The 7,500m³ FueLNG Bellina LNG bunkering vessel will provide LNG in Singapore to the BHP vessels and will be able to bunker fuel at a rate of 100-1,000m³/hr. The vessel is operated by licensed Singapore LNG bunker supplier FueLNG, which is a joint venture between Shell and Singapore's Keppel Offshore and Marine. It was launched at sea in June and is expected to arrive in Singapore from the Keppel Nantong shipyard in China by the end of the year.

FueLNG's first contracts will be to provide ship-to-ship LNG bunkering services to Shell-chartered tankers and one of Germany-based shipping firm Hapag-Lloyd's container vessels.

By Camille Klass