SINGAPORE: The demand for liquefied natural gas (LNG) in Asia is growing.
Asia alone accounted for 55 per cent of the total demand growth for LNG globally in 2017.
In particular, China has edged its way to become the second largest importer of LNG, taking over South Korea and being behind only Japan.
The total demand for LNG in China last year surged by 50 per cent, reaching 38 million tonnes. And according to DNV GL’s Energy Transition Outlook model, this trend is likely to continue.
This is driven by three key factors: The continued growth of the manufacturing sector, China’s rising need for natural gas – which will see it become the leading gas importer by 2030, and the prediction that gas will become the largest single source of energy from 2034 onwards.
This rise in interest in natural gas and LNG, in particular, coincides with the upcoming implementation of the Global Sulphur Cap by the International Maritime Organisation.
AdvertisementAdvertisementComing into effect on Jan 1, 2020, the new regulation will mean that ships operating outside of sulphur emission control areas will have to use fuel with a sulphur content not exceeding 0.5 per cent.
To meet the regulations, ships have the option of either fitting in scrubbers which control gaseous emissions from ships, use low sulphur fuels, or adopt LNG as an alternative fuel.
In line with this new regulation, we predict that LNG, together with liquefied petroleum gas (LPG), will account for 32 per cent of the total energy use in shipping by 2050.
FILE PHOTO: Shipping containers being loaded onto Xin Da Yang Zhou ship from Shanghai, China at Pier J at the Port of Long Beach in Long Beach, California, U.S., April 4, 2018. REUTERS/Bob Riha Jr./File Photo
DIFFERENT LNG UPTAKE ACROSS VARIOUS SHIP SEGMENTS
The most noticeable interest in the adoption of LNG as a ship fuel is in the cruise industry, where we have seen a number of vessels ordered with this option.
These recent orders can have a tremendous effect on the total volume of LNG sold to ships as large cruise ships can easily consume 30,000 to 50,000 tonnes of LNG per year, depending on their operational profile.
Such bunker volumes will give LNG suppliers the confidence to invest in additional LNG bunker vessels, which will likely be the preferred way of supplying these ships. These bunker vessels will increase the availability of LNG in certain regions and therefore, benefitting LNG-fuelled vessels in other segments and potentially leading to additional orders.
Container ships are also well suited to be a forerunner in the adoption of LNG fuel, given their fixed routes and high fuel consumption, to earn back the additional investment.
For a while now, the interest in the use of LNG fuel has been relatively high for container ships. As such, the use of dual fuel engines and other novel solutions that can utilise LNG fuel are currently being explored.
Five ships from the P&O Cruise line in Sydney harbour. (Photo: Reuters)
DEVELOPING LNG INFRASTRUCTURE
Our assessment is that the availability of LNG for ships is actually higher than what the industry generally perceives. Furthermore, our LNG intelligence suggests the infrastructure for LNG bunkering is developing rapidly.
In total, there are already 60 locations worldwide that supply LNG for ships, and this is exclusive of the various LNG bunker vessels and trucks that are in operation.
To date, 20 countries in the world already have operational LNG bunkering facilities, with another 18 starting or in discussions to build such facilities on their home grounds.
Meanwhile, government-backed initiatives are also getting underway in China, Korea and Japan as these countries strive to meet ambitious national targets for combating local pollution and reducing greenhouse gases.
In Singapore, a concerted effort by the Maritime and Port Authority of Singapore over the past few years has seen the construction of an LNG import terminal, as well as the development of ship-to-ship bunkering, and LNG fuelled vessels.
READ: A commentary on the future of Singapore's energy needs burning bright.
READ: A commentary on the challenges facing Singapore's natural gas ambitions.
The Singapore liquefied natural gas import terminal in Jurong Island is used for importing LNG, reloading and re-gasification and storage. (Photo: SLNG)
It is also clear that the orders for LNG bunker vessels are picking up, and it is expected that these vessels will play in important role in ensuring a cost-efficient distribution and bunkering of LNG.
All these factors point to one key message: LNG as an alternative ship fuel is a solution that is available, and that the conditions needed to accelerate its adoption are in place.
While conventional oil-based fuels will remain as the main fuel option for most existing vessels in the near future, the commercial opportunities of LNG as a fuel for shipping are interesting and growing.
Cristina Saenz de Santa Maria is a speaker at the inaugural LNG Forum 2018 held on Apr 24 as part of the annual Singapore Maritime Week. She is responsible for DNV GL's maritime operations in South East Asia, Pacific and India.
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Asia alone accounted for 55 per cent of the total demand growth for LNG globally in 2017.
In particular, China has edged its way to become the second largest importer of LNG, taking over South Korea and being behind only Japan.
The total demand for LNG in China last year surged by 50 per cent, reaching 38 million tonnes. And according to DNV GL’s Energy Transition Outlook model, this trend is likely to continue.
This is driven by three key factors: The continued growth of the manufacturing sector, China’s rising need for natural gas – which will see it become the leading gas importer by 2030, and the prediction that gas will become the largest single source of energy from 2034 onwards.
This rise in interest in natural gas and LNG, in particular, coincides with the upcoming implementation of the Global Sulphur Cap by the International Maritime Organisation.
AdvertisementAdvertisementComing into effect on Jan 1, 2020, the new regulation will mean that ships operating outside of sulphur emission control areas will have to use fuel with a sulphur content not exceeding 0.5 per cent.
To meet the regulations, ships have the option of either fitting in scrubbers which control gaseous emissions from ships, use low sulphur fuels, or adopt LNG as an alternative fuel.
In line with this new regulation, we predict that LNG, together with liquefied petroleum gas (LPG), will account for 32 per cent of the total energy use in shipping by 2050.
DIFFERENT LNG UPTAKE ACROSS VARIOUS SHIP SEGMENTS
The most noticeable interest in the adoption of LNG as a ship fuel is in the cruise industry, where we have seen a number of vessels ordered with this option.
These recent orders can have a tremendous effect on the total volume of LNG sold to ships as large cruise ships can easily consume 30,000 to 50,000 tonnes of LNG per year, depending on their operational profile.
Such bunker volumes will give LNG suppliers the confidence to invest in additional LNG bunker vessels, which will likely be the preferred way of supplying these ships. These bunker vessels will increase the availability of LNG in certain regions and therefore, benefitting LNG-fuelled vessels in other segments and potentially leading to additional orders.
Container ships are also well suited to be a forerunner in the adoption of LNG fuel, given their fixed routes and high fuel consumption, to earn back the additional investment.
For a while now, the interest in the use of LNG fuel has been relatively high for container ships. As such, the use of dual fuel engines and other novel solutions that can utilise LNG fuel are currently being explored.
DEVELOPING LNG INFRASTRUCTURE
Our assessment is that the availability of LNG for ships is actually higher than what the industry generally perceives. Furthermore, our LNG intelligence suggests the infrastructure for LNG bunkering is developing rapidly.
In total, there are already 60 locations worldwide that supply LNG for ships, and this is exclusive of the various LNG bunker vessels and trucks that are in operation.
To date, 20 countries in the world already have operational LNG bunkering facilities, with another 18 starting or in discussions to build such facilities on their home grounds.
Meanwhile, government-backed initiatives are also getting underway in China, Korea and Japan as these countries strive to meet ambitious national targets for combating local pollution and reducing greenhouse gases.
In Singapore, a concerted effort by the Maritime and Port Authority of Singapore over the past few years has seen the construction of an LNG import terminal, as well as the development of ship-to-ship bunkering, and LNG fuelled vessels.
READ: A commentary on the future of Singapore's energy needs burning bright.
READ: A commentary on the challenges facing Singapore's natural gas ambitions.
It is also clear that the orders for LNG bunker vessels are picking up, and it is expected that these vessels will play in important role in ensuring a cost-efficient distribution and bunkering of LNG.
All these factors point to one key message: LNG as an alternative ship fuel is a solution that is available, and that the conditions needed to accelerate its adoption are in place.
While conventional oil-based fuels will remain as the main fuel option for most existing vessels in the near future, the commercial opportunities of LNG as a fuel for shipping are interesting and growing.
Cristina Saenz de Santa Maria is a speaker at the inaugural LNG Forum 2018 held on Apr 24 as part of the annual Singapore Maritime Week. She is responsible for DNV GL's maritime operations in South East Asia, Pacific and India.
Let's block ads! (Why?)
More...