Regulatory changes, technological maturity support LNG bunkering demand
Regulatory changes and greater technological maturity around the use of liquefied natural gas (LNG) have helped it gain traction as a bunker fuel and should keep demand strong in the very near future, according to a new report by the International Gas Union.
PHOTO: A graphic representation of an LNG Tanker. Getty Images
Global LNG bunkering demand has recovered this year compared to 2022 - the "most turbulent year in the history of the gas industry," the IGU report says. LNG bunker prices traded higher than those for bunker fuel oils for a large part of last year, when Russia's invasion of Ukraine caused a natural gas supply crisis in Europe and led to a slump in demand as shipowners switched to the cheaper conventional fuels.
Overall, global LNG demand dropped by 1.5% from 2021 to 2022. However, by early 2023, LNG bunker prices had dropped below bunker fuel oil prices and encouraged a rapid expansion of the LNG-fuelled vessel orderbook, according to IGU and co-authors Snam and Rystad Energy. More than half of the current shipping orderbook is for LNG-ready ships, the report notes.
The marine industry has invested heavily in LNG since the International Maritime Organization (IMO) lowered the sulphur emission limit for ships sailing in most oceans around the world to 0.50% in 2020. This encouraged a switch to low sulphur conventional fuels, and alternative fuels with lower sulphur contents such as LNG.
The IGU report authors argue that LNG is currently the only technologically mature alternative to oil-based marine fuels. This argument comes despite recent successes in methanol bunkering and shipping, and announced plans to build plants to produce hydrogen, ammonia and methanol with renewable energy,
"Other carbon neutral fuels, such as hydrogen, green ammonia, or methanol, are still facing technological, infrastructural, economic, and regulatory issues, and are not expected to become widely available in the very near future," it says.
By Debarati Bhattacharjee
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