Specializing in International Freight Forwarding, by way of ocean, air, rail and truck freight-RISINGSUN

The increasing demand for clean fuel sources in the marine industry has led to the growing demand of LNG for fuelling the shipping industry. The MARPOL convention is the major international body ensuring that the marine vessels do not emit polluting substances causing marine pollution. Conventional marine fuel, also known as bunker fuel is the heavy distillate product obtained after vacuum distillation process in refineries. This fuel oil is thick & heavy and contains sulphur and nitrogen compounds which negatively impact the environment. Several Emission Controlled Areas (ECA’s) have been declared by the MARPOL. Special environmental considerations exist in these areas. The increasing production of natural gas, especially from unconventional sources, provides the ship operators an opportunity to reap benefits of cheap gas prices. However, the concept of LNG as a bunker fuel is still very new, with very few shipping companies actually adopting this marine fuel. The market for LNG as bunker fuel is anticipated to rise at a substantial pace in the future owing to these stringent environmental regulations.

The increasing fuel oil prices are also another major driver for this market, encouraging investments in utilization of LNG as a marine fuel. When LNG is used as a bunker fuel, it ensures that environmental compliances are met and further reduces the risk of engine failure. LNG meets the sulfur content and emission requirements, and can be easily produced from natural gas conversion. In some of the major bunker markets, LNG is priced at a discounted rate compared to conventional marine fuel oils. LNG provides an economical option to ship operators for fueling their vessels.

The strict environmental regulations imposed by MARPOL further encourages shipping companies to adopt LNG as a marine fuel. However, the additional capital required to convert conventional ships to LNG fuelled ships, may hamper the growth in the future. The hazards and risks associated with LNG fuel are different when compared to conventional marine fuels. Gas prices are decreasing owing to an increased natural gas production; this factor can prove to be an opportunity for the widespread use of LNG as bunker fuel.

The market for LNG as a bunker fuel can be segmented depending on the various methods of delivering the fuel to the vessel. LNG can be stored in storage vessels in bunker terminals which can be further supplied to ships through pipelines. LNG can also be transported to the anchored location by use of large-frame trucks. Another viable method is transferring the LNG fuel from one vessel to another at anchorages. The method to be used for refueling depends upon the port infrastructure and the requirements of the shipping company.

Bunker supplying facilities are majorly located around the major shipping centers of the world including Singapore, Rotterdam, Fujairah and Houston. Europe is anticipated to be the major market for LNG Bunker fuel owing to increasing environmental concerns in this region. The ECA’s are located in this region; hence ships operators are coerced to use clean fuel sources in this region. North America is also expected to declare new ECA’s which would further enhance the requirement of LNG as a bunker fuel. The cheap natural gas prices in this region are also a major motivating factor for adoption of LNG as a marine fuel. Asia pacific and Middle–East are other major prospective regions for the growth of the LNG marine fuel market.

Some of the major players operating in LNG fuelling market are Royal Dutch Shell, GDF-Suez S.A., OW Bunker, and Gazprom Neft Marine Bunker among others.

LNG as a Bunker Fuel Market