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LNG as a marine fuel starting to gain traction

As the deadline for 0.1% low sulphur fuel in Emission Control Areas (ECAs) in North America and North Europe beckons at the start of 2015 so the switch to LNG as a marine fuel has started to move from being a small-scale concept to a wider reality.

The last week or so has seen a slew of developments related to using LNG as a fuel in both the shipping and offshore sectors much of them centred around the North Europe and Scandinavian markets where the 0.1% sulphur restriction will apply. One of the issues that has dogged LNG’s acceptance as a marine fuel has been a chicken and egg situation that owners would not build LNG vessels unless they were assured supply infrastructure, while investments were not being made in supply infrastructure unless vessels were ordered.

This is starting to change and in a landmark move last week Nippon Yusen Kaisha (NYK) ordered the world’s first LNG bunker tanker at Hanjin Heavy Industries & Construction, which it plans to deploy as in the port of Zeebrugge, Belgium as part LNG bunkering venture with GDF Suez and Mitsubishi targeting the North Europe market.

In Rotterdam Shell inked an agreement with the Gas Access To Europe (Gate) terminal which will see the development of a new jetty and a dedicated LNG terminal. Meanwhile the Port of Gothenburg announced it would be cutting tariffs for LNG-powered vessels from 2015.

In the Middle East Keppel – Nakilat joint venture yard N-KOM reported a contract to convert ferries in Greece to be LNG-powered.

While looking to the US classification society ABS and South Korean shipyard Daewoo Shipbuilding and Marine Engineering (DSME) unveiled a joint development project for a LNG fuelled drillship design targeted at the Gulf of Mexico.

With all these developments rules to ensure safe delivery of LNG as a fuel are also high on the agenda. Guidelines for safe LNG bunkering was one of the areas of focus for new IACS chairman Philippe Donche-Gay as he outlined his priorities last week.

Despite all these developments it will not be an overnight transition to the use of LNG as a marine fuel and for most come 2015 the immediate choice will be between either buying MGO or fitting scrubbers to meet 0.1% sulphur limits. However, what they do show is LNG set to become a serious component of the mix of fueling options for shipping in the years ahead.

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