For the implementation of LNG as a marine fuel for deap sea vessels, Singapore appears to be the key location to get the ball rolling. Already for quite some time, many eyes have been watching the development of LNG bunkering at the SLNG terminal. I didn’t have the chance to attend the ongoing Bunkerspot conference myself, so I have to rely on Platts for their account of the discussions about the development of LNG bunkering. As usual I feel the need to clarify some issues.
“Participants polled at the Bunkerspot LNG Asia conference were skeptical of LNG bunkering gaining traction in Singapore in the next five years, but were more positive when given a longer time frame of 10 years”
This is human psychology, isnt it? A big change is happening in the industry – it is easy to assume it will take a while. Let’s kick the can down the road. Nobody can blame us for not taking action. Anyway, surely they have some arguments backing this expectation:
“”There are compelling reasons for LNG to become the future fuel for shipping…but there are also a good number of reasons why it may not become the future fuel for shipping for some time,” Nigel Draffin said, Chairman of the International Bunker Industry Association”
Well, for one thing, IBIA is biased in this matter as their existence relies on the use of oil. Secondly, let’s see what is really meant by “a good number of reasons…”:
Reason no 1:
”LNG terminals are designed to handle one vessel a week, not one per hour… LNG terminals should not be assumed to be hosts for bunker vessels…”
I completely agree, and this has also been acknowledged by all the industry projects that I have been involved in – none of them assume bunkering directly at the terminal premises. There needs to be a barge or other ways of transferring LNG to a bunkering station. This is also line with normal bunkering practices for oil, where the bunkers normal come to the ship, and not the other way around. Therefore reason no 1 is invalid, as no plans have been made for bunkering directly at terminal premises.
Reason no 2:
“A huge new market for LNG [in terms of LNG bunkering] is emerging at a time when there is insufficient supply to cater to current LNG demand”
This is simply incorrect. Supply meets demand for LNG, as it always has and always will. What this really is, is only a discussion of price. Who is willing to pay more for the LNG? And that may very well be the ships. Which also makes sense from an environmental point of view; power on land can be produced by other sources, even renewables. For ship fuel, LNG is the cleanest option we have.
Reason no 3:
“In addition, Regan pointed out that one Achilles’ heel that Singapore faced was that the country had no LNG bunker barges to begin with”
Oh, come on. Is it really going to push the development down road for ten years because we cant build a few barges?
Reason no 4:
“there are challenges which are not only unique to Singapore in terms of LNG bunkering, which various speakers at the event brought up, including high costs of vessels and infrastructure…”
As I have pointed out before, the emphasis on CAPEX is highly exaggerated. Investment decisions should be made based on cash flow models for the entire life cycle. And in such calculations, cost of fuel will be the overshadowing parameter for any ship, while CAPEX will only contribute 10-20% of total daily costs.
Reason no 5:
“… lack of international standards “
This is a lame excuse. Firstly, there are standardisation going on through several joint industry projects, and also an ISO committee. Secondly, the lack of international standards is not a show stopper. It normally just means that an extra risk analysis needs to be done, and some additional communication with flag and port states will be necessary.
Reason no 6:
“uncertainty about future pipeline gas and LNG prices”
Ok, what about the uncertainty about future oil prices? And especially prices of low sulphur fuel? It should be clear to everybody that fuel price uncertainty going forward will not only be about the absolute values of each fuel, it will also be about the relative difference between them.
To conclude, nothing of the reported discussions from the Bunkerspot conference shakes my confidence in LNG as a future marine fuel.