SZ Energy Intelligence LNG Series Topic 2012: Bright LNG as Ship Fuel

Shanghai, China, January 06, 2012 --(PR.com)-- In the past decade, more and more stringent emission requirements are being constantly applied to land transport. Automotive diesel fuel and gasoline now, for example, have almost no sulfur. However, there is the shipping industry, which has an absence of emissions rules.

According to an authoritative report, the world's shipping industry consumes 20 million barrels of oil per year, over 1.2 billion tons of CO2 emissions, accounting for 6% of total global emissions. It is predicted that by 2020 the global shipping industry CO2 emissions will reach 14 million tons.

In order to achieve the emission reductions on a global scale, the United Nations International Maritime Organization (IMO) Convention for the Prevention of Pollution from Ship will limit big emissions of 9 kinds, mainly through the mandatory energy efficiency design index (EEDI) formula, to regulate the level of energy efficiency, and provide current and future engine emission limits, from initial stage of design and construction.

Remi Eriksen, COO of DNV Asia Pacific & Middle East Det Norske Veritas AS (DNV) said, "Take sulfur oxide emissions as example, its rules will generalize from ship construction to ship modernization. Ship owners are basically faced with 3 choices, 1, switch to clean fuels, 2 continue to use heavy fuel oil but need to install the water gas cleaner, and 3 switch to LNG as fuel. LNG as ship fuel is of very significant environmental benefits, it is almost 100% none of SOx, no particles, 85% -90% reduction of NOxs and 15% -20% reduction of CO2 emissions."

LNG as ship fuel has now been deeply concerned, although got a slow start. Many governments, enterprises and ship owners have started such a novel study to assess the benefits of LNG as ship fuel and endeavor to introduce LNG to all areas of sipping industry.

Gerd Würsig, deputy head of department at Germanischer Lloyd Environmental Research said, "There is no doubt for natural gas to replace traditional fuel or replace marine light diesel at least, as for ship yards, there is no need to hesitate the development of these vessels because they will be soon coming into our eyes."

Remi Eriksen, COO of DNV Asia Pacific & Middle East Det Norske Veritas AS (DNV) said, "DNV predicted that new ship orders of LNG fuel will reach 500 by 2015 and 1,000 by 2020."

China Shipping Chairman Li Shaode said, "China Shipping has ordered with East Shipyard Of Shanghai four 4 LNG ships of 170,000 cubic meters, and is in negotiation with other ship yards for new ship contracts. It is expected for LNG ships will reach 12 in the 12th 5 year plans."

At the same time for ship construction, Ulf G. Ryder, President & CEO of Stena Bulk AB put forward another phenomena, "Nearly 30% of LNG ships all over the world are idle in the last 2 years. For now, they are in hot demand for different energy companies, nearly 90 - 95% of LNG ships have been booked to be put into use in the near future."

The market demand is strong and charter prices are comparatively high currently. If 90% of LNG ships are put into operation for a ship owner, the income will be considerable. BW Gas CEO Andreas Sohmen-Pao said, "This is the world's largest arbitrage opportunity."

However Mærsk A/S announced its intention to sell its LNG business as it wished to reallocate resources to strategic focus areas in the Group. A.P. Møller - Mærsk A/S entered into an agreement on May 11, 2011 to sell Maersk LNG A/S to Teekay LNG Operating LLC and Marubeni Corporation at a total consideration of USD 1,402 million on a cash and debt free basis.

LNG as ship fuel seems very bright in the future, but is full of variables and the twists and turns, in the next topic, SZ Energy Intelligence will focus on challenges faced with the same LNG fuel.

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