130 gas fuelled ships confirmed, GFS conference is told

Conference chairman Lars Robert Pedersen of BIMCO welcomes delates to the fifth Motorship Gas Fuelled Ships conference

Mercator Media’s 2014 Gas Fuelled Ships conference, under the banner of The Motorship, got under way this morning in Stavanger, Norway, with the keynote addresses from a wide variety of important industry figures.

Chairman Lars Robert Pedersen, deputy secretary general of BIMCO, gave the welcome address, summarising the last GFS conference. There were various topics coded by red, amber and green symbols. The greens have moved forward following the recent MSC meeting which answered some of the outstanding questions: notably implementation of the IGF code and location of LNG tanks.

Anders Mikkelsen, business development leader DNV GL, gave the first keynote speech. He explored the ‘big questions’ of pricing, availability, the risks and opportunities of new low sulphur fuels and the uncertainty of what will happen after the low sulphur limits come in. Despite this, there is a lot of optimism in the industry. The small scale LNG value chain is critical, and users and potential users need to understand how this will work. Engines are not considered a technology risk, though dual fuel has a significantly larger market share in the current order book than pure gas. Tanks are developing fast, though the C type is still dominant. Globally, infrsastructure clusters are fast developing to support bunker supplies. Western and southern US and Northern Europe are well established, in the Far East things are moving fast. In Europe break bulk will impact the number of confirmed projects – this will ease suppliers getting hold of smaller volumes. Bunkering vessels are another vital link, with many projects on the drawing board, both newbuild and small tanker conversions. Still to be resolved are relative delta on tank pressure on the receiving vessel, and boil off.

52 LNG fuelled ships are in operation worldwide. Previously almost entirely Norwegian, the fleet is getting more international. There are 78 confirmed orders, with greater variety of ship types and more outside Europe. So with 130 confirmed ships, excluding gas carriers and inland vessels, we will reach 2020 with strong momentum for the gas fuelled ship orderbook. Several are being built as ‘LNG ready’. However, previous estimates of 1,000 LNG ships by 2020 are optimistic, it looks more like 600-700. The orderbook will continue to diversify, though with economic and infrastructure questions still to be resolved LNG still represents a commercial risk. But it is a risk worth taking for many trades.

Jaroslaw Kotowski, project manager INEA for the EC, gave the second keynote speech, on encouraging LNG bunkering opportunities in Europe. There has been considerable support for ‘green’ shipping projects, particularly LNG, and funding is still available for

Aksel Skjorvheim, Shell LNG business development manager, gave the third keynote address, outlining the development of small scale LNG supply in Europe. He believes there is a strong case for gas as ship fuel, and Shell intends to play a strong role. The company believes in small-scale plants which can supply transport needs, including ships. It also offers the possibility of supplying bunker vessels from large LNG terminals, and believes that a network of regional and local hubs served by large terminals will develop. The challenge is to do this in a cost effective way, to compete with other fuels, and this will depend on volume. The LNG itself and distribution capacity is there, there are no technical or logistic limitations, the market just needs the right concentration of end users.