DNV looks at LNG fuel in Singapore

22 Mar 2011
Bjørn Tore Markussen of DNV’s Clean Technology Centre in Singapore

Bjørn Tore Markussen of DNV’s Clean Technology Centre in Singapore

A joint industry project on the future small scale LNG value-chain in South East Asia has identified noteworthy potential for LNG as fuel for ships in regional trade, and predicts a future market for LNG bunkering in Singapore.

The joint industry project (JIP), which was initiated by DNV during Singapore Maritime Week in 2010, mobilised a consortium of 16 participants from all parts of the LNG value chain. Among the members are Gazprom, Rolls-Royce, Wärtsilä, Hanjin Shipping, I.M. Skaugen, Keppel, the Linde Group, Trans LNG, DNV, BW group, BBG, the Maritime and Port Authority of Singapore, and two Singapore universities, NUS and NTU. The JIP is also supported by Innovation Norway and The Norwegian Embassy in Singapore. The study examined two areas of future use of LNG in South East Asia. These were LNG for small scale power production in off-grid island regions and LNG as fuel for ship propulsion.

The study identified multiple island regions in South East Asia where small-scale power plants fuelled by LNG would be feasible. The distribution of LNG to these power plants would require close to 60 small scale LNG carriers by 2020 if the full number of plants is built. As the price of crude oil is rising faster than the price of natural gas, the financial incentives for using LNG for power generation are equally increasing with considerable environmental benefits to be gained from such a fuel switch.

Shipping is a vital part of the future LNG supply chains in South East Asia. The study forecasts that container feeders might be the first ship segment to adopt LNG for propulsion regionally. About 20% of the regional container feeders are up for renewal by 2020. Local and regional ferries are also well suited to use LNG for propulsion in the longer term.

Singapore is identified as the regionally preferred site for future LNG bunkering, due to large shipping volumes, calm seas for bunkering operations and the fact that infrastructure for LNG bunkering is already under construction. With stricter requirements for environmental performance, and an increasingly competitive expected price for LNG as fuel for ships, a shift to LNG propulsion may have an exciting impact on Singapore as a bunkering hub.

“Substantial market opportunities will evolve throughout the small scale LNG value-chain in South East Asia in the next decade,” says managing director Bjørn Tore Markussen of DNV’s Clean Technology Centre in Singapore. “The companies who seize the opportunities early in these evolving markets will be well positioned for interesting growth if entry risks are managed properly.”

Lam Yi Young, chief executive of the Maritime and Port Authority of Singapore (MPA), said “With the push towards cleaner fuel for ships, the results of this Joint Industry Project are timely in evaluating the potential for LNG bunkering services in Singapore. LNG's lower carbon dioxide emissions, minimal sulphur and nitrogen content as well as the abundant availability, allows it to be a viable alternative fuel source for ships, which is also in line with MPA's commitment to promoting environmentally-friendly shipping.”

“The consortium is eager to use the findings from the LNG study to build business for the participants and to inform regional stakeholders about the opportunities that lie ahead,” says Markussen, “DNV as a company has already decided to invest into a next phase of the JIP. We are now inviting old and new members to join the consortium and one or more of the many project streams that will be kicked off in April and May.”

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