LNG uptake to be steady not fast: Oxford Institute Energy Studies

The Kairos LNG bunker supply vessel will extend LNG bunkering capacity in Klaipeda in Lithuania The Kairos LNG bunker supply vessel will extend LNG bunkering capacity in Klaipeda in Lithuania

Demand for LNG fuel in Northern Europe is unlikely to accelerate rapidly over the coming years, as ship owners are likely to opt for LNG for newbuilds rather than retro-fitting their existing fleet, according to a new study from the Oxford Institute for Energy Studies.

The study assesses both supply-side and demand-side constraints to the more widespread adoption of LNG as a marine fuel, focusing on the current situation for LNG in the Baltic and North Sea Emissions Control Areas (ECAs).

One of the study’s key findings is the role of environmental regulations in initiating change in the North Sea, initially in Norway before 2005, and subsequently in the rest of the region after 2015. This has wider relevance for the Mediterranean region, where a proposal to introduce a NECA is currently being studied by the IMO.

Drawing on the development of LNG bunkering infrastructure in the North Sea and Baltic region, the study found that the development of LNG bunkering infrastructure was most likely in regions that already have substantial LNG infrastructure.

Finally, the report concluded that ship owners are willing to invest in new LNG-fuelled vessels but appear less enthusiastic about retrofitting existing vessels with LNG propulsion systems. As such, demand for LNG as a marine fuel is likely to rise at a steady pace, rather than rise in a sudden ‘big bang’. However, the report notes that the popularity of LNG among some larger vessels means demand growth may well outpace ship numbers.

The report does recognise the difficulties of generalising about the economics of fuel selection or the payback periods for retrofitting scrubbers without considering vessel size, the amount of time that a vessel will spend in an ECA, or its related levels of LSMGO and HFO consumption.

However, the largest unknowns remain underlying price differentials between LSMGO and HFO, along with regional supply dynamics, as well as uncertainty about regulatory decisions, such as whether NOx emissions restrictions will be retroactive or only apply to newbuilds when they come into effect.

The report notes that in the North Sea and Baltic Sea ECAs, the introduction of restrictions on NOx emissions for newbuild vessels from 2021 will strengthen the case for ship owners/operators choosing alternatives to oil-based propulsion for their new vessels, including LNG.

LATEST PRESS RELEASES

Chevron Marine Lubricants to put Global Sulphur Cap and cylinder oil lubrication in the spotlight at Nor-Shipping 2019

Chevron Marine Lubricants will use this edition of the Nor-Shipping international maritime trade sho... Read more

DESMI Ocean Guard wins Frame Agreement for Supply of Ballast Water Management Systems for the Existing Fleet of French Company Sea Tankers

Aalborg, DK, May 7, 2019 – DESMI Ocean Guard A/S is pleased to announce that Sea Tankers have select... Read more

Vickers Oils Site Development

Vickers Oils has opened its 1,700 square metre state-of-the-art R&D laboratory, as well refurbishing... Read more

Gloryholder LGM to supply the LNG bunkering system for Damen 6000m3 Bunkering vessel

Gloryholder has been awarded the contract to design and supply the LNG cargo handling and fuel gas s... Read more

DESMI Ocean Guard’s CompactClean Ballast Water Management System Receives US Coast Guard Type Approval

Aalborg, DK, April 17, 2019– DESMI Ocean Guard A/S is pleased to announce that its CompactClean Ball... Read more

DESMI KaziCat

DESMI KaziCat is a true Multi-Purpose Catamaran Vessel despite its compact size; just below 24 meter... Read more

View all