Will LNG be the future fuel in the maritime transport industry? DNV GL explains

Etienne Pascal Romsom's picture
Etienne Pascal Romsom, Chief Business Development Officer, Executive Vice President, DNV GL
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Mr. Romsom will be speaking at the upcoming GAS Asia Summit & Exhibition which takes place from 26 to 28 October in Singapore.

Gastech News: Will LNG be the future fuel in the maritime transport industry?

Etienne Pascal Romsom: The most important drivers and enablers for LNG to become a major fuel in the maritime sector are expanding regulatory emissions requirements, the ability to hedge fuel costs and the increasing availability of LNG infrastructure that enables bunkering of LNG fuel.  In addition, the conventional global LNG market is currently oversupplied, providing incentives for producers and traders to facilitate building new downstream markets. There also appears to be sufficient availability of capital in the market to finance new LNG regasification and bunkering infrastructure. DNV GL saw an exponential growth in the number of LNG fueled ships, with currently 79 LNG fuelled ships in operation worldwide and 93 confirmed LNG fuelled newbuilds (excluding LNG carriers and inland waterway vessels). The number of ships in operation has more than doubled in the last 4 years and until 2018 we expect a further growth of at least 30%. A growing number of the new ships are ‘LNG ready’ or have dual fuel engines, meaning that they can switch to LNG when the market for this is favourable.

Gastech News: Are Asia-Pacific governments investing enough in creating appropriate infrastructure to support the success of LNG as maritime fuel?

Etienne Pascal Romsom: One key obstacle in the past has been the ‘chicken-and-egg’ problem related to investments in LNG infrastructure versus LNG markets.  However, in Asia-Pacific we see a strong growth in LNG regasification to feed power plants, either as part of new gas-fired power plants / gas distribution or as a conversion from depleting domestic gas to LNG import. LNG storage facilities are a key contributor to the cost of this infrastructure that can simultaneously be used for LNG bunkering. Increasingly, gas and power companies capitalise on their infrastructure to also position as an LNG bunkering hub at relatively low incremental infrastructure costs. Governments can further assist in promoting gas as the preferred transition fuel towards a low-carbon future, and some see a strategic opportunity to proactively position as a major LNG bunkering hub for further growth in their existing maritime activities.

Gastech News: In a previous interview with Gastech News, DNV GL said that the key problems for LNG bunkering include a lack of LNG fuelled vessels, little collaboration between key stakeholders, and the need for a regulatory framework. Has anything improved/changed since last year?

Etienne Pascal Romsom: We see a number of positive developments in cross-industry initiatives, such as the strategic MOU between Shell, Qatargas and Maersk Group[1] as well as the SEA/LNG[2] coalition of which DNV GL is a member. DNV GL is contributing in many areas to lower the barriers for adopting LNG as fuel. We have recently launched an intelligence portal (LNGi), the market’s only LNG bunkering map with worldwide information and continuously updated information and which provides detailed and visual insight to existing and planned LNG bunker opportunities around the world.

Additionally, our research includes an assessment of the impact of LNG fuel variability on engine performance (as part of the work to prepare for an LNG fuel standard) and developing standards for safe and cost-efficient LNG transfer at bunkering stations, to support globally consistent regulations.

Gastech News: What next for LNG bunkering in Asia?

Etienne Pascal Romsom: The model for furthering growth of LNG bunkering in Asia and Middle East will follow a different model from what we have seen for example in the more local/regional approach in Norway. Asia has a number of world leading maritime ports and if some of these can establish a critical density of LNG bunkering hubs that are scalable to larger volumes, it can support a more global model for LNG fueled shipping. In addition, we also see a smaller scale regional model benefiting from LNG regasification infrastructure.

Gastech News: What are you most looking forward at this year’s Gas Asia Summit (GAS) and what is your final message to our readers?

Etienne Pascal Romsom: Essential in our view is a smarter approach in navigating the current challenging markets; cost efficiency through standardisation and replicability, cross-industry collaboration to solve infrastructure dilemmas, and innovation to future proof business models towards a low-carbon future.

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To meet Etienne Pascal Romsom and discuss the key dynamics revolutionising the Asian gas markets, attend our upcoming GAS Asia Summit & Exhibition which takes place from 26 to 28 October in Singapore as part of the Singapore International Energy Week (SIEW). GAS incorporates discussions across the whole region, covering projects, strategies, technologies, and will help shape the LNG landscape across Asia. Click here to attend as a delegate.

More on Asia's gas and LNG dynamics:

Photo courtesy of DNV GL.

[1] Ship & Bunker

[2] DNV GL