LNG: ‘to wait would be a mistake’

on Friday, 11 September 2015. Posted in Petrospot News

The cost benefits for shipowners of adopting LNG as a marine fuel have been ‘partially eclipsed’ by the low crude oil prices – but waiting to see how prices develop would be a mistake, according to Mark Bell, general manager of the Society for Gas as a Marine Fuel (SGMF).

Speaking at the Bernhard Schulte Shipmanagement forum, as part of London International Shipping Week, ‘LNG as a Marine Fuel: Addressing the Challenges’, Mr Bell said that the members of SGMF now have 50-60 LNG-fuelled ships in service, with as many again on order or under construction.

However, he said: “The shipowner has to make a decision about what he is going to do next: it is no mean feat.”

Issues regularly raised include regulations and rules, safety and public perception, ship types, technology, performance and the environment, he said.

“The safety track record of the industry is second to none – and it needs to be maintained as second to none. Like it or lump it, if there is one incident involving this commodity as a fuel, it would hit the headlines straight away.”

In terms of public perception, there is a job to be done to maintain safety record and get the message across, he said.

Ticking the ‘technology box’, he said: “LNG is a known commodity; we know how to handle it and we know how to use it.”

The performance benefits of using LNG have perhaps not been fully realised yet, said Mr Bell. “For the ship owner, it is price, price, price. But what about afterwards – for example, the long-term maintenance, etc. The results are very good, so much so that manufacturers are saying you can have longer periods between overhauls.”

Turning to regulations and rules, Mr Bell said: “The IMO has been ahead of the curve and it is up to the industry to build on that experience. The cost benefits have been partially eclipsed by low crude prices. When the price of crude goes up, what will happen with the price of gas in terms of what is going to happen? But to wait would be a mistake.”

SGMF members moving ahead with LNG projects have overcome all the issues, he said: “At the end of the day, it is a gut feeling, I am going to go for it. And those who have put their hands in their pockets find themselves in a position to outgun the opposition.

“A lot of projects in Scandinavia have been done with significant funding from organisations to kick start them. But now we are seeing larger organisations putting their hands in their own pockets.”

Finally, Mark Bell said: “The public at large and the world at large are asking maritime to clean up its act. Owners are saying – how about low-sulphur fuels, where can I get them from 2020? But if there is a hint that the low-sulphur limit might be postponed by the IMO, the EU will come back and say there will be an eco-zone for Europe. That will change the face of maritime history.”

Mats Fagerberg, partner at Affinity Shipping, who spoke about the newbuilding opportunities and building LNG bunkering into designs, said: “I think there will be plenty of companies that want to get involved in LNG, making an early move, and there will be others to follow. You have to find the type of ship that can operate on LNG: it isn’t a matter of how keen you are – the economics are challenging.”

John Eltringham, BSM project director, outlined a series of LNG projects undertaken by BSM over the past nine years.  Click here to visit the LISW website.