The global fuel sulphur limit of 0.5%, effective 2020, is driving the increased interest in LNG as a marine fuel. One of the main obstacles to the accelerated uptake of LNG, however, is the uncertainty regarding future market volumes for the fuel. DNV GL has addressed this issue in a recent market study on the future LNG market in the Iberian Peninsula.
DNV GL conducted the market study on behalf of the six-year CORE LNGas hive project. The EC-funded project aims to provide an investment plan for LNG fuelling in Spain and Portugal. The EUR 33 million (USD 37.7m) project is coordinated by Enagas, and co-funded by the European Commission.
The DNV GL market study forecasts the potential future demand for LNG as a ship fuel and the required future infrastructure for the areas around Spain and Portugal, covering the Mediterranean, Atlantic and Gibraltar Strait peripheral regions. The results of DNV GL’s analyses have now contributed to the CORE LNGas Hive project’s recommendations for the development of the LNG supply chain infrastructure, involving over 40 ports in the project area.
Fernando Impuesto, CORE LNGas hive project coordinator from Enagas, says: “Through this market study we now have a strong decision basis to prepare the supply side on the Iberian Peninsula in meeting future demand for LNG bunkering at competitive conditions.”
Compliance the new motivation
Despite LNG fuelled shipping being high on the agenda in the maritime industry, the market drivers are seen to change. From previously being encouraged by a lower price of LNG compensating for the added cost for installation of the LNG fuel equipment, results from interviews conducted by DNV GL indicate a shift towards compliance with emissions regulations to be the main motivation.
LNG can significantly reduce SOx, NOx and particulate emissions, and can also contribute to the reduction of greenhouse gas emissions.
Potential calls for advance planning
The study has revealed a huge potential for LNG as a marine fuel that will utilize the current spare capacity of the existing LNG import terminals. The consolidated quantitative results show that by 2030 up to 2 million m³/y of LNG is to be bunkered by ships (with Algeciras, Las Palmas and Barcelona as most important ports) and by 2050 approximately 8 million m³/y of LNG.
On the logistical side, the market study further concludes that existing LNG terminals will need to develop break bulk capacity to allow for loading LNG to small carriers and LNG bunker vessels. In most ports, development of local intermediate storage capacity needs to be synchronized with increasing LNG demand by larger vessels. Besides bunker stations and local storage facilities, small carriers for delivering batches of LNG to ports over sea will play an important role for the times ahead.
To realize the predicted LNG supply chain in 2030, about 1 billion Euro of capital expenditures (CAPEX) investment will be needed, the report states. That adds up to a total cost of 3,7 billion Euro in 2050.
CORE LNGas hive project
The six-year CORE LNGas hive project is co-funded by the European Commission and is scheduled for completion by December 2020. The CORE LNGas Hive project is to provide recommendations to the National Policy Framework (NPF) with regard to the demand for LNG as a maritime fuel in Spain and Portugal on the deployment of alternative fuels infrastructure. It also aims to provide an investment plan for scaling associated project results. See website here: http://corelngashive.eu/en/
Source: DNV GL