Shell Strengthens LNG Fuel Commitment with Aframax Time Charters

| The Netherlands and Russia

SCF LNG-fuelled AframaxPAO Sovcomflot (SCF Group) has signed time-charter agreements with Shell for two dual-fuelled ice-class Aframax tankers, which mark a historic turning point that sets new environmental standards for the global tanker industry. The signed agreements represent the next step in an extensive top-to-bottom collaboration between SCF Group and Shell over the last three years around reducing the environmental footprint of the tanker industry, in particular, by fuelling tankers with LNG.

The vessels are part of a series of six SCF Group tankers currently under construction and due for delivery between Q3 2018 and Q1 2019. The two tankers will be on time charter to Shell for up to 10 years, with a minimum commitment of five years. This “Green Funnel” series of ice class 114,000 deadweight LNG-powered Aframax tankers will operate within Shell’s extensive global freight trading network. The landmark agreement is one example of ship owners and operators choosing LNG fuel over traditional marine fuels in response to sulphur and nitrogen oxide emissions regulations, including the IMO’s implementation of a global 0.5% sulphur cap from 2020.

The new contracts follow the ground-breaking LNG Fuel Supply Agreement between Shell and Sovcomflot concluded in 2017, which pioneered the expansion of Marine LNG fuelling into the tanker industry and, in general, for vessels not tied to fixed routes or set timetables.

Shell will provide the LNG fuel for these vessels via its own LNG bunkering infrastructure.  “This is another milestone for our LNG marine fuels business which demonstrates LNG is being chosen in more segments of shipping to comply with ever-tightening emissions standards,” said Lauran Wetemans, General Manager, Shell Downstream LNG. “Fuelling these two vessels alongside the four we announced last year builds significant scale in the supply chain and demonstrates LNG will play a fundamental role in the future energy mix.”

This will build on Shell’s existing LNG bunkering activities in Singapore, Europe, the Americas and Middle East to deliver LNG as a marine fuel to customers across the world, enabling ship owners by broadening the number of choices of how to comply with the new sulphur specifications, with LNG fuel being one of them.

Cardissa (Shell LNG Bunker Vessel)

Cardissa (Shell LNG Bunker Vessel)

The vessels will also use Shell’s specialised LNG bunker vessels, such as the Cardissa, for fuelling in North West Europe. Shell will provide further supply points across North West Europe and the Baltic as it expands its LNG fuelling infrastructure.

Aframax Emissions

In concluding these contracts, both SCF Group and Shell seek not only the safe and economically efficient transportation of oil by sea but also look to improve the emissions footprint of such shipments by exceeding, rather simply complying with, ECA zone emission regulations on carbon, sulphur, nitrous oxide and particulates pollution output from their vessels.

Total carbon emissions using LNG fuel can be reduced by 27 per cent, with sulphur emissions reduced by 100 per cent, nitrous oxide emissions down 85 per cent and particulate matter emissions reduced by 100 per cent. The vessels’ main engines, auxiliaries, and boilers will be dual fuel, capable of using LNG, and the vessels will also be fitted with Selective Catalytic Reduction (SCR) technology to comply with Tier III regulations governing NOx emissions when in gasoil fuel mode.

Mark Quartermain, Vice-President, Shell Crude Trading, said:

“LNG fuel will play a fundamental role in the future energy mix. Chartering and fuelling these vessels highlights Shell’s commitment to LNG as emissions standards tighten. We look forward to continuing to build upon our strong relationship with SCF to support our trading operations in key areas.”

Sources: Shell and Sovcomflot

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