Advert

LNG bunkering industry in Malta

LNG is proving to be a viable fuel for shipping, particularly for ships engaged in routes within the European economic zone. Photo: VladSV/Shutterstock.com

LNG is proving to be a viable fuel for shipping, particularly for ships engaged in routes within the European economic zone. Photo: VladSV/Shutterstock.com

Ports which have a leading role in Europe have already set up LNG bunkering facilities and hence if Malta wants to retain its status as a maritime hub, the question is not if it should set up LNG bunkering facilities but how soon it can do that.

Some ships in Northern Europe have been using LNG as their fuel source for over a decade, with an extremely good safety record. However, as the use of such ships spreads to other parts of the world, the International Organisation of Standardisation (ISO) has introduced new ISO standards to ensure that LNG-fuelled vessels can bunker in a safe and sustainable way. The ISO 20519-2017, which has just been published, sets down the requirements for LNG bunkering transfer systems and equipment that is used to bunker LNG-fuelled vessels.

According to Lloyds Register (2016), LNG is proving to be a viable fuel for shipping, particularly for ships engaged in routes within the European economic zone. Cruise liners, ferries and RoRo vessels have been the main vessel types that adopted LNG as their source of energy but other vessel types – including containers, tankers and bulk carriers – are quickly following suit.

According to Lloyds Register Bunkering infrastructure survey 2014 covering 22 major seaports in Europe, North America and Asia, 59 per cent of them either have in place or plan to provide LNG bunkering infrastructure, 86 per cent consider LNG as likely or very likely to be viable bunker fuel for deep sea shipping and 76 per cent of them have a time frame of zero to five years for LNG bunkering operations to commence.

By the end of last year, six LNG bunkering vessels were already in operation, departing from just one vessel in January 2017. These vessels are important for boosting the demand for LNG as a marine fuel and possible delivery upon request from the ship owners.

Apart from this European reality, one can also look at other island nations like Malta and, in this respect, one can note that Singapore has taken a significant step forward in the development of practical operational procedures and standards for LNG bunkering operations.

The Maritime and Port Authority of Singapore (MPA) and its appointed consultant, Lloyd’s Register, have completed its study on the technical standards and procedures for LNG bunkering in the Port of Singapore. The study consolidated information that needs to be addressed before LNG bunkering can take place in the following five key areas: LNG bunkering standards and procedures within the port’s limits; technical requirements and specifications for LNG bunker tankers and receiving vessels with regard to transfer system, fittings and safety equipment; safety standards for LNG bunkering operations; identification of safety exclusion zones and emergency procedures; and competency standards for personnel handling LNG bunkering

Following the completion of the study, MPA will be organising industry consultation sessions to share the results of the study with the maritime industry and seek their feedback. With the industry feedback, MPA will subsequently finalise the LNG bunkering standards for the Port of Singapore.

As at end of 2016, the world fleet counted 449 LNG carriers in service (45.5 million gross tonnes) and 139 (153 million gross tonnes) on order while, on the other hand, there are 215 LNG-fuelled ships in service and 69 on order.

In 2014, the EU Commission published the Alternative Fuels Infrastructure Directive which has, among its goals, the creation of a network of LNG-fuelling points in the main European ports in order to facilitate the shift to LNG. The directive highlighted the need of two basic parameters: cost benefit analysis and environmental benefits.

LNG bunkering facilities are today available in the ports of Finland, Norway, Sweden, Denmark, Germany, Holland, Belgium and Spain. Through Poseidon Med Project, five countries, namely Cyprus, Greece, Italy, Croatia and Slovenia, are undertaking a joint study with the objective of developing infrastructure facilities for LNG bunkering.

Furthermore, a network of LNG-bunker ready ports was set to bolster efforts towards enabling the uptake of LNG as a marine fuel. Such network was lately further extended by the Chinese Port of Ningbo-Zhoushan, Marseille Fos, Vancouver in Canada and the Port of Singapore. With this expansion, the network comprises a total of eleven Ports across Asia, Europe and North America.

The EU Commission aims to create a network of LNG-fuelling points in main European ports in order to facilitate the shift to LNG

The Port of Gothenburg in Sweden has just confirmed the construction of a new LNG bunkering facility within the port which enables vessels to bunker LNG from trucks or containers while simultaneously loading or unloading cargo at two jetties – dispensing with the need to make a separate refuelling stop. The facility is scheduled to be up and running this year.

This is an avenue of funding that Malta needs to exploit, for two main reasons: environmental consideration and price differential. It is estimated that the price of LNG is between 60 to 80 per cent the price of heavy fuel oil (HFL), hence representing a saving of 20 to 40 per cent on bunker costs.

Apart from the cost considerations, which are significant, there are other issues mitigating towards the use of LNG as bunker fuels, including: the significant costs related to the cleaning of HFO bunker tanks; the disposal of contaminated oils and sludge; the wear and tear of the machinery when using HFO; and the possibility of sea pollution from same fuel.

LNG by far exceeds alternative options in terms of emission reductions. It emits zero Sox (sulphur oxides) and virtually zero PM (particulate matter). Compared to HFO, LNG emits 90 per cent less NOx (oxides of nitrogen) and the use of best current practices and appropriate technologies to minimise methane leakages offers the potential for up to 25 per cent reduction in greenhouse gases.

The pricing of LNG as a bunkering fuel is fraught with many uncertainties mainly because of lack of infrastructure and availability. This is a main drawback for LNG users. With growth in demand and increased flexibility in the LNG spot market, this uncertainty is expected to abate.

The emphasis being made here is on the procedural aspects that need to be addressed, rather than the technical dimension for setting up an LNG bunkering terminal. The same applies to issues of demand and supply which would be the domain of an economic viability study that also needs to be undertaken.

Delivering LNG fuel to a ship can be done by truck, ship or pipeline. As things stand today, the delivery by truck is the most common method in use. This is mainly due to the fact that, cost wise, this method is the least expensive and, at the same time, the most flexible. Even the ship to ship (STS) bunkering is often the preferred solution for transferring fuel as it offers a flexibility in transfer location, wherever the vessel is located, and a swift and efficient operation. Whichever method of transport is used, there are three basic factors which are fundamental to have a safe and successful operation: risk analysis and safety management which vary according to the method used; authorisations and sanctioning by relevant authorities; and training of personnel.

ISO standards and procedures are already developed for each method of transport as well as for training, risk assessment, installations and equipment.

A particular study that is often quoted on the subject matter, namely Bunkering – LNG for Shipping, identifies nine aspects or drivers which are essential in assisting the decision-makers to develop the LNG bunkering offer at ports. These nine drivers are: LNG demand, offer, location, port profile, pricing, infrastructure, permitting, port relevance and public opinion.

The priority of one driver over the other is subjective to the realities of the location and the overall objectives of the policymakers.

By way of conclusion one needs only look around other European countries to note the extensive investment that has been made in the LNG bunkering infrastructure. Malta cannot remain on the periphery of this development because Maritime Malta has to offer a holistic solution to the shipowners when they come to choose at which ports they will call. By a lengthy consideration, Malta will not be an alternative to shipowners anymore and will remain out of the best possible LNG strategic locations.

Godwin Xerri is managing director of Combined Maritime Services and Joseph Calleja is general manager of Palumbo Malta Shipyard. They are members of the Malta Maritime Forum. The opinion expressed by the authors does not necessarily reflect the position of the Malta Maritime Forum.

www.mmf.org.mt

Advert
Comments not loading? We recommend using Google Chrome or Mozilla Firefox with javascript turned on.
Comments powered by Disqus  
Advert
Advert