LNG’s future as a marine fuel

By Anastasios Chrysochoos and Alexandros Lagakos*

LNG’s use in shipping is expected to gather interest from the sector in the next few years for reasons associated to the new fuel requirements as well as the need to reduce emissions.

It should be noted that since the beginning of 2020, there will be a new limit on sulfur content in shipping fuels globally, set at 0.5% compared to 3.5% currently.

The issue concerns 3.5 million bpd, with shipping companies looking into ways of conforming to new requirements and stricter CO2 emissions rules in the near future, whose possible enforcement is already under discussion.

An advantageous choice

LNG is one of the more appropriate and advantageous solutions, since its use brings environmental benefits and fuel cost savings.

Specifically, LNG provides 25% fewer CO2 emissions compared to diesel, 85% fewer NOx emissions and 99% fewer SOx and microparticle emissions.

At the same time, the International Maritime Organization – IMO – has set a very ambitious goal for reducing the rate of “CO2 emissions to shipping work” by 70% until 2050 compared to 2008 with a parallel target of reducing CO2 emissions by 50% within the same timeframe.

Energy analysts consider the repercussions of these initiatives to be significant, since High Sulfur Fuel Oil (HFSO) today represents 80% of shipping fuels and 2 mboe of this fuel are expected to be replaced with cleaner alternatives, such as diesel and Very Low Sulfur Fuel Oil (VLSFO).

The possibility of sparsity

The transition to these fuels may possible create sparsity in the oil market from 2020, with balance returning shortly. At the same time, it is estimated that during 2019-2021 the installation of scrubbers (emission cleaning systems to reduce SOx emissions of ships) will rise.

When it comes to the numbers, around 155 ships are currently using LNG globally and a similar number has been ordered, while many harbors around the world already develop LNG supply infrastructure.

LNG is not expected to uniformly be applied to all types of ships, since this solution’s commercial viability has to coincide with the particular attributes of each ship.

For example, it seems that cruiseships and coastal ships turn towards LNG, since they follow frequent set paths to harbors that have – or will soon have – the necessary supply infrastructure.

At the same time, it is necessary that these ships function with the best possible green footprint, in favor of their clients and in favor of the connecting cities.

We should consider the taken decision by many European cities to “persecute” diesel off their urban space and realize how the image of a cruiseship or any other ship consuming tons of polluting diesel ties to that.

LNG does not only ensure fewer emissions (mentioned previously) but also constitutes a cheaper fuel compared to diesel. Therefore, it is an ideal solution for these ships.

Environmental benefits

Moreover, for similar reasons, LNG has significant economic and environmental benefits for other types of ships such as tugs, ferries, Ro-Ros and contains ships, even oil tankers under certain conditions.

The case of Russian Sovcomflot is enough, who has already constructed its first Aframax that will operate mainly in the ECA zone in the Baltics and the North Sea.

We should also note that first class container or CMA companies already operate ships with LNG.

Alternative choices

In any case, IMO’s goal to reduce the “CO2 emissions to shipping work” ratio requires the use of alternative fuels in the future, such as hydrogen, methane and also electricity. These technologies are currently non competitive, either because of “commercial immaturity” of each technological solution, or because of taking much of the ship’s useful shipping capacity.


When it comes to LNG, concerns are present, since a restricting factor is the possible complexity of converting an older ship or the comparatively higher cost of constructing a new one, as well as methane slip or the dissimilar regulatory framework around the globe. However, the market and technical solutions mature over time. Therefore, offered value for shipping and the environment is obvious and LNG will certainly continue to expand its market share in the global shipping fuel market.

“Green shipping”

Last but not least, the European banking sector appears interested in “green shipping” with a given financial support by European programs and investing institutions.

In any case, IMO’s target to reduce the ratio of emissions to economic viability of LNG projects in shipping is further advanced by possible synergies from the use of small scale LNG. The Madeira island in Portugal may show the way for our case, since a storage unit supplied by ISO LNG containers, gasifies up to 12,000 c.m. per hour and supplies a small distribution network with a power plant as the main consumer.

In the Greek reality, the promotion of using LNG as a shipping fuel has been included in the Natural Gas Road Map 2017-2022, which is approved by the Governmental Council of Economic Policy (Decree 78/2018).

At the same time, the Poseidon Med II program is fully under way, which immediately concerns the country, since it includes studies for ship conversions or construction, for building infrastructure and for means of supply (bunker/feeder vessels), as well as studies about the regulatory framework and probing synergies that will constitute necessary investment ready for funding.

On its behalf, DEPA has made a step forward by developing a plan to build an LNG vessel of 3,000 c.m. in order to supply the port of Piraeus, as well as other Greek ports. Through the project, which is funded by the EU, DEPA aims to enhance the use of LNG as a shipping fuel in the country.

The vessel, according to DEPA, will be the first of its kind in Greece and the Eastern Mediterranean. The ship will be part of the Poseidon Med II project, as well as the new BlueHUBS project which is jointly forwarded by Greece and Cyprus.

As a result, LNG is still on the radar of shipping companies and necessary infrastructure, supply hubs and regulatory frameworks are globally in development, while the ambition for new, more innovative fuels remains.

After all, the issue is high in IEA’s priorities and the organization hopes to develop the necessary framework for dialogue between interested parties.

An international supply base

What remains is for Greece to take advantage of its place in global shipping, the dynamic of the Piraeus harbor and the national shipbuilding sector, the abilities of the Revythousa LNG terminal, as well as programs such as Poseidon Med II, in order for the country to become immediately a base of supplying LNG ships in the Eastern Mediterranean.

* Anastasios Chrysochoos is a staff member of the Greek energy ministry and doctoral candidate of the AUEB.

Alexandros Lagakos is the founding chairman of the Greek Energy Forum.

Source: greekenergyforum.com

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More