1 February 2013

The LNG Option

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This week’s LNG Bunkering conference in Rotterdam has been told that LNG should be seen as only a “transition” solution for air emissions legislation. Antoine Kedzierski, policy officer at Transport & Environment, a Brussels lobbying group told the meeting that LNG has become more viable since the premium of fuel oil over gas has widened and there are claims that using LNG rather than fuel oil reduces direct carbon-dioxide emissions by about 20%. However, this does consider carbon dioxide emissions tied to the production and transport of the LNG. Using LNG as a bunker fuel also releases unburned methane into the atmosphere, methane is a greenhouse gas which is about 21 times more potent than carbon dioxide when it comes to its impact on the climate. Equally important to consider are the commercial implications. LNG conversions are expensive and when considering the case for capital investment ship operators should review the likely fuel price drivers for the future. An increased demand for LNG as bunkers is likely to put upward pressure on prices. Conversely, vessels fitted with sea water scrubbers will be able to continue to consume high sulphur fuel oils for which demand is likely to fall as emissions regulation bites and thus price pressure in more likely to be downward.