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Gas Innovation Investment Liquid Natural Gas Ports

A look at small scale maritime virtual pipelines solutions

Today, much of the LNG that is transported around the world is carried in large oceangoing vessels. But, now, we are seeing an increasing demand for small scale LNG carriers, usually with a maximum size of the tanks on board such ships of around 30,000 to 40,000 m3, as compared with a large-scale LNG carrier with a capacity of approximately 160,000 to 170,000 m3.[i] At the end of 2018, the global LNG tanker fleet was approximately 563 vessels. It included 33 FSRUs and 44 vessels of less than 50000 cubic meters .[ii]

Driving demand to small scale LNG carriers

There are a number of drivers for an increase in the demand for this type of vessel. These include:

  • The introduction of the IMO 2020 emissions cap that is encouraging an increase use of LNG by ships.
  • In Europe and China, greater concern about the environment and pollution, which is encouraging increased use of LNG
  • In Indonesia, the need to deliver LNG to the growing number of gas to power projects being built throughout the country as part of electrification efforts.
  • The growing electrification of transport, resulting in more gas power projects needed worldwide.

As a result, Bloomberg predicts that by 2030, 450MMtpa of LNG will be required globally, an increase from 308MMtpa in 2018, driven largely by Asia accounting for 86% of the total growth.[iii]

Traditionally the market, for moving LNG was to customers needing large regular quantities, to meet their power and heat generation needs. Amongst the top three global LNG buyers are Korea Gas Corp Japan’s JERA and China National Offshore Oil Corp.[iv]

New prospects

Now, in order to open up new prospects for LNG, traders are looking for smaller customers to exploit, which do not have the budget or need for large quantities of LNG. As a result, traders are making increasing use of small scale LNG carriers, delivering LNG from a major hub such as Rotterdam in Europe and Singapore in South East Asia to customers, such as power generation plants, land-based industries and suppliers of LNG as fuel for vehicles or ships. Builders of small scale LNG carrier ships offering a range of commercial designs include DAMEN SHIPYARDS GORINCHEM[v] in Holland and Sinopacific Offshore & Engineering.[vi]

An LNG terminal can be used to not only re-gasify LNG loads, but also used as a transhipment and storage site for cargoes for later use. For example, in January 2018 Russian LNG exports from the Yamal LNG export terminal, was transferred via the UK’s Isle of Grain LNG terminal to a ship destined to deliver the cargo to customers in Boston New England.[vii]

Bunkering etc.

At major LNG hubs such as Gate in Holland, LNG is reloaded into smaller LNG tankers for re-export, or re-gasified for transmission by Europe’s gas pipeline network to customers. In addition, the port of Rotterdam is distributing LNG as a fuel for shipping and road transport.

For LNG bunkering activities, small-scale tankers are being used, to directly deliver LNG as a fuel to the growing number of ships using LNG as a fuel. For example, in order to for Shell to meet its maritime customer needs in north-west Europe, the company operates three LNG bunker vessels. One such small-scale bunker vessel in its fleet holds some 6500 m³ of LNG fuel. The source of the LNG comes from the Gate terminal in Rotterdam.[viii]

Outside Europe, there is not an extensive network of LNG bunkering ports or vessels able to provide ship to ship bunkering services. However, we are beginning to see a growing number of new facilities being developed in Australia, North America, south-east and north-east Asia. In the Asian Pacific region, the ports of Singapore[ix] and Tokyo are aiming to become major regional bunkering hubs for their regions.[x]

New entrants

Around the world integrated LNG logistics suppliers have been set up to meet growing market demand.

In the Caribbean, American based New Fortress Energy, founded in 2014, is an energy infrastructure business that operates liquefied natural gas (LNG) production facilities, logistics and terminals across North America and the Caribbean. For example, the company is involved in delivering LNG from American LNG ports to customers of all sizes in Jamaica and Puerto Rico for power generation, mining and transport purposes.

Elsewhere, Avenir LNG, which is a British based small-scale LNG supplier, established in 2018, involved in all aspects of the logistics chain including provision of vessels to transport and bunker LNG, importing and distribution.[xi] It is actively involved in developing opportunities in the Mediterranean Sea, the North Sea, the Baltic Sea, the Caribbean, South America and Asia. Its website announces recent news about 3 projects, one in Brazil, Malaysia and Columbia.[xii]

In September 2019, Avenir announced, that it would provide additional services planned to be provided directly from the FSRU Höegh Grace include, among others, cool down of conventional LNG carriers and reloading of small LNG cargoes for onward distribution throughout Latin America and the Caribbean.

In October 2019, Avenir announced that its first 7,500 bcm liquefied natural gas (LNG) carrier. The vessel will provide bunkering to LNG fuelled vessels across Malaysia in addition to transport services for small-scale terminals in the region.

In November 2019, Avenir announced that its second 7,500 bcm LNG Carrier will used to deliver LNG to various ports across Brazil.

One thing is certain the market for small scale LNG carriers is expected to grow.

[i] https://giignl.org/sites/default/files/PUBLIC_AREA/About_LNG/4_LNG_Basics/lng_3_-_lng_ships_7.3.09-aacomments-aug09.pdf

[ii] https://cyprus-mail.com/2019/04/15/lng-transport-is-where-the-big-money-is/

[iii] https://avenirlng.com/about/

[iv] https://de.reuters.com/article/us-asia-lng-markets/worlds-top-lng-buyers-form-alliance-to-push-for-flexible-contracts-idUSKBN16U27X

[v] https://www.damen.com/en/companies/damen-shipyards-gorinchem

[vi] https://www.wartsila.com/twentyfour7/energy/small-carriers-diversify-the-lng-fleet

[vii] https://www.ft.com/content/56f19604-fd6d-11e7-a492-2c9be7f3120a

[viii] https://www.shell.com/energy-and-innovation/natural-gas/lng-for-transport/lng-for-marine.html#iframe=L2Zvcm1zL2VuX2diX3doYXRfbG5nX2Nhbl9kb19mb3JfeW91cl9idXNpbmVzcz91cmw9bG5nLWZvci1tYXJpbmU

[ix] https://www.slng.com.sg/website/index.aspx

[x] https://sea-lng.org/lng-as-a-marine-fuel/bunkering-infrastructure/

[xi] https://avenirlng.com/about/

[xii] https://avenirlng.com/category/projects/

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