A review of demand prospects for LNG as a marine fuel
The growing level of interest displayed in LNG as a marine fuel, driven by both environmental restrictions and economic attractiveness means usage is certain to grow. There is, however, less certainty over the pace and scale of demand growth. This in part is due to the relatively poor data quality on marine fuel usage but primarily a reflection on the still early nature of market development and uncertainties over alternative fuel options.
This paper, which is a follow up to an earler study published in 2013, aims:
- To assess the most promising sectors for LNG in marine transportation in global shipping markets.
- To derive a set of metrics that could be used to generate forecasts of LNG demand in the marine sector and to assess the validity of current forecasts
- To assess the current state and planned state of LNG refuelling infrastructure and its impact on market development
- To briefly mention the comparative prospects for LNG in land-based transport.
The paper concludes that the shipping sectors that are likely to be more promising for LNG include ro–ro ferries, cruise ships, bulk carriers, large container vessels, and, perhaps unsurprisingly, LNG tankers.
It would also appear that because of the costs of retrofitting, most LNG-fuelled ships will be newly built and owners/operators are unlikely to commit without concluding a long-term supply contract covering both pricing and physical delivery. LNG suppliers which are prepared to conclude such contracts will provide an important stimulus to the market. The lead times involved and the relatively low capital cost of infrastructure suggest that refuelling capacity is unlikely to be a constraint.
A review of recent forecasts suggest that global demand will be in the range of 25 to 30 mtpa of LNG by 2030. The paper describes how many new or converted vessels fuelled by LNG would be required to reach this level, how it might be achieved and where the main obstacles to uptake are likely to occur. It concludes, that on balance, a demand level of around 15 mtpa (excluding LNG tankers) by 2030 is a more realistic prospect at present.