As the oil major’s LNG bunkering newbuild, Cardissa, is christened in Rotterdam, Lauran Wetemans says that growing the company’s LNG bunker delivery capacity to as many five vessels is currently under consideration.
Bringing together stakeholders to make the marine LNG infrastructure commercially viable and with a global reach was a key theme at the Shell-organised event in Rotterdam yesterday to mark the christening of the 6,500 cbm-capacity Cardissa, which was constructed at the STX shipyard in South Korea and arrived in Rotterdam in July. She will operate as an LNG bunkering and distribution vessel from the Gate LNG terminal.
Shell Netherlands President Director, Marjan van Loon welcomed guests to yesterday’s ceremony, and the christening was performed by Karin Orsel, Co-Chairman of the Royal Association of Netherlands Shipowners (KVNR).
Speaking after the event, Shell LNG Fuel General Manager Lauran Wetemans said that the marine LNG sector could be seen as ‘disruptive’ in the same way as the electric-powered car industry is proving to be in that it requires a new supply infrastructure, and he acknowledged that the ‘buy-in’ of owners is crucial if the use of LNG bunker fuel is to be stepped up from its current, relatively modest level.
With customers such as Carnival and Sovcomflot already onboard, Shell is pressing for an increase in the number of LNG bunkering ports around the world. Availability of LNG – an issue which is often cited as being a limiting factor in the uptake of this ‘clean’ bunker fuel – is not a problem, said Wetemans.
‘There is LNG - either produced or at a receiving terminal - at around 150 locations in the world and more than 50 of them are in key bunkering spots, [such as] Singapore, Rotterdam Busan, Shanghai, Ningbo, and in the Middle East,’ he said.
‘What needs to happen is to be able to take that LNG in smaller quantities out of those terminals, and that is actuallly not that difficult – the Zeebrugge terminal has done that and in Rotterdam you could have bunkered on the existing jetties.
‘However, what Zeebrugge and Rotterdam have done is to make an extra jetty, and that is not a massive investment in the grand scheme of things.’
Wetemans said there are around 28 ports around the world that are actively positioning themselves to make marine LNG available to vessels but he acknowledged that it will take time to make this energy transition.
‘So, it is not that you can come tomorrow [for fuel], but that’s shipping – if you order a vessel it will take two years for the vessel to be there.’
The introduction of the global 0.5% sulphur cap in 2020 will be the catalyst for decision-making about future fuel choices, and Wetemans emphasised that LNG will be one of several solutions to achieving regulatory compliance. ‘I’m not promoting LNG as the single silver bullet – it is part of the mix.’
Looking ahead five years, he suggested that there could be between 10-30 LNG bunker vessels in operation.
‘Why do I say that? Well, if you look at particular ports you do want more than one vessel per port – it gives you flexibility and contingency.’
‘But, also, if I look at [a customer such as] Carnival, they need it in 10 to 20 ports – so by 2025 [LNG] should be available in the top 25 top ports in the world.’
In response to a question from Bunkerspot about the future prospects for the LNG retrofit sector, Wetemans noted that: ‘We have always said it is easier for newbuilds, however I think you will see retrofits pretty soon.
‘But’, he highlighted, ‘there are certain segments that are more easily suited to LNG – such as oil/product tankers - because you can put the tanks on deck.
‘If you have a bulk carrier it sits in the way of the cargo operation – so [for the retrofit market], for certain segments, yes, and for certain segments, no, but it is proven that it is easier to integrate at the beginning than it is to take it out later.’
Following the arrival of the Cardissa in Rotterdam, Shell has also agreed terms with Victrol NV and Compagnie Fluviale de Transport (CFT) on the long-term charter of a 3,000 cbm-capacity bunker vessel. The barge, which is slated to enter service in 2019, will operate out of Rotterdam, serving a range of customers, including vessels operating on Europe’s inland waterways.
At the Rotterdam event yesterday, Wetemans also indicated that fitting a bunker arm to the Coral Methane to give her an LNG bunkering capability was also an option currently under discussion.
Developed for the Netherlands-based gas transportation company Anthony Veder, the 7,500 cbm-capacity vessel operates under a 15-year charter with Shell’s Norwegian energy company, Gasnor AS.
The construction of the Cardissa has been supported by EU-funding of around €10 million, but Wetemans would not be drawn when challenged to disclose the final cost of the vessel.
‘The first vessel, it is always a little bit more expensive than you would like because everyone builds in contingencies, but I can assure you that the second one we have ordered [the barge] is significantly cheaper than this one.
‘The Cardissa is absolutely not relevant as a comparison,’ he emphasised. ‘This is not a bunker barge – it is a bunker vessel. So, if I give you the number then you will say it looks horrendous, but this [vessel] will allow me to do distribution and therefore the ship is more expensive.’
He continued: ‘It has been an economic decision; this ship has also given us opportunity. It allowed us to sign up Carnival, it allowed us to sign up Sovcomflot, and now that I have got this ship and have got the second one ordered, I can take this ship to the next port – Amsterdam, Hamburg, Gibraltar or the Western Mediterranean. So, I can use this vessel and relocate it.’
While Wetermans was not willing to talk numbers on the cost of the Cardissa, he did disclose that from a commercial point of view the vessel will need to achieve annual LNG delivery volumes of between 200,000-300,000 metric tonnes.
In terms of the price of LNG, he indicated that ‘it will be at a discount to diesel that allows you to make the investment.
‘f you compare it to heavy fuel oil and a scrubber, then it’s a bit more challenging,’ he said. ‘But if you think that after 2020 there will be NOx emission control areas (NECAs) and there will be greenhouse gas (GHG) emission targets, then all of a sudden, when you start pricing that, then [LNG] becomes distinctly better than fuel oil and scrubbers.’
When asked by Bunkerspot how price competitive LNG may be in comparison to the new 0.5% sulphur blended fuels that are expected to come onto the market to meet the 2020 regulation, Wetemans indicated that: ‘0.5% [fuel] will also be at a discount to diesel – and while I don’t think anybody knows what the price of 0.5% is going to be, LNG will be cheaper than a 0.5.’