Greater regulatory certainty and a burgeoning bunkering infrastructure worldwide means the conditions couldn’t be better for LNG-fuelled vessels to set sail

Using natural gas as a fuel has long been hailed as the future of shipping. However, it has proven remarkably difficult to establish exactly when this particular future will arrive. In 2012, DNV GL predicted that by 2020, the LNG-fuelled fleet would comprise around 1,000 vessels. Three years later, this figure was revised downwards to between 400 and 600 vessels, with low oil price and slower than expected development of bunkering infrastructure cited as key reasons.

Today, there are 117 vessels burning LNG, of which more than two-thirds are operating in Europe. A confirmed order book of 111 vessels will see that figure double. In addition, there are 114 vessels that are classified as LNG-ready. A quicker uptake of LNG as a fuel for shipping is thus clearly visible.  

Bunkering boom

The conditions needed for an acceleration are in place. In particular, bunkering options are expanding on a global scale. Today, there are 60 supply locations worldwide, including Singapore, the Middle East, the Caribbean as well as Europe, according to the latest data in DNV GL’s LNGi business intelligence portal. A further 28 facilities have been decided and at least 36 are under discussion. 

By the beginning of 2018, six LNG bunker vessels will be in operation globally, and four more projects are confirmed. Major players including Total, Shell, Gas Natural Fenosa, ENN and Statoil have announced plans for new LNG bunker vessels, which, according to DNV GL’s Senior Consultant for Environmental Advisory, Martin Christian Wold, are likely to materialize in the near future at key locations in northern Europe, the Middle East, the Gulf of Mexico, Singapore, and the Mediterranean. 

Meanwhile, government-backed initiatives are getting underway in China, Korea and Japan, as these countries strive to meet ambitious national targets for combating local pollution and reducing greenhouse gases (GHGs).

Wold explains: “For suppliers, it’s very much a question of timing. They won’t bring these facilities online until they see sufficient confirmed orders for LNG-fuelled tonnage to justify the investment. Yet, they are also jostling to secure an anchor customer and gain first-mover advantage to deter their rivals from setting up nearby.”

Shell, for example, has just signed a long-term charter agreement for a 4,000m3 bunker barge to supply LNG bunkers along the U.S. east coast. Meeting growing demand for LNG from cruise lines was cited as the major impetus behind the decision. 

The regulatory outlook too is now much more certain, thanks to IMO setting 2020 as a fixed date for the introduction of its global cap on fuel sulphur content. Because of the political currency attached to the decision, any softening of the regulation or significant slippage is regarded as unlikely.

“Evaluating whether LNG as a fuel will provide a competitive edge is difficult enough for ship owners. Having to anticipate various regulatory scenarios on top of that complicated matters further. IMO’s decision brings much-needed clarity to owners considering switching to LNG and other alternative fuels,” says Wold.

Inflection point

Both SEA\LNG, a multi-sector industry coalition working to facilitate and accelerate the widespread adoption of LNG as a marine fuel, and the Society for Gas as a Marine Fuel (SGMF), a non-governmental organisation dedicated to promoting the safe handling of LNG as a fuel, have watched these developments unfold and believe that an inflection point for LNG uptake is closer than ever.

SEA\LNG General Manager Steve Esau says that the pivot will hinge on global availability of bunkering infrastructure close to traditional bunkering ports. “Nine of the top ten oil bunkering ports already offer LNG or have firm plans to do so by 2020,” he says. Slicing the statistics another way, there are already large scale terminals nearby 24 of the world’s top 25 ports ranked by trade volume. With a little more investment in the ‘last mile’ to bring LNG from the bulk infrastructure to ships, he believes the foundations are in place for a wider switch to LNG from 2020.

SGMF’s main objective is to provide guidance for safe and responsible use of LNG as fuel, and General Manager Mark Bell has been watching the development from the start: “Right now just 0.2% of the addressable global fleet is running on LNG. But with regulatory clarity and established standards for safe handling of gas as a marine fuel, I believe we will see LNG fuel for ships become a mainstream option within the next five to seven years.”

Boxship breakthrough

The concept is increasingly appealing to container lines, with several now giving serious consideration to LNG for their newbuild fleets. Maersk Line raised many eyebrows when it publicly stated it views ‘alternative fuels’ as a better long-term solution to meet tougher environmental regulation than exhaust gas scrubbers in combination with conventional engines running on heavy fuel oil (HFO).

Just recently, CMA CGM made an announcement timed to coincide with the COP23 talks in Bonn, Germany, that it will equip nine 22,000 TEU vessels with engines burning LNG, thereby improving their EEDI by some 20% over comparable HFO fuelled tonnage.

Endorsements for LNG by such major operators could serve as the catalyst that triggers a stampede. DNV GL’s Wold comments: “While speculation about orders for large LNG fuelled container ships on the Far East-Europe route had been mounting, few had expected a breakthrough contract to arrive this year. It marks a significant turning point for LNG as a fuel and the shipping business more generally.”

Zero-carbon transition

LNG fuel as a solution to curb harmful emissions is indisputable. It emits zero sulphur oxides (SOx) and virtually zero particulate matter (PM). Compared to HFO, it emits up to 90% less nitrogen oxides (NOx).

The environmental agenda is today shifting to focus more on greenhouse gases. Employing current best practices and appropriate technologies to minimize methane leakage, gas offers the potential for up to a 25% reduction. “Gas is not a silver-bullet, but it is a step in the right direction when it comes to reducing carbon emissions,” says SGMF’s Bell.

SEA\LNG’s Esau believes there is considerable scope for refinements and improvements to be made. “Advances in dual fuel technology and propulsion, enhanced control systems and future use of gas turbines present further opportunities for greater GHG reductions.”

His optimism is not unjustified. Engine manufacturers have invested huge sums in R&D to improve the efficiency and environmental performance of conventional HFO burning engines, spurred by a combination of regulatory push and demand from end users for better fuel consumption. With a similar level of focus and engineering ingenuity, there is little reason to doubt they could achieve major advancements for engines operating on LNG.

In the longer term, the possible addition of renewable natural gas – or biomethane – into the energy mix could offer further benefits. Today, biomethane is only produced in small quantities. However, as the incentives and momentum for reducing GHGs grow, production is likely to grow as well. Notably, the Port of Rotterdam is already exploring its potential. It is too early to say whether enough can be produced to fuel more than a handful of vessels, nonetheless Esau believes this is an opportunity that must be “vigorously pursued”. 

While conventional LNG alone cannot cut CO2 to the extent required by the COP21 agreement, it remains the best commercially available and proven technology to reduce CO2 emissions for most ship types and trades, states Wold: "With no definitive zero-emissions solutions yet on the horizon, it makes sense to do what you can today to improve air quality and lessen the carbon entering the atmosphere.”


Industry associations SGMF and SEA\LNG are engaging with shipping companies, LNG suppliers, industry regulators and other stakeholders to promote a safe and accelerated uptake for LNG as a marine fuel. They aim to instil investor confidence for its adoption through a combination of education and outreach.

“Our work must be based on objective data, as it may feed into investment decisions running into the tens of millions dollars,” remarks SEA\LNG’s Steve Esau. To this end, both are capitalizing on DNV GL’s LNGi business intelligence portal, which provides comprehensive insights on worldwide bunkering availability and keeps a close eye on fleet development.

It is now supported by LNG Fuel Finder, an online tool that lets ship owners and charterers register their interest in using LNG as a ship fuel, and alerting LNG suppliers to the fact. Esau believes this digital marketplace will boost transparency and raise confidence in the availability of LNG as a bunker fuel. "It could provide an effective channel for buyers to meet sellers.” Mark Bell of SGMF echoes this sentiment: “As a consolidated source of credible data, LNG Fuel Finder could remove the suppositions from the equation.”

Author contact:
Martin Christian Wold ([email protected])
Senior Consultant, Environmental technology and compliance
DNV GL – Maritime Advisory