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Tuesday, October 22nd, 2019

Shell: IMO regulations could launch serious takeoff for LNG

by October 14, 2016 General


Not only is the conventional part of the bunker industry waiting anxiously for the announcement from the IMO’s Marine Environment Protection Committee (MEPC) in a few weeks. The LNG sector also needs to know if the new sulfur requirements will enter into force in 2020 or 2025.

“The IMO’s decision is critical for everything and everyone right now. Everybody is holding back because no clarity has arrived from the IMO yet. As long as the question remains open, people won’t make any decisions,” says Lauran Wetemans, General Manager of Gas to Transport at Shell, in comments to ShippingWatch:

“If we look at the discussions which have taken place in the past three years, people are ready with actual plans. But they are waiting until they know if it’s now or in five years. I’m not even sure if we will actually get a decision from the IMO by the end of October.”

Rolls-Royce also thinks that the IMO’s decision is one of the most crucial driving forces for LNG:

“The IMO sulfur emission requirements constitute a major incentive for carriers. When they know that the date is approaching and they know that the regulations are global, then they will have to take action and look into what solutions are out there. And then they will have to choose between low sulfur fuels, a scrubber to handle the sulfur or a broader, strategic solution such as LNG,” explains Richard Bowcutt, Senior Vice President of Rolls-Royce in Asia and the Pacific.

Few to lead the way

Shell estimates that LNG will constitute 10-20 percent in 2030, referring to the fact, that the majority of new vessels built today can handle different types of fuel.

And although Richard Bowcutt declared in front of 1,500 bunker stakeholders, participating this week in a Singapore conference, that LNG “is a reality”, he also admits to ShippingWatch that the energy source is still at an early stage:

“A lot of people are dipping their toes but very few are jumping into the water. The few actually doing so will be the ones to prove to others that this is the way to go,” Bowcutt explains:

“It’s worth noting that this isn’t something you can easily move forward with. You have to understand all the many different dynamics, but when you have made the decision, it will be long-term and strategic, and then you will see the benefits.”

Rolls-Royce has to date supplied over 60 LNG-driven engines around the world to the maritime sector. And when ShippingWatch meets with Wetemans, he has just finished 18 months of negotiations with the cruise liner company Carnival to supply gas for the world’s first LNG-operated-cruise liner from 2019.

LNG goes beyond sulfur regulations

Meanwhile, only a few days have passed since Volkswagen announced that the German car manufacturer will likewise employ two LNG-operated car carriers on the services between Europe and North America.

“Volkswagen Group takes its share of responsibility for the environment. This does not only concern our cars but also production and logistics,” says Wolfram Thomas, Head of Group Production at Volkswagen, in a press release:

“By employing two LNG-operated freight vessels on the services between Europe and North America, Volkswagen Group Logistics becomes a frontrunner in environmentally friendly, resource-efficient transport.”

And just as Volkswagen notes in the press release, both Wetemans and Bowcutt highlight that LNG is a more pure source of energy than what is required by the approaching IMO regulations:

“LNG is essentially much more environmentally sound – in terms of SOx, NOx, greenhouse gas emissions, and particle matter. As such, by going to LNG, the industry would be able to meet future environmental requirements as well, and focus on the business instead,” Bowcutt says while Wetemans adds:

“Global shipping has a very good opportunity here to take the lead.”

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