LNG

Global shipping chaos is leading to huge additional economic costs for imports and exports and in terms of shipping liquefied natural gas spot charter rates for West of Suez and East of Suez have plummeted.

London shipbrokers said shipping spot charter rates for West of Suez slumped this week because of the Red Sea crisis by $40,000 per day to $105,000 per day.

Rates for East of Suez tumbled by $30,000 per day to be at $75,000 per day because of extra cargo and fuel costs stemming from having to take longer delivery routes around the Cape in South Africa,

Charter demand has also been seriously affected because clauses in time-charter agreements exclude the deliberate entry into “war zones” that would affect hull, cargo and crew insurance.

LNG carriers from Qatar are continuing to use the Suez Canal and one that has just delivered to Italy’s Adriatic LNG import terminal was well on its way back to Ras Laffan.

Vessels carrying LNG from the Atlantic Basin via Suez had been less frequent before the crisis and are not expected to be re-using the Suez route anytime soon.

Containership costs soar

An example of the shipping chaos in terms of financial costs are the measures and cost adjustments having to be taken by companies like France’s Marseille-based group CMA CGM, which runs one of the largest containership fleets and many of whose vessels are powered by LNG.

CMA CGM has been forced to raise its tariffs for customers because of the Red Sea and Suez Canal shipping disruptions caused by terrorism and those on the Panama Canal caused by drought.

CMA CGM is one of the groups that has halted its ships from entering the Red Sea, and thus the Suez Canal, because of the dangers of terrorist missile attacks from Iran-backed Houthi rebels in Yemen.

One of the company’s vessels, the “CMA-CGM Jacques Saade”, the world’s first LNG-powered very large containership with 23,000 twenty-foot equivalent unit containers, normally travels to and from Asia via the Suez Canal on the Asia trade route.

The vessel was heading for the Moroccan port of Tangiers on December 21 after travelling from the East Mediterranean just after the company stopped using the Suez Canal that took its vessels past Yemen on the Red Sea route.

“In continued efforts to ensure the safety of our crew, vessels, and your cargo amid the ongoing developments in the Red Sea region, we would like to provide you with important information regarding the re-routing of several vessels from their intended route to through the Cape of Good Hope (South Africa),” said CMA CGM.

“As highlighted in our previous Customer Advisory, the re-routing of these vessels is a precautionary measure taken to navigate away from potentially unsafe areas,” explained the company.

“This decision is in line with Clause 10 of our Bill of Lading, and while we understand it may impact your logistics and supply chain operations, it is a necessary step which comes with a cost,” stated CMA CGM.

Red Sea ports

“Accordingly, we hereby inform you that, effective immediately and until further notice, a Red Sea Charge will apply to all cargo to and from Red Sea ports unless you decide to accomplish the Bill of Lading at the designated hub ports,” the company explained.

The Red Sea Charge details are as follows: US$1,575 per 20-foot Dry, $2,700 per 40-foot Dry and $3,000 per Reefer container and special equipment.

The scope of these charges relate to routes for already-agreed cargoes that traditionally past Jeddah, the Port of Neom, Djibouti, Aden, Hodeidah, Port Sudan, Massawa, Berbera, Aqaba and Sokhna

“The date of application is December 20th, 2023 for cargo on board or to be loaded/ discharged to/from Red Sea, said the company.

Panama Canal

The company also informed its customers in November 2023 that the severe drought and further transit restrictions affecting the Panama Canal had taken a “severe toll” on operations so that consequently CMA CGM prices had to be increased from January.

The company noted that during the year, and despite several water conservation measures, the Canal draft was reduced from 14.94 metres to 13.41 metres (44 feet).

“The lack of precipitation over the summer months has forced the Panama Canal Authority to reduce the number of vessels transiting per day,” CMA CGM explained.

“As a consequence, by January 1st 2024, the booking windows for transiting the Neopanamax locks will be reduced by 30 percent,” said the company.

“These restrictions combined with an increase in the Canal Tariff implemented earlier in the year, are taking a severe toll on CMA CGM’s operations,” stated CMA CGM.

“Therefore, please note that CMA CGM will apply a US$150 per Twenty-Foot Equivalent unit (TEU) Panama Adjustment Factor starting on January 1st, 2024,” the company told customers.

The Korean Register, the classification society of the Republic of Korea, has awarded an Approval in Principle (AIP) for an LNG dual-fuel Very Large Gas Carrier (VLGC) jointly developed by KR and South Korean shipbuilder HD Hyundai Heavy Industries.

The award was made at the five-day Gastech energy conference and exhibition in the Asian city state of Singapore.

“Currently, the global maritime industry is grappling with the development of various counter-measures to meet strengthening greenhouse-gas regulations and there is more market interest in eco-friendly ships fueled with LNG in particular,” said KR.

The newly approved LNG dual-fuel VLGC, which has been developed in response to market needs, utilizes both marine gas oil (MGO) and LNG as fuel and incorporates two LNG fuel tanks positioned on both sides of the open deck.

HHI executed the ship’s basic design, established the layout of fuel supply pipes and the gas detection system and designed the LNG fuel tank using their technical expertise.

Verified

KR verified the safety, suitability and the regulatory compliance of the design by reviewing national and international regulations, leading to the issuance of the AIP for the LNG dual-fuel VLGC.

“KR has been focusing on the development of eco-friendly technologies relevant to LNG for several years because LNG is considered a major alternative that can meet the international regulations,” said Kim Yeontae, Executive Vice President of KR’s Technical Division.

“We will further enhance our customer support to respond to decarbonization, based on our experience and technologies acquired from joint development projects with shipyards,” Kim added.

Jeon Seungho, HHI’s Senior Executive Vice President and Chief Technical Officer, said he was delighted with the award.

“HHI has been working to develop eco-friendly fuel propulsion ships such as LNG using our accumulated design technologies, and we are pleased to demonstrate our technical expertise with this AIP,” Jeon explained.

Order book

“We will continue to make technological innovations for the development of eco-friendly ships,” he stated.

HHI is one of the world’s leading builder of LNG carriers as well as LNG-powered vessels at its Ulsan shipyard.

The advanced facilities give the Korean company a 10 percent share of the global market. The main HHI yard stretches over 4 kilometres along the coast and has 10 large-scale drydocks with nine huge “Goliath Cranes”.

Nippon Yusen Kabushiki Kaisha, the Japanese shipping company known has NYK Line, is continuing to expand its liquefied natural gas-powered fleet of vessels now numbering over 800 owned and operated ships, including 86 LNG carriers.

CMA CGM, the French container shipping line based in the Mediterranean port of Marseille and the third-largest in the world and with a growing fleet of LNG-powered vessels, has a new service to the LNG fuel location of Ennore port on the East Coast of India.

The containerships will expand port coverage with a direct call to Ennore, near Chennai in India, on the Westbound leg of the service connecting North Europe and the Mediterranean with Oceania as from June 2023.

“This new call will offer our customers a fast export connection from the main commercial area in South East India to Europe together with a direct import connection from Australia and Singapore,” said CMA CGM.

“Ennore is also a natural gateway from/to the Inland Container Depot of Bangalore covered with efficient rail connectivity,” added the French company.

The other LNG fuel ports in CMA CGM’s so-called NEMO service include Fos Sur Mer near Marseille, La Spezia in Italy, Rotterdam in the Netherlands, Malta and Singapore.

French LNG storage tanks designer GTT is supplying the tanks for six more LNG-powered containerships ordered from South Korea by CMA CGM.

The six containerships are being constructed at the Korean shipyard of Hyundai Samho Heavy Industries.

The vessels, each capable of carrying 8,000 containers, will be equipped with an LNG fuel tank with a capacity of 6,000 cubic metres.

The deliveries of the vessels are scheduled from the fourth quarter of 2024 to the fourth quarter of 2025.

CMA CGM is a pioneer of LNG-powered containerships and has about 12 more of the vessels being built in China.

The shipping line has said it is aiming to have a fleet of 44 LNG-fuelled containerships by 2024.

The 12 China-built vessels will be delivered between the last quarter of 2023 and the third quarter of 2024.

The construction contracts for those CMA CGM newbuilds were awarded to Hudong-Zhonghua Shipbuilding and Jiangnan Shipyard Co.

Each of the Chinese yards is building six vessels able to carry between 13,000 and 15,000 twenty-foot equivalent units (TEU) of containers.

The first ever LNG-powered containership was delivered to CMA CGM from the Hudong-Zhonghua yard and entered commercial operation in September 2020.

The 23,000 TEU “CMA CGM Jacques Saadé” was named after the late Lebanon-born founder of the shipping line and father of current Chairman Rodolphe Saadé.

Gaztransport and Technigaz (GTT), the French designer of LNG storage tanks for ships and for onshore, has taken a minority stake in the Norwegian technology start-up Tunable AS via an investment round with the participation of the company's existing shareholders.

Oct 25 (LNGJ) - Korea Shipbuilding and Offshore Engineering (KSOE), the main holding company of Hyundai Heavy Industries and affiliates, has obtained a 383 billion South Korean won ($325 million) order to construct four LNG-powered petrochemical carriers.

   The 4,000 deadweight-ton vessels to be built by HHI are scheduled to be delivered to a customer in the Middle East by the first half of 2024. KSOE said it had already surpassed its annual order target for all vessels of US$14.9 billion for the three shipyard companies in the group, HHI, Hyundai Samho Heavy Industries and Hyundai Mipo Dockyard.

French maritime storage technology firm GTT has received an order from its partner, the South Korean shipyard Samsung Heavy Industries (SHI), for the fuel tank designs for five LNG-fuelled container vessels.

Enagás, the Spanish gas grid and liquefied natural gas terminal network operator, and maritime fuels company Peninsula Petroleum Ltd, have signed a joint venture deal for the building and charter of an LNG bunkering vessel based at the Port of Algeciras to serve the Strait of Gibraltar shipping lanes.

The bunkering vessel with capacity of 12,500 cubic metres will be built at the South Korean Hyundai Mipo Dockyard shipyard and is expected to be delivered in the third quarter of 2023.

The vessel will be chartered by Peninsula through an initial seven-year contract. It will load LNG fuel at Enagás regasification terminals, mainly the one at Huelva in southwest Spain.

The Enagás subsidiary called Scale Gas signed the agreement with Peninsula.

The LNG bunkering project will be co-financed by the European Union to the tune of €11 million ($13.3M) as part of the EU Connecting Europe Facility (CEF) transport aid programme.

The financing is available as part of the EU’s support of the development of LNG as a maritime fuel to help avoid sea pollution and to improve air quality in ports.

“The signing of this agreement is in line with Enagás’s commitment to promoting the development of a value chain that allows more efficient and sustainable maritime transport,” said Marcelino Oreja, Chief Executive of Enagás .

John A. Bassadone, the CEO and founder of Peninsula, said the project would serve a growing market and promote cleaner fuel.

“Peninsula and Enagás share the vision of developing the use of LNG as a transitional maritime fuel,” explained Bassadone.

“Having the support of a partner like Enagás is incredibly positive and exciting,” he stated.

Also party to the agreement is the Spanish Port Authority of Algeciras.

“We have been working intensely to promote alternatives to current fuels and developing the use of LNG as a proven technology that is currently available to serve ship owners already asking for LNG in the Port of Algeciras,” said Gerardo Landaluce, President of the Algeciras Port Authority

“Two years after the signing of this agreement, supported by Enagás and along with the co-financing of the European Union, the Bay of Algeciras will have a stable LNG bunkering supply service,” added Landaluce.

March 25 (LNGJ) - Total and Swiss-based MSC Cruises have signed an agreement for the French energy company to supply around 45,000 tonnes per annum of LNG for cruise ships calling at the Port of Marseilles. Total said it already had worldwide bunkering ties with MSC Cruises. “As we prepare to launch our first of three upcoming LNG-powered cruise ships in 2022, through this key agreement Marseilles will become our hub in the Mediterranean for the refuelling of our latest-generation and most environmentally advanced ships,” declared Pierfrancesco Vago, Executive Chairman of MSC Cruises.

Høglund Marine, the Norwegian company specializing in both retrofit and newbuild projects, has signed a contract to supply an advanced LNG Fuel Gas Supply System for three German ships owned by the German Federal Government to be deployed in hazardous roles.

The customised Fuel Gas Supply Systems (FGSS) have been developed to allow the LNG-fuelled vessels to take on hazardous roles such as pollution control, emergency towing and firefighting.

Høglund, based in Tønsberg in southeast Norway, signed the agreements with the Abeking and Rasmussen (A&R) shipyard for three multipurpose vessels ordered by the German government’s Federal Waterways and Shipping Administration.

The design and construction of the three vessels is being supervised by the Federal Waterways Engineering and Research Institute.

To meet the advanced specifications for the LNG system that ensures safe operation in hazardous atmospheres, Høglund will be collaborating with HB Hunte Engineering, headquartered in Oldenburg in the northern German state of Lower Saxony.

“This project makes A&R the only shipyard worldwide offering LNG-fuelled vessels that are qualified to operate in hazardous atmospheres,” said Høglund.

These 90-metre-plus vessels will be equipped with engines generating up to 12,000kW and 145 tonnes of bollard pull, and will have a top speed greater than 15 knots.

The three vessels will also be exclusively LNG-powered. Although suitable for worldwide operation, they will be deployed within the German coastline where they will carry out works on sea marks, pollution control and utilising hydroacoustic equipment as well as in pollution control, emergency towing and firefighting.

Høglund explained that given the intended versatility and multiple roles of the vessels and the hazardous atmospheres they will operate in there are obvious additional safety requirements.

“Consequently, the yard alongside their federal supervisor and owner are placing extra consideration on the design of the LNG system,” said the Norwegian company.

To meet these specifications, A&R, Høglund and HB Hunte Engineering have collaborated to develop a dedicated gas safety concept.

“With Høglund taking responsibility for the overall FGSS product delivery, HB Hunte will contribute a unique LNG tank design, pipe engineering and integration of the LNG system into the wider vessel architecture,” said Høglund.

“Combining skills and expertise in this way is key to supporting the greater safety measures required for special vessels of this type,” it added.

Høglund said that equipping an LNG-fuelled vessel to conduct waterborne firefighting, pollution control and emergency response missions is a particular challenge, as safety must be guaranteed.

The design of the new vessels will meet the requirements of UK maritime classification society, Lloyds Register, and satisfy the strict rules for gas and low flashpoint fuels (IGF Code) aggravated by operation in hazardous atmosphere (gas protection operation).

“With increased uptake of LNG as an alternative fuel, it is important that systems such as the FGSS and dedicated automation are in place to support its safe and effective use,” said Peter Morsbach, a Vice President at Høglund.

“We must take into account complex safety concerns stemming from impacts on the operational profile and atmosphere,” he added.

“In this case here, the focus lies on the system’s safety concept and related design measures in terms of the tank connection spaces, gas treatment rooms, ventilation and monitoring,” stated Morsbach.