LNG

The Maritime and Port Authority of Singapore has issued the annual bunkering data from the Asian city state’s world-class shipping fuel industry listing Equatorial Marine Fuel Management Services as the top bunker supplier in the hub where LNG fuel is also growing in importance and with the fuel suppliers Trafigura and Sinopec taking second and third spots.

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.

Accelleron, the Swiss company that is a global leader in turbocharging technologies and forms part of the Sauber Group, has had its service contract renewed by the Dutch shipping company Anthony Veder, owner of a growing small-scale LNG carrier fleet.

European classification society DNV said there were a total of eight new vessels with alternative fuel propulsion ordered in November with four of them LNG-powered ships as the sector showed continued growth, helped by lower LNG bunker prices at under $890 a tonne in markets like Rotterdam to improve the shipping economics outlook.

Among the ships the other four were methanol-powered and all eight shipping were in the roll-on-roll-off (RoRo) ferry and car carrier sectors.

DNV said that so far in 2023, the platform has logged 268 new orders for alternative fuel vessels, including 112 LNG-fuelled and 152 methanol-powered ships.

The months of June and July saw the most activity related to LNG with 47 new orders combined, whereas July propelled methanol-powered vessels across the 200 ships mark with 48 new orders.

Strong market

“While November's performance may not have matched the volume of previous months, the overall enthusiasm and promising trajectory remain for both LNG and methanol,” said Martin Wold, Principal Consultant in DNV's Maritime Advisory business.

“In general, the pipeline for both announced and unannounced projects remains strong, indicating that the pace will pick up again,” Wold explained.

“However, it's worth noting that the momentum we see in the tanker and bulk segments continues to experience a more gradual acceleration,” he added.

There are currently 988 LNG-fuelled vessels on order or in operation worldwide. This list comprises 528 ships to be delivered through 2028 and 460 LNG-powered ships on the water.

About 198 of these newbuild orders are for LNG-powered containerships and a further 139 vessels are Pure Car and Truck Carriers (PCTCs), while oil and chemical tankers are in third with 48 orders and the fourth-highest segment is for crude oil tankers with 36 orders.

There are also 24 cruise ships and 18 tugs in the order book along with 11 RoPax vessels as well as single-figure numbers for car and passenger ferries, general cargo ships, offshore supply ships and fishing vessels.

Rotterdam prices

This DNV data does not include smaller inland vessels and barges that are part, for example, of the Amsterdam, Rotterdam, Antwerp (ARA) refining hub transportation in northwest Europe or trading on major European rivers.

LNG bunkering fuel costs in Rotterdam have declined steadily since the start of the year.

LNG bunkers at Rotterdam were priced in November at the start of December 2023 at $887 per tonne compared $998 at the start of November 2023 and $1,392 per tonne at the start of January.

Among other emissions-reducing fuels, the price of Ultra Low Sulfur Fuel Oil (ULSFO) at the Dutch port was less volatile than LNG.

The last ULSFO quote in Rotterdam showed only a slight rise since the start of the year to $558 per tonne at the beginning of December 2023 compared with $556 per tonne at the start of January 2023.

Gaztransport and Technigaz (GTT), the French LNG storage technology company, has received an order from a Chinese shipyard to design the cryogenic fuel tanks of 10 ultra-large containerships to be powered by LNG as part of the move to cleaner maritime fuel.

Seatrium Limited of Singapore, formerly Sembcorp Marine Ltd and the Dutch family-owned dredging and shipping company Van Oord, marked the successful completion and delivery of the “Vox Alexia”, Van Oord's third dual-fuel LNG-powered Trailing Suction Hopper Dredger (TSHD), during a sailaway event in the Asian city state.

The delivery of the “Vox Alexia”, the final unit of a series of three dual-fuel LNG-powered dredgers, adds to the earlier completions of the first and second newbuilds “Vox Ariane” and “Vox Apolonia” delivered in April and December 2022 respectively.

Both sister vessels are currently in service and contributing to Van Oord’s cleaner fleet operations.

Seatrium said that following delivery, the “Vox Alexia’ would set off from Singapore for further preparatory trials by the customer prior to being put into service later in 2023.

“Leveraging the experience of constructing two earlier units, and an integrated Seatrium-Van Oord team approach, the project was completed with good safety performance as well as stringent quality and performance standards,” said a statement from Seatrium and Van Oord.

Merger

Seatrium underwent a corporate transformation to a new brand and with its name changed from Sembcorp Marine Ltd following its merger with Keppel Offshore & Marine.

Seatrium and Van Oord added that the “Vox Alexia” was built to the requirements of the International Maritime Organization's Tier III regulations and construction was overseen by French maritime classification society Bureau Veritas.

The vessel has a hopper capacity of 10,500 cubic metres and incorporates highly automated marine and dredging systems.

The TSHD is equipped with a suction pipe with submerged e-driven dredge pump, two shore discharge dredge pumps, five bottom doors, a total installed power of 14,500 kW and is able to accommodate 22 persons.

“We are very pleased to now add ‘Vox Alexia’ to our fleet in addition to her sister vessels ‘Vox Ariane’ and ‘Vox Apolonia’, and as such contribute even more to the energy transition and decarbonisation of our fleet,” said Harold WM Linssen, Director of the Ship Management Department at Van Oord.

More projects

“We also look forward to utilising and further developing the established synergy with Seatrium in upcoming projects,” added Linssen.

Tan Leong Peng, Managing Director of the Seatrium subsidiary, Seatrium New Energy Limited, said that the successful delivery of the latest dual-fuelled vessel with LNG capability would contribute to Van Oord’s greener shipping operations.

“We are pleased to deliver ‘Vox Alexia’, the final unit in the series of three highly automated dual-fuel newbuild dredgers,” said Tan.

“All three TSHDs run on cleaner LNG fuel and integrate greener features for enhanced efficiency, improved performance and environmentally sustainable operations,” he stated.

South Korea has held a ceremony for the formal hand-over of a new liquefied natural gas bunkering vessel equipped with Korean-designed and constructed cargo storage systems.

The “Blue Whale” ship was constructed at the Hyundai Heavy Industries shipyard in the southern port city of Ulsan, where the ceremony took place.

“The vessel cost 55.3 billion won ($41.7 million) and is the first vessel equipped with the Korean type KC-2 cargo storage design,” said a statement from the South Korean Ministry of Trade, Industry and Energy.

The country developed its initial LNG cargo storage technologies from 2004 to 2014, called KC-1, and several vessels adopted that system, though it never made a commercial breakthrough.

“Based on that, it launched a project in 2017 to upgrade the KC-1 system to come up with the advanced KC-2 tank design,” added the statement.

“The ‘Blue Whale’ will be able to provide 7,500 cubic metres of LNG fuel directly to vessels, compared with an average of 30 cubic metres of LNG carried by a bunkering truck,” it stated.

Long-term project

The Ministry described the construction of the “Blue Whale” as an achievement by the shipbuilding industry of 20 years of work on LNG storage issues.

Two different designs were initially developed for LNG containment tanks for vessels, the Moss design and the membrane-type tank system using thin, flexible membranes supported only by the insulated hull structure.

Other ship and tank designs also emerged, including the KC-1 design from Korea Gas Corp. and backed by three Korean shipyards but was never taken up outside Korea. The system has now been upgraded and improved and is the KC-2 system used in the “Blue Whale”.

The Moss design was first commercial storage design taken up in 1971 and is well known by its independent spherical tanks that often have the top half exposed on LNG carriers.

However, the most common membrane-tank systems have been designed by Gaztransport and Technigaz (GTT), the French technology company which charges royalties to shipyards to use its extremely successful tanks on new vessels.

Options

LNG has been a fuel option for a long time, though up until a few years ago it was confined to LNG carriers utilising the boil of gas from their cargo and smaller vessels like ferries and offshore support vessels.

LNG fuel is now part of the shipbuilding sector as part of the preferred dual-fuel options for shipowners.

There are currently 32 LNG bunkering vessels operating worldwide with most having capacity between 7,200 cubic metres and 9,200 cubic metres and with 16 other fuelling ships on the shipyard order books.

LNG bunkering is also available for vessels at almost 90 terminals and ports worldwide using methods such as quayside truck re-fuelling, ship-to-ship transfers and barge-based transfers.

Kawasaki Kisen Kaisha, the Japanese shipping company known as K-Line, is planning an LNG carrier growth strategy focused on Qatar and with ship management operations being moved into southeast Asia.

April 25 (LNGJ) - Vitol Bunkers, the maritime fuel business of global commodities firm Vitol, said it was now working in close alignment with the fuel supply unit of Turkish energy group Petrol Ofisi to offer bunkering services at Turkish ports.

   Vitol Bunkers and Petrol Ofisi will offer re-fuelling for LNG carriers, containerships, oil tankers, car carriers and cruise liners. “With a fleet of 16 barges, Petrol Ofisi is the largest bunker supplier in Turkey, making more than 3,000 bunker deliveries each year,” said Vitol.

French liquefied natural gas storage technology firm Gaztransport and Technigaz (GTT) reported a more than 17 percent increase in first-quarter revenues as the order book continued to build after a record year in 2022 and orders in the first three months for 25 LNG carriers.