of LNG must be commensurate. At present, LNG bunkering infrastructure is grossly
inadequate and, as such, LNG use as a marine fuel continues to be hampered by
insufficient storage space and inadequate logistical arrangements in the supply
chain.
36
It is probably worthwhile to mention that the majority of LNG use on ships is
currently limited to vessels operating coastwide, and predominantly in waters in the
European continent. Notably, bunkering ports around the world have to date not
developed any LNG bunkering facilities in a comprehensive fashion. If existing
ports have to be modified to meet the relevant requirements, these would be fairly
expensive ventures. Furthermore, LNG bunkering would result in additional costs
including the costs of delivery to the import terminals and then the costs relating to
breaking bulk where the LNG is received. There will also be the issues of need and
availability of shuttle services for delivering the LNG bunkers to bunker vessels and
the further costs of delivering them to ships. If these are viewed as downsides to the
use of LNG as fuel, there is also the economic factor which concerns currently
decreasing oil prices resulting in a corresponding decline in the price of fuel oil.
Overall, this scenario is not consistent and compatible with the best business sense
for shipowners.
37
For LNG to become the norm in terms of marine fuel, account must be taken of
the need for ships to be retrofitted. This is quite a complex task given that existing
engines of ships must be modified significantly, or LNG gas tanks must be added.
All these together with the sophistication involved translates into considerably high
costs for fitting of LNG tanks along with the associated piping systems. In view of
these observations, it would appear to be the case that using LNG as the best option
for fueling ships’ engines is more appropriate and cost-effective for new buildings,
and the task of transforming existing ships for LNG usage is not ideal in that sense.
The cost factor obviously cannot be ignored: an LNG bunkered ship is inordinately
expensive, costing in the range of USD 60 to 80 million for a new build mid-size
vessel.
Considering all these above-mentioned anomalies and downsides, it would
appear that the use of LNG as a bunker fuel would not be considered by shipowners
as the best and most viable option at present or in the near future, which may allow
IMO to complete the legal framework governing shipboard LNG overall ahead of its
vast development.
36 But see Shell Marine Report in Marine Professional, supra, note 1 above.
37 IMO (2017).
The International Legal Regime Governing Shipboard LNG
701
inadequate and, as such, LNG use as a marine fuel continues to be hampered by
insufficient storage space and inadequate logistical arrangements in the supply
chain.
36
It is probably worthwhile to mention that the majority of LNG use on ships is
currently limited to vessels operating coastwide, and predominantly in waters in the
European continent. Notably, bunkering ports around the world have to date not
developed any LNG bunkering facilities in a comprehensive fashion. If existing
ports have to be modified to meet the relevant requirements, these would be fairly
expensive ventures. Furthermore, LNG bunkering would result in additional costs
including the costs of delivery to the import terminals and then the costs relating to
breaking bulk where the LNG is received. There will also be the issues of need and
availability of shuttle services for delivering the LNG bunkers to bunker vessels and
the further costs of delivering them to ships. If these are viewed as downsides to the
use of LNG as fuel, there is also the economic factor which concerns currently
decreasing oil prices resulting in a corresponding decline in the price of fuel oil.
Overall, this scenario is not consistent and compatible with the best business sense
for shipowners.
37
For LNG to become the norm in terms of marine fuel, account must be taken of
the need for ships to be retrofitted. This is quite a complex task given that existing
engines of ships must be modified significantly, or LNG gas tanks must be added.
All these together with the sophistication involved translates into considerably high
costs for fitting of LNG tanks along with the associated piping systems. In view of
these observations, it would appear to be the case that using LNG as the best option
for fueling ships’ engines is more appropriate and cost-effective for new buildings,
and the task of transforming existing ships for LNG usage is not ideal in that sense.
The cost factor obviously cannot be ignored: an LNG bunkered ship is inordinately
expensive, costing in the range of USD 60 to 80 million for a new build mid-size
vessel.
Considering all these above-mentioned anomalies and downsides, it would
appear that the use of LNG as a bunker fuel would not be considered by shipowners
as the best and most viable option at present or in the near future, which may allow
IMO to complete the legal framework governing shipboard LNG overall ahead of its
vast development.
36 But see Shell Marine Report in Marine Professional, supra, note 1 above.
37 IMO (2017).
The International Legal Regime Governing Shipboard LNG
701