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12/08/2020
Use of LNG as a Marine Fuel

Use of LNG as a Marine Fuel

Fuel oil is the main fuel used in the global shipping sector, representing about 75% of its total consumption. Therefore, the sector represents is responsible for about 12% of the global energy-related SO2 emissions. In addition, international maritime organization (IMO) estimates that maritime sector represents about 2.5-3% of the global CO2 emissions. Therefore, by adopting appropriate environment-friendly solutions, the global maritime sector can take an effective role in reducing global GHG in line with the global efforts to mitigate the climate change.  The use of LNG as a marine fuel is one of the key substitutes/options to reduce the maritime sector dependence on high sulfur fuel oil, thanks to its environmental and economic benefits.

The study is divided into four chapters, chapter-I overviews the different types of ships used in the maritime sector. It also addresses the role played by the world fleet in the development of world maritime trade.

Chapter-II addresses different types of fuels used in the maritime sector. It also highlights the role played by the (IMO) to regulate the sector. The annex-VI of the MARPOL treaty is deeply analyzed to provide all possible solutions to meet its new regulation of global sulfur cap of 0.5% in the marine fuel.

Chapter-III is devoted to show the key advantages and barriers against the use of LNG as a maritime fuel.  It provides a deep dive into the main segments of LNG-powered ships market, its key players and future outlook.

Chapter-IV addresses the future projects and plans announced by state-own companies in the Arab countries to invest in LNG bunkering facilities and tracks the progress achieved in these plans.

The study concluded that the international maritime sector has taken remarkable actions to adopt LNG as a marine fuel for both old and newbuild ships. In early 2020, the total number of LNG powered ships reached 178 ships representing ~ 0.2% of the world's commercial fleet.

Moreover, the number of LNG bunkering locations is growing rapidly, where various types of ships can be bunkered offshore using bunkering vessels/barges or at small intermediate bunker terminal. By far, Northwest Europe remains the major hub for LNG bunkering locations worldwide.

Nevertheless, Arab region possesses many significant factors that could enable to establish a regional LNG bunkering hub in the region. Such factors include the existence of fully integrated gas industry, the availability of LNG export infrastructures and unique location with proximity to many international maritime lines.

As a consequence, a number of state-owned Arab companies has shown its interest to invest in LNG bunkering projects. There are four LNG bunkering terminals are planned in Qatar, Oman, UAE and Egypt. Some of them have entered the FEED phase while others are still under discussion. Doubtless, the success of the Arab companies to materialize these projects will enable region to play a key role in meeting the forecasted demand on LNG bunker fuel.