Ship bunker fuel accounts for about 4% of global oil consumption which makes it a substantial component of global demand. Unsurprisingly, the shipping sector accounts for about 3% of global carbon emissions & 4% of global Sulphur emissions, and this impact has been a major environmental concern. To reduce this environmental impact, The International Maritime Organisation (IMO) has implemented a new rule - IMO 2020 which mandates a global sulfur cap on marine fuel of 0.5%, down from 3.5%. If successful, the rule could turn out to be the single-biggest globally mandated improvement to air quality ever. The world’s ships have obviously had to change the fuel they use. However, the rule has had a major impact not only on the shipping industry but also on the refining industry. Refiners are not fully ready to make the bunker fuel oil available as per the specifications due to delays in the commissioning of the sulphur reduction projects. The shipping industry has tried to mitigate these delays by investing in scrubbers to continue using high sulphur fuel oil. However, that is likely to be a stop-gap measure.
In this situation, LNG has an opportunity to be used as an alternative to marine fuel oil as it is comparatively a clean fuel with fewer environmental concerns. However, preparing for LNG as bunker fuel has its own challenges, especially safety-related issues at bunkering terminals and ships. Though there are good standards for LNG handling in general and for waterborne LNG supply, LNG bunkering standards are still in the early stages of development.
Nonetheless, the use of LNG is growing continuously and more LNG receiving terminals are expected due to the environmental impact benefits and longer price security that LNG enables. Currently, bunkering facilities are only possible at or near LNG producing facilities or LNG receiving terminals. Enabling ship-to-ship bunkering is the long term goal, but still, the use of LNG as a ship bunker fuel is bound to grow.
I am highlighting key safety issues to be addressed to LNG bunkering successful:
Achieving bunkering facilities risk level same as fuel oil bunkering
Bunkering vessel design and related safety
Addressing LNG release risk to the atmosphere due to the possible use of hoses and connections
Risk assessment at LNG terminals due to bunkering facility and possible mitigations
Navigational risk assessment due to changes in traffic and frequency of ships movement
Implementing effective security and safety zoning
Specific training of operating staff for LNG bunkering and knowledge transfer to ship personnel
With such a large and historic change for the world’s maritime and refining industries, some big winners and losers are starting to emerge. Singapore is in a good position to be a leader in yet another industry. As Asia’s oil-trading hub, Singapore is already a leader in bunker fuel capabilities. It also has LNG receiving facilities in place. With appropriate investments and focus, it has great potential to become an LNG bunker hub as well.
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