Japanese-French trio to supply LNG as ship fuel in Europe www.asia.nikkei.com
TOKYO -- Japan's Nippon Yusen and Mitsubishi Corp. will partner with French energy giant Engie to supply liquefied natural gas as ship fuel in Europe starting this year, as a greener alternative to heavy oil.
The trio on Tuesday announced the business under the Gas4Sea brand. A dedicated storage vessel that can hold 5,000 cu. meters of LNG -- the first of its kind -- will supply the fuel to other ships.
The operations will be based in Belgium's Port of Zeebrugge for the time being, refueling ships that make a stop there.
The International Maritime Organization in 2015 tightened environmental regulations for ships navigating in the North Sea and the Baltic Sea, requiring a 90% reduction of sulfur oxides content in fuel oil -- the mainstay ship fuel -- to a maximum of 0.1%.
Ships that travel through these waters now use low-sulfur fuel oil that is about 70% more expensive than regular fuel oil. LNG emits no sulfur oxides and is roughly the same price as normal fuel oil, so marine shippers would be able to cut fuel costs by switching.
Engie's global gas supply network will enable the business to expand to other parts of the world, including North America and Asia.
Jun Nishizawa, a senior vice president at Mitsubishi, told reporters in Hamburg, Germany, that the partners will work together to cultivate a new market in Asia, where regulatory changes have been lagging.
For waters around the globe, more stringent environmental regulations are to take effect as early as 2020, slashing the maximum allowed sulfur content in fuel to 0.5% from the current 3.5%. Against such a backdrop, demand for LNG as a cleaner fuel is seen reaching 7 million tons in 2020. The three companies hope to supply 200,000 to 300,000 tons of LNG a year.
About 300 ships used LNG as fuel last year and the tally is seen exceeding around 1,500 in 2020, according to the Japan Ship Technology Research Association.
Mitsubishi's rival Mitsui & Co. is also considering LNG supply in the Russian Far East by joining hands with state-owned company Gazprom. And European oil giant Royal Dutch Shell is building a large vessel to use for LNG supply.
Published Date:2016-09-07