1 Sep 2017

Slow and steady growth

The LNG-fuelled fleet has been one of slow, but steady expansion since the first vessel was delivered. The Glutra, a ferry operating in Norway became the industry's first LNG-fuelled vessel – outside of the LNG carrier fleet. From here, the fleet has expanded to 104 operating vessels – as of June 2017. The initial years of LNG-fuelled vessels saw only four vessels delivered between 2000-2006. From then, there was only single digit increases each year through to 2012, where 11 vessels were delivered. Since then, double digit deliveries have occurred, with 20 vessels delivered in 2015. So far in 2017 (year-to-June) there have been 11 vessels delivered.

Current LNG-Fuelled Fleet

(no of vessels)

Source: OSC/Market Intelligence

The initial focus of the LNG-fuel sector was with two types of vessels - ferries and platform supply vessels (PSV). Both types of vessels provide idea platforms to test a new fuel and its accompanying fuel systems. The vessels operate on (usually) short-distance routes and (mostly) predictable operating schedules, meaning vessel bunkering schedules can be planned far in advance and the subsequent LNG supply chain lined-up for timely bunkering. However, since the early-days of the 2000s, the supply chain has increased, owners are more confident that there will be the required bunkering volumes – as such there is a growing anticipation that LNG will continue to become a major bunkering fuel. 

LNG-fuelled fleet – by vessel type

No. of vessels

Source: OSC/Market Intelligence

Such is the confidence in the sector – that the range of vessels that have been ordered and delivered with LNG-fuelling systems has expanded to include cement carriers, chemical carriers, cruise vessels, an ice breaker, and even the world's first CNG vessel. So far in 2017, there have been deliveries of six Ro/Pax, two PSVs, a chem/prod tanker, an ethane tanker and a cruise vessel.

The route to LNG-fuel for a vessels is proving to be more complex than just the initial duel fuel (DF) systems provide in the early-days of the sector. In addition to  DF - which enables other fuels (HFO/distillate) to be utilised in addition to gas, there are now a growing number of high or low pressure systems to provide the fuel. Alternatively, there is the option for just a single fuel type of gas. However, in the search for the cleanest propulsion option, there are several vessels that have battery packs, or even one PSV with a fuel cell and a battery pack in conjunction with LNG-fuel.

It’s not just new vessels that are having the LNG treatment. There are a now six vessels that have undergone engine conversions to enable them to utilise LNG as a fuel.

Fuel type of current LNG fuelled fleet

(No. of vessels)

Source: OSC/Market Intelligence

Growing orderbook = Positive outlook

The overall orderbook for LNG-fuelled vessels currently stands at 95 vessels. Of these vessels, there are a further 27 scheduled for delivery during the remainder of 2017. By far, the largest number of vessels scheduled for delivery of any single year since the inception of the LNG-fuelled vessel sector is scheduled to by 2018 - over 40 vessels are anticipated for delivery. There is also a surprisingly long orderbook for some cruise ships through to 2026.

It is anticipated that the orderbook will continue to expand in the coming months and years. OSC analyses of the activity within the LNG-fuelled sector – highlights that interest for both newbuildings and vessel conversions is growing.

Current LNG Fuelled Orderbook

(No. of vessels)

Source: OSC/Market Intelligence

Increased interest in the LNG-fuelled sector has meant that owners have been more willing to order vessels that have  cleaner propulsion systems than the vessels they replace. Currently, there is a diverse range of vessels on order, these include: a cable laying vessel, a jack-up rig, a semi-submersible crane and wind farm installation vessel to name a few.

However, the main focus for the newbuilding sector are ROPAX vessels, followed by a significant number of cruise vessels. There are also a number of container vessels that are scheduled for delivery in the next few years. These are all of relatively small nominal TEU capacity, but they highlight that the container sector is now taking LNG as a fuel seriously.

Number of LNG Fuel Vessels by Vessel Type

(No. of vessels)

Source: OSC/Market Intelligence

The fuelling system types also provide several options for owners to consider – as in which is the best option for their vessel and their area of operation. DF is still the clear favourite, but the split between high pressure and low pressure and pure gas are providing alternatives.

Fuel Type of Current LNG Fuelled Orderbook

(No. of vessels)

Source: OSC/Market Intelligence

Future LNG-Fuelled Fleet

LNG as a fuel is still very far from becoming the all-conquering silver bullet for the shipping industries emissions problems – but it is a step in the right direction – and 17 years on from the first vessel it can be seen to be gathering momentum.


David Bull
Principal Consultant
Energy Shipping Specialist
david.bull@rhdhv.com

David Bull has over 17 years’ experience of the maritime sector having worked for Lloyd’s List, Drewry and Braemar Seascope shipbrokers. As a Principal Consultant and Project Manager at OSC, David’s main work lies in providing analysis, market insight for due diligence, economic feasibility and trade and traffic forecasting models. His main focus is on the energy sector. He specialises in services for the LNG, offshore and liquid bulk markets. David has a BSc in Geography and holds a CFA Investment Foundation certificate.

Ocean Shipping Consultants is Royal HaskoningDHV's in-house consultancy team, offering commercial and financial services to the maritime, ports and logistics industries, ranging from market research and strategy advisory, to full transaction support.

Royal HaskoningDHV Maritime also provide a variety of services including: selecting/designing/optimising mooring facilities for LNG import or export terminals. We also provide Dynamic Mooring Analysis for vessels response to wind, wave and currents. See  https://www.youtube.com/watch?v=MmK20fADODI

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