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LNG powers ahead in maritime market

LNG is making inroads into a variety of means of transport, with new maritime environmental regulations boosting its use in shipping

World liquefied natural gas imports in 2017 grew at their fastest rate since 2010. According to the International Group of LNG Importers (GIIGNL), imports worldwide surged 9.9% from 2016 to 289.8m tonnes. While China led the national import growth statistics, demand also grew elsewhere. LNG is increasing its share of new national and sectoral markets worldwide. In the traditional bulk gas and power sector, this April saw Bangladesh emerge as a new importer. A commissioning gas cargo from Qatar arrived at a new floating storage and regasification unit (FSRU) at Moheshkhali Port, developed by national oil company Petrobangla, Excelerate and the International Finance Corporation. Bangladesh expects to double the FSRU's 3.8m-tonnes-a-year capacity with the addition of a second facility next year.

On the other side of the world, France's Total and Germany's Siemens are reportedly close to agreeing jointly to develop an LNG-to-600-megawatt power project in Cuba. This would be ideally positioned to take advantage of the growing availability of LNG in the Caribbean. Additional LNG import projects in Croatia and Germany are projected to further develop LNG penetration of the world's most evolved maritime LNG market, the European Union.

While import capacity will rise to meet increased LNG availability, especially from Australia and the US, end-user demand is expected to increase from the transport sector. The UN International Maritime Organisation (IMO) Annex VI limits sulphur content in marine fuels to a maximum of 0.5%. The IMO's adoption this April of more stringent targets for 2050 are leading the shipping industry, which currently consumes about 5m barrels a day of fuel oil, to evaluate a shift towards LNG.

Such interest is growing fast. Peter Keller, chairman of Sea\LNG, an industry coalition supporting the adoption of LNG as a marine fuel, says his schedule is packed with speaking engagements. Ports and companies worldwide are exploring the development of marine LNG infrastructure. Ferries plying fixed routes were early LNG converts, but cruise liners and container vessels operating regular routes are now adopting the fuel for their vessels. In a sign of such developments, Total and France's CGA CGM have agreed a 300,000-tonnes-a-year supply agreement for the latter's new generation of 22,000-twenty-foot-equivalent-unit container ships, which will enter service in 2020. LNG bunkering activity is growing worldwide, led by the EU.

Ports and companies worldwide are exploring the development of marine LNG infrastructure

On land, LNG is emerging globally as a trucking fuel. In the EU, Gas Infrastructure Europe (GIE), a trade body, reports that in France, Italy, Spain and the UK alone, the number of operational LNG truck stops more than doubled in 2017 from 2016, to 167; and trans-Europe LNG trucking "corridors" are under development.

LNG infrastructure on inland waterways also increased, GIE reported. Improved bulk LNG infrastructure is expected to lower costs, sparking increased offtake potential from terminals like Croatia's planned Krk LNG project, which has been a gleam in the region's eye since the 1990s. In China, trucks lifted 10.2m tonnes from LNG terminals in 2017, according to GIIGNL.

Logistics is seen as key to LNG's penetration of niche markets and transport. Increasingly flexible logistics are helping LNG deliveries into small markets such as island states in the Caribbean. US LNG is regularly delivered in ISO containers to Barbados, with 85 shipments arriving in 2017, according to the US Department of Energy. Trucked deliveries of LNG to Jacksonville, Florida supplied Tote Maritime's LNG-powered vessels on their voyages to Puerto Rico while Tote supported the construction of a dedicated Jacksonville gas liquefaction terminal as a permanent supply alternative.

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