Natural gas giant Qatar Petroleum (QP) and the No. 1 gas seller, Royal Dutch Shell plc, are partnering to provide global marine bunkering services, a growing infrastructure need.
The agreement by state-owned QP’s Wave LNG Solutions and Shell Gas & Power Developments BV paves the way to establish a 50-50 joint venture for liquefied natural gas (LNG) marine services.
Principal business activities are to include procuring LNG, setting up bunkering storage and vessel infrastructure around the world, as well as selling LNG as a marine fuel.
“We see LNG bunkering as a promising solution for the shipping industry in light of a continuously evolving regulatory environment, and as an important opportunity to enhance LNG’s position as a clean energy source, particularly in maritime transportation,” said QP CEO Saad Sherida Al-Kaabi.
“LNG demand for bunkering is expected to grow significantly over the coming years, and we believe there is a real potential for such demand to reach 35 million tons/annum by 2035. This requires focused investments and collaboration among all industry players to provide the required solutions our customers are looking for.
“In addition, the right partnership model, similar to the one we are establishing with our partner Shell, will also be pivotal in maturing this business.”
Wave LNG Solutions was created by QP to market and invest in LNG as a transportation fuel, particularly for the marine transportation sector.
“The shipping industry is starting to make the very necessary strides to reduce emissions from vessels,” said Shell CEO Ben van Beurden. “LNG is already playing an important role as the cleanest, and an affordable, alternative to traditional marine fuels available today. That is why we look forward to building on our strong long-term partnership with QP, expanding the LNG marine fuel network and creating a safe supply chain.”
An increasing number of ship owners and operators are turning to LNG over traditional marine fuels in response to tighter sulfur and nitrogen oxide emissions regulations. Beginning in 2020, the International Maritime Organization has imposed sulfur emissions caps in marine transmission fuels at 0.5% from the current cap of 3.5%.
Adding bunkering infrastructure to allow switching to LNG is a costly endeavor, according to the U.S. Energy Information Administration (EIA). Earlier this year it said the shortage of equipment and high development costs initially could prevent vessel operators from switching to LNG as a fuel source.
"In the medium and long term, this infrastructure barrier decreases, and LNG’s share of U.S. bunkering grows to 7% in 2030 and to 10% by 2050,” EIA said. Many ships are being built today with LNG-ready engines, which it said could be configured to switch at a later date.