Paris-based Total SA has inked a deal to provide liquefied natural gas (LNG) to another French company with global shipping operations.
One of the world’s largest LNG players, with stakes in U.S. export terminals along the Gulf Coast, Total said earlier this month that it has signed a supply agreement with Marseille, France-based CMA CGM to provide 270,000 metric tons per year of the super-chilled fuel.
The LNG would be used to power CMA CGM’s new containers that are to operate between Asia and the Mediterranean. Those ships are scheduled for delivery starting in 2021.
Under the deal, Total Marine Fuels Global Solutions (TMFGS) would provide bunkering services at the port of Marseille-Fos, France’s primary trading seaport. An LNG bunker vessel, or one that provides the fuel for ships, will be positioned at the port, while bunkering services would also be available in Singapore.
Total’s LNG sales increased markedly in the third quarter, growing 20% year/year to reach 7.4 million metric tons. The increase was driven largely by the company’s stakes in new and existing terminals on the Gulf Coast, Australia and Russia.
While the French oil major has an integrated portfolio that includes liquefaction capacity, marketing, trading, shipping and downstream infrastructure, CEO Patrick Pouyanne noted that the deal with CMA CGM is emblematic of the company’s push to integrate marine fuel into the heart of its LNG strategy.
Global LNG demand for ship propulsion is projected to increase from 400,000 metric tons in 2017 to 10 million metric tons in 2025, according to Total. The increase will be driven by stringent environmental regulations being imposed by the International Maritime Organization as well as its availability and efficiency.
“Liquefied natural gas is the only energy currently available and reliable to significantly reduce our carbon footprint,” CMA CGM CEO Rodolphe Saade said. “The choice of LNG to power our ships requires the complete adaptation of the entire energy supply chain and infrastructure.”
The company operates more than 500 ships that serve over 420 ports on five continents. By choosing Marseille-Fos as a refuelling port for its new vessels, Saade said French container ports are now being integrated into the LNG transition.
TMFGS said the same day the CMA CGM deal was announced that it had inked an agreement with Japan-based Mitsui O.S.K. Ltd. for a second large LNG bunker vessel that would be delivered in 2021 and operate in the Mediterranean. Total launched its first LNG bunker vessel in Shanghai last month that will supply CMA CGM.
The second vessel is to be built by Hudong-Zhonghua Shipbuilding in China and have a capacity of 18,600 cubic meters. The second vessel would be used to supply a wide range of ships, including container ships, tankers, ferries and large cruise ships.
TMFGS also recently signed a 10-year agreement to jointly develop an LNG bunker supply chain in the port of Singapore with Pavilion Energy. The deal follows a heads of agreement signed by the two companies in June 2018.
Outside of LNG bunkering, the shipping market to transport the fuel for liquefaction facilities has been impacted worldwide as activity has slowed on a global glut. Norwegian shipbroker Fearnleys AS said recently that the longer-term outlook for charters is stronger as another wave of supplies is expected to hit the market to match a supply gap that’s seen opening 2022-2025.
On the new building front, the firm noted that Samsung Heavy Industries Co. last month announced a $1.5 billion contract with an unspecified buyer to build up to five LNG carriers. The massive vessels average about $300 million each.* Hyundai Heavy Industries Group also recently secured $1.13 billion of orders for six LNG carriers from ship owners in Europe and Asia.
Most LNG vessels today are built by Asian shipyards, which can build at lower costs compared to their counterparts in Europe.
*The original story indicated Samsung would build up to eight LNG carriers, each costing on average about $186 million. NGI regrets the errors.
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