Australian LNG Bunkering Feasible by 2016

Henning Mohn of DNV said ships may switch from imported fuel to domestically produced LNG

Liquefied natural gas (LNG) bunkers could be an economically feasible solution for environmental and commercial challenges in the Australian shipping market, a Joint Industry Project (JIP) study by Det Norske Veritas (DNV) and nine Australian partners found.

The study found that there are no significant legal restrictions to hinder adoption of LNG fuel for shipping, but it recommends more technical guidelines and a clearer regulatory framework.

It also calls for financial incentives to help the industry make the switch.

"When establishing LNG bunkering, the critical business phase is the first 2-4 years of operation when the LNG suppliers rely on a few brave ship owners willing to be industry forerunners," DNV said.

"After some years of successful operation a second wave of ships is expected to enter the market, which will reduce suppliers' uncertainty and reinforce the business case."

With strong support for the adoption of LNG fuels and the establishment of LNG bunkering at certain ports, the country could be using the fuel by 2016.

"Increasing LNG production along with new international regulations boost the interest in LNG fuelled shipping; this may actually to some extent switch ships from fuelling with imported fuel to using domestically produced LNG," said JIP Project Manager Henning Mohn.

Australia is becoming increasingly dependent on imports for its refined oil products as domestic refineries shut down, and some observers argue that switching to natural gas - where Australia is a leading power - would help reduce the use of those imports.

DNV announced the start of the study with its Australian partners in October 2012.