Interview: TOTAL Confirms its Ambition in LNG Bunkering Business

Thursday December 22, 2016

TOTAL Marine Fuels aims to capture ten percent of the global liquefied natural gas (LNG) bunker market by 2025, Managing Director Olivier Jouny has told Ship & Bunker.

"The 0.50% global sulfur cap in 2020 will accelerate the change in the needs and habits of the shipping industry," says Jouny.

"With LNG you avoid the SOx emissions, but it is also a good solution if you look at the NOx emissions, CO2 emissions, and PM emissions. So while it's definitely a compliant solution for 2020, it's even more than that when you look at the global picture from an environmental standpoint. And in the coming years if there are additional environmental constraints, LNG is also a good choice.

"So we're not saying that the LNG bunkering market will emerge easily, there will be hurdles, but we strongly believe it is going to emerge."

TOTAL is already active in both the conventional bunker markets and LNG markets, and with a company motto of "Committed to Better Energy" Jouny says it naturally followed that they should want to be a key player for LNG bunkering.

"Our aim as of today is by 2025 to target 1 million tonnes per annum, out of what we see will be a global market of slightly above 10 million tonnes - so a ten percent market share in 2025.," he says, and geographically speaking the focus will be mainly on Europe and Asia.

"I do not believe there will be a lot of spot business and certainly, in the beginning, it will be medium or long-term business," he adds.

In terms of the hurdles for adopting LNG bunkers, Jouny says price relative to conventional oil bunkers will be a big factor.

"A huge investment will need to be made by both supplier and shipowner, and it is very important that the logistical chain is as competitive as possible otherwise the price advantage of the LNG will be lost," he says.

Taking into account not just the cost of LNG, but also the full logistical and bunkering costs, "LNG bunkering economics are challenging in the current environment but optimized logistical costs and favorable commodity spread will confirm the business case," says Jouny.

As many others in the industry have said, the success of the global sulfur cap will depend heavily on policing of the new rules.

"There needs to be clear enforcement and penalties. Otherwise, this will become a challenge to the adoption of LNG," says Jouny.

"Another potential difficulty we see is the acceptability of LNG. Even if both the economics are good and the LNG industry has an excellent safety track record, if people do not accept it as a reliable option that could also slow the development of the market.

TOTAL's supply of LNG bunkers will come as part of a full spectrum offering of bunker fuels that will also include 0.50 percent compliant distillate and fuel oil products.