Ambiguous Future for LNG?

While the use of LNG has become a trend, many challenges lie ahead before the practice becomes a common one. Some of the obstacles are the apparent lack of LNG bunkering infrastructure, regulations, and operation standards.

As the industry anticipates many changes, companies and professionals are having a hard time understanding how the new regulations will affect them and, more importantly, how to implement necessary changes ahead of the upcoming deadlines.

Three of the guest speakers at the Red Sea and Gulf Bunkering Conference discuss key themes including the latest port infrastructure developments, new LNG fuels, cutting-edge procedures for testing quality of fuels and in-depth macroeconomic overviews. Having come from different backgrounds, each represents the viewpoints of his side of the industry.

Consultant Rob Smith, who has significant experience in oil prices, refining, and natural gas, will address several topics at the conference like the changes in bunker specifications, the switch from fuel oil to diesel, and some of the challenges of using LNG. Like many others, Smith is sceptical about the future of LNG in the field of bunkering. "Using LNG is fine, but it needs enough ports that can import LNG to store and refuel other ships with it. This is the big bottleneck and is what will prevent it from being a large scale switch until at least the next decade," he said.

Smith is not the only one who is sceptical about the current state of LNG in the bunkering business. While John Philips highlighted some of the general challenges, he too shared Smith's concerns about the outlook of LNG. "Some of the obstacles of using LNG are the lack of personnel (ashore and afloat), lack of facilities, and the safety impacts," he said. Coming from a credit management background, Philips was also concerned about the transition to meet sulphur and other regulatory demands raising costs for owners, affecting their liquidity.

The Suez Canal Authority's Maritime Analyst Hossam Abdelkarim, who regularly carries out economic research as well as analyses the current status of oil products and LNG, objectively stated other challenges of using LNG. This includes "additional investments compared to a standard ship (engine, LNG tank, safety measures, control rooms, piping, and insulation): loss of cargo space: Higher manning costs and crew training: logistics costs for LNG (from import terminals or liquid gas hub, depending on the region)," he said.

The Middle East is a key player when it comes to LNG production, whether in the field of bunkering or otherwise. Qatar, Saudi Arabia, and Iran are some of the top conventional gas reserve holders in the world. Of course, the political turbulence, economic sanctions, and changing regulations in places like Iran will be shaping the future outlook of LNG production and consumption around the globe.
Stay tuned for our survey depicting the effects of Iran's economic sanctions on the use of LNG in the bunkering business.

What is your biggest challenge when it comes to bunkering? Do you think that the new sulphur regulations will significantly affect your operations? Let us know more at www.gulf-bunkering.com