Interview: Total Gives Further Details on CMA CGM LNG Bunkering Plans

Olivier Jouny, Managing Director, Total Marine Fuels Global Solutions

Earlier this month Total Marine Fuels Global Solutions (TMFGS) announced it had signed a major liquefied natural gas (LNG) bunker supply deal with CMA CGM to fuel nine 22,000 twenty-foot equivalent (TEUs) capacity newbuild ULCCs. Having placed the order earlier in the year, the French box ship operator expects the first vessels to come into service from early 2020.

Ship & Bunker recently spoke to TMFGS' Managing Director, Olivier Jouny, who has now revealed further details about the agreement and its LNG bunkering plans.

"While the deal does not exclude supply in Asia, the plan is to bunker in Northern Europe for three reasons. Firstly due to the dynamism of the ports in the Northern European zone. Secondly, the level of commercial activity in this zone is important for CMA CGM and there are long stops in these ports that will definitely help the loading of bunkers here. And finally is the price of LNG, which is more competitive in Europe than in Asia," Jouny explained to Ship & Bunker.

"We are now working very closely with CMA CGM to design the operational and technical framework. This is something that is not only new for us as a supplier, new for CMA CGM as a customer, and new for the ports, it is new for the whole industry and when you start from scratch you are also setting the tone for others going forward. So this is being seen very much as a partnership and that is also reflected in the long term agreement."

As previously reported, the agreement will see Total supply around 300 kt per year of LNG to CMA CGM over the course of a 10-year agreement, and Jouny has clarified that such volume will meet the entire supply requirement of the nine vessels.

The LNG bunkers will be supplied ex-barge, and Jouny says TMFGS have been consulting with a number of shipowners to charter a suitable vessel and intend to finalise a long term time charter agreement with one shipowner in the near future.

"Contrary to some reports in the press, we do not intend to be in contact with the shipyard and it will be the shipowner who will finalise matters there," he added.

As for the vessel itself, Jouny confirmed reports that its capacity will be around 18,000 cbm.

"We need to be in a position to supply in one stem the full capacity of the CMA CGM vessels, which are close to 18,000 cbm. So by definition the bunkering vessel needs to be at least 18,000 cbm," he told Ship & Bunker.

"We also want high maneuverability for the vessel as it will operate in ports where traffic is heavy and there are space constraints. High safety standards for the vessel are also a key point we are looking at, and from an environmental standpoint, we also want an eco-solution so we do not want any flaring of gas. The vessel will also be LNG propelled."

Costs

The cost of LNG bunkering has been a key talking point among those exploring the viability of using the alternative bunker fuel, and the fact it requires investment in new and more complex infrastructure means delivery is inherently more expensive than traditional bunkering setups - at least initially.

While Jouny declined to go into detail as to the cost of its planned solution for CMA CGM, he agreed a key issue for LNG bunkering has been that the CAPEX for logistics has been too high.

"The trend is going in the right direction and the cost of these bunkering vessels is decreasing," he said.

"I can not discuss anything on the charter rates for our planned solution for CMA CGM, but what I can say is that we need to be sure we have a competitive logistical cost for this bunkering."

Beyond the specifics of the deal with CMA CGM, Jouny believes the move could provide a major boost for the adoption of LNG bunkers in general, particularly those operating on Europe-Asia routes.

"LNG bunkering will not be everywhere to begin with, and the size of solution is also important - if you are too small then maybe the economics will not make sense. But in Asia and Europe there are big hubs, so there is a huge potential for LNG to develop. And when major players like CMA CGM make such decisions it can cause a snowball effect for others," he said.

"I do not believe though that LNG will displace traditional bunker fuel, but it will be an important part of the mix. This is why we are approaching the market as a provider of a full array of multi-fuel solutions. If you want to be prepared for 2020 you need to start a few years in advance and customers like being able to discuss all the 2020 options with a single entity that can present the risks and advantages of all solutions."