Bergen: LNG as a fuel for ships will continue to grow in popularity, accelerating to the point whereby in five years there could be thousands of ships with this chilled gas firing propulsion systems across the globe, says the ceo of a Norwegian LNG fuel specialist.
Dag Lilletvedt is the ceo Fuelgarden LNG, an independent LNG fuel service provider specializing in the small-scale LNG market, not just in maritime but across a range of high horsepower industries.
With ECAs in North America and North Europe leading the way, LNG as a fuel is gaining traction, Lilletvedt says, but interest is not limited to these two areas.
“China is starting to become a major LNG bunker region due to need for improvement in air quality,” Lilletvedt says. He also notes growing use in Southeast Asia, Australia, the Middle East and Mediterranean.
“The LNG technology for ships is in place, LNG can be made available in most places and there is LNG available in smaller quantities fitted for especially the local and regional ships,” Lilletvedt says.
LNG prices have come down and are cheaper than MGO and, Lilletvedt claims, they are now starting to compete against HFO in some places.
Previously it has mainly been newbuild vessels that have been made ready for LNG use, however based on new technology developments there is also the possibility to retrofit ships for LNG. “This will make a huge impact in the number of ships using LNG,” the Norwegian reckons. “We also see that charterers prefer greener ships,” he adds, “which gives shipowners a competitive advantage and the charterers a greener image.”
The drop in oil prices does not concern Lilletvedt too much – it is something temporary, he insists, noting that oil is already going up in price again in the last few days.
“I think the general view amongst most analysts and market participants is that the oil price is not sustainable at the current level and that prices will have increased substantially within the second half of this year,” he says.
“On the LNG side we see that the LNG prices have fallen, and that going forward the LNG supply will increase and LNG demand in major power generation markets might fall. This calls for continued lower LNG prices,” Lilletvedt says. He observes that when shipowners make a decision to build a ship it is based on a 20-year horizon. “Most see that the low oil prices are a short-term phenomenon and that the LNG market is evolving and that LNG prices will be interesting going forward,” he says