Medium-range tankers for the longer term

When examining the number of ships, it becomes evident that the uptake of alternative fuel technologies is predominantly driven by battery/hybrid and LNG-fuelled vessels. However, when considering gross tonnage, LNG fuel emerges as the dominant choice, indicating that battery/hybrid solutions are commonly implemented on smaller vessels. Out of the 1,079 ships currently operating on LNG fuel, 659 are LNG carriers, while the remaining 420 comprise other ship types, as highlighted by DNV in the report.

ABS, a leading authority in maritime and offshore classification services, presents a compelling view of the emerging energy value chains that are reshaping the industry.

The global demand for oil has seen remarkable growth, with a 2.3% year-on-year increase in 2022, and an anticipated further growth of 2.4% in 2023. However, this surge will be short-lived as alternative energy solutions steadily gain traction. The transportation sector, in particular, is witnessing a rapid transition towards electrification and hybrid technologies, resulting in a significant decline in the demand for oil. Additionally, the power sector is under pressure to shift towards renewable energy sources, straining oil demand from this domain.

Looking ahead, ABS forecasts that crude oil seaborne trade will reach its peak, followed by a swifter decline compared to seaborne trade for oil-based products. This divergence is a consequence of the disparity between supply and demand in refining points. Refining capacity in North America and Europe is projected to dwindle by 2050, while oil-producing regions seek to diversify and increase capacity for refined products and petrochemicals. This strategic move up the value chain empowers refiners to capture a substantial share of refining margins.

“The year 2025 is projected to witness the highest HFO equivalent level, before steadily decreasing towards 2050”

Moving forward to 2050, ABS anticipates that oil-based marine fuels, equivalent to heavy fuel oil (HFO), will account for approximately 10% of the oil and chemical tanker market fuel mix. The year 2025 is projected to witness the highest HFO equivalent level before steadily decreasing towards 2050. From 2040 onwards, fuel consumption is expected to be predominantly driven by ammonia, methanol, and hydrogen. The transition towards these alternative fuels is fuelled by the growing availability of sustainable energy options.

With respect to the tanker fleet, ABS predicts a decline due to the peak and subsequent decrease in global oil demand, the rise of alternative energy sources, and the associated geopolitical risks linked to oil production. The aggregate share of oil and chemical tankers, as well as dry bulk carriers, is forecasted to decrease from 64% of the fleet in 2022 to 45% in 2050; a demand shift that entails a greater focus on smaller vessels, such as medium-range tankers. However, it is worth noting that the adoption of alternative fuels has been relatively slower in sectors that employ small tankers and bulkers.