An LNG-powered VLCC sailing on the Middle East Gulf-China route could return the investment in the higher capex within three to five years, according to a new study
The independent study was commissioned by SEA\LNG, a collaborative industry foundation promoting the use of LNG as a marine fuel.
Conducted by independent simulation and analytics expert Opsiana, the study demonstrates the benefits of LNG as a marine fuel for a newbuild 300,000-dwt VLCC on the Middle East Gulf-China trade route, compared with other alternatives currently available and scalable to the shipping industry across three fuel pricing scenarios.
The business case compares the relative investment performance of four propulsion alternatives:
The study indicates that LNG as a marine fuel delivers a strong return on investment on a net present value (NPV) basis over a conservative 10-year horizon. The analysis in the study shows payback is from three to five years.
SEA\LNG chairman Peter Keller commented “This is the third in a series of investment studies commissioned to support shipowners and operators in decision-making at this crucial time. In addition to the positive results of studies undertaken by Opsiana for the liner and PCTC segments, this study underlines the compelling investment case for VLCCs.”
According to SEA\LNG, the route was chosen because it is the major energy trade corridor from the Middle East-China. SEA\LNG claims the study highlights several key findings:
SEA\LNG points out that there are additional benefits including the branding value gained by choosing LNG as a more environmentally friendly marine fuel.
To ensure the best possible data was available to Opsiana, SEA\LNG members1 contributed maritime expertise and current, timely background information and data from across the LNG value chain to ensure a high level of credibility in the study and results.
SEA\LNG notes that while the results of this study are based on a set of fuel forecast assumptions, through the ’Reader’s Choice’ modelling, provision has also been made for each reader to apply their personal crystal ball on future prices. Impacts of other capex values whose premiums may change as a result of differences across three principal categories – market, technology, physical – can also be incorporated.
Mr Keller concluded “As convincing, qualified evidence supporting the environmental, operational and commercial benefits of LNG continues to emerge, acceptance of its credibility is becoming increasingly widespread and concrete. LNG is the only safe, mature, commercially viable marine fuel that offers superior local emissions performance, significant greenhouse gas reduction benefits today, and a pragmatic pathway to a zero-emissions shipping industry.”
The full investment study, as well as the other studies in the series, can be accessed via this link.
Note 1: SEA\LNG members - Carnival Corporation & plc, Chart Industries, Clean Marine Energy, DNV GL, Eagle LNG Partners, ÉNESTAS, Exeno Yamamizu, Fearnleys, FortisBC, Gasum AS, GE, GTT, JAX LNG, Keppel Gas Technology, K LINE Group, Lloyd’s Register, MAN Energy Solutions, Maritime and Port Authority of Singapore, Marubeni Corporation, Mitsubishi Corporation, Naturgy, Novatek Gas & Power, NYK Line, Port of Rotterdam, Port of Virginia, Qatargas, Shell, Société Générale, Stabilis Energy, Sumitomo Corporation, Total, TOTE Inc, Toyota Tsusho, Uyeno Group of Companies, Vancouver Fraser Port Authority, Wärtsilä, and Yokohama-Kawasaki International Port Corporation.
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