LNG BUNKERING MARKET ANALYSIS

Bunkering is the process of transferring fuel to a vessel or a facility in the form of conventional marine fuels or LNG. The density of LNG is around half that of heavy fuel oil. This translates to around 1.8 times LNG needing to be bunkered to obtain same range in comparison to bunkering heavy fuel oil.

Global LNG bunkering market was valued at US$ 592.84 Million in 2021 in terms of revenue, exhibiting a CAGR of 35.26% during the forecast period (2022 to 2030).

Drivers

Increasing number of vessels or ships are using LNG owing to the need for cleaner fuels coupled with stringent government regulations to reduce chemical emissions. This in turn is expected to drive growth of the LNG bunkering market. For instance, a regulation passed by the International Maritime Organization (IMO) in 2020, stated that ships must reduce their sulfur content in fuel from 4.5% to 3.5%. Various end users are increasingly inclined towards replacing conventional fuels such as natural gas with LNG, given its significant cost advantage over the former. LNG has high combustion efficiency, is easy to redeploy, and is of lower volume than natural gas, translating in easier and relatively cost effective transportation and storage of the same. This has led to rampant adoption of LNG across various industries, leading to commissioning of various new LNG plants worldwide, in turn creating a highly conducive market for LNG bunkering.

Lockdown imposed due to the outbreak of Covid-19 pandemic has resulted in temporary ban on import and export; thereby, disrupting the supply chain and hampering the LNG Bunkering market growth in the second, third and fourth quarter of 2020. However, the market was recovered in 2021 as the demand for LNG as bunker fuel from the maritime transport and shipping industry increased.

Figure 1. Global LNG Bunkering Market Value Share (%), By Region, 2021

Market Restraints

Over the forecast period, the global LNG bunkering market is likely to be restrained by high transportation costs and the need for safety in the transportation process. Furthermore, a lack of infrastructure to fuel LNG across bunkering locations is likely to hinder the expansion of global LNG bunkering market.

Market Trends

The global LNG bunkering market is expected to increase to a greater extent over the forecast period, led by the increase in demand for LNG fuel among end-users such as defense vessels yachts, cruise ships, ferries & OSV, and bulk and cargo fleets. In 2020, The International Maritime Organization's (IMO) proposal for a mandated reduction in sulfur content in bunker fuel poses a challenge to the worldwide shipping industry. LNG is an ideal alternative fueling solution for ship-owners, as it has zero sulfur content and its combustion produces relatively low sulfur oxide compared to that produced by other fuel oils and marine diesel oil. Companies are focusing on producing small-scale LNG (SSLNG) to create profitable opportunities in the global market.

Implementation of several stringent environmental policies to reduce or control traditional air emissions is the major factor driving the global LNG bunkering market. The International Maritime Organization (IMO) in 2020, a United Nations’ specialized agency involved in setting the standards for safety and security of international shipping and prevention of marine pollution, has introduced stringent standards and regulations for the prevention of pollution caused by ships. The IMO mandates that all ships need to reduce their fuel sulfur content. Demand for LNG bunker fuel is expected to rise, as LNG enables almost complete reduction of sulfur oxide emission and moderate reduction of nitrogen oxide and carbon dioxide emission. Rise in demand for LNG bunkering can be ascribed to the attractive advantages of LNG fuel over crude oil in terms of price, energy content (energy per unit mass), and environmental footprint.

Figure 2. Global LNG Bunkering Market Value Share (%), By Vessel Type, 2021

Recent Developments

• In February 2021, Sumitomo, a worldwide general trading company and Petronas, a Malaysian oil and gas company signed a deal to jointly market and supply LNG bunker fuel in Japan and Malaysia.
• In January 2022, Total Energies, a multi-energy company that produces and markets energies on a global scale and its partner CMA CGM, a French container transportation and shipping company launched ship to containership LNG bunkering operation in the Port of Marseille Fos in Southern France
• In February 2022, Kyushu Electric Power Co. Inc., a Japanese energy company ,NYK Line, a Japanese energy company located Chiyoda, Tokyo, Japan, ITOCHU ENEX CO. LTD., a company engaged in home life business and others, and SAIBU GAS CO., LTD, a Japanese gas company based in Fukuoka, Japan established a joint venture company, KEYS Bunkering West Japan Co., Ltd., and emphasized on commencing the operation of the LNG fuel supply business for ships in Japan’s Kyushu and Setouchi regions in the spring of 2024.

Competitive Section

Major players operating in the global LNG bunkering market include Royal Dutch Shell Plc., Skangas, ENN Energy, Korea Gas Corporation, Prima LNG, Harvey Gulf International Marine LLC, Bomin Linde LNG GmbH & Co KG, Fjord Line, Crowley Maritime Corporation, and Polskie LNG.