LNG World Shipping May/June 2017 by rivieramaritimemedia

A Clean World Needs LNG. WE ARE READY.

Quality valves from HEROSE enable the safe transport, storage and bunkering of LNG. Our cryogenic experts provide components that fit your system.

Valves built to endure

HEROSE GMBH 23843 Bad Oldesloe Germany

This issue of LNG World Shipping Magazine is sponsored by

May/June 2017 www.lngworldshipping.com

Credit: National Grid

Deepsea import terminals – North West Europe invests for growth

Exclusive: the world’s LNG-fuelled ships Infographic: the changing shape of global LNG trade “The industry needs to realise that, whatever happens, US LNG is going to end up in Asia – and that it is going to create an important requirement for ships” GTT chairman and chief executive Philippe Berterottière, page 34

contents

May/June 2017

19 09

Comment 5 This year’s Gastech found Tokyo delegates in a buoyant mood

Infographic 6 LNG World Shipping crunches the data to reveal the key findings from this year’s annual report by the International Group of LNG Importers (GIIGNL)

Interview 9 MISC president and group chief executive officer Yee Yang Chien tells Karen Thomas why floating LNG opens a new opportunity and why MISC is thinking bigger about fleet growth

Polar shipping 28

13 Mike Corkhill examines the impact of the Polar Code on LNG shipping

Special report 15 Northwest Europe has deepsea LNG-import capacity to spare – but the UK and Ireland are planning to add more. Karen Thomas reports

Small-scale LNG

21 Mike Corkhill introduces our exclusive research into the LNG-fuelled tonnage on order and on the water 25 The last year has seen owners of cruise ships embrace LNG as marine fuel 26 Little has changed, regarding demand for LNG-fuelled service and supply ships this year 28 Delays and cancellations erode demand for LNG-fuelled dry cargo and container ships 29 Tankers and bulk carriers drive growth in LNG-fuelled newbuildings

Cargo handling 31 Gastech is a showcase for new cargo-handling technologies

Containment 32 Two additional ships have been ordered with the KC-1 containment system this spring. KC LNG Tech boss Chul-hee Lee outlines his ambitions for this new technology 34 Asia will buy most US LNG exports – and now is the time to book the tonnage to deliver it, GTT chief executive Philippe Berterottière tells Karen Thomas

www.lngworldshipping.com

LNG World Shipping | May/June 2017

contents Ship orders and deliveries 36 Oversupply is leading shipowners to push back delivery dates for new LNG carriers – but that’s good news for both the shipyards and for charter rates, writes Mike Corkhill

Best of the web 38 The ten most-read stories this spring on LNGworldshipping.com

Viewpoint

May/June 2017 Editor: Karen Thomas t: +44 20 8370 1717 e: karen.thomas@rivieramm.com Consultant Editor: Mike Corkhill t: +44 1825 764 817 Commercial Portfolio Manager: Bill Cochrane t: +44 20 8370 1719 e: bill.cochrane@rivieramm.com

40 The new generation of ice-class LNG carriers will test marine coatings to their limits, argues AkzoNobel business development manager Michael Hindmarsh

Sales Manager: Ian Pow t: +44 20 8370 7011 e: ian.pow@rivieramm.com

Front cover image (credit: National Grid)

Production Manager: Richard Neighbour t: +44 20 8370 7013 e: richard.neighbour@rivieramm.com

Next issue July/August 2017 issue of LNG World Shipping Main features include our special report on offshore LNG and an area report on the Indian subcontinent’s growing LNG-import demand. We also look at ship-to-ship LNG transfers and floating storage and regasification unit (FSRU) operations and present the latest developments in LNG pumps and valves. Read the latest international LNG shipping news at www.lngworldshipping.com Follow LNG World Shipping on Twitter, @LNGkaren

Subscriptions: Sally Church t: +44 20 8370 7018 e: sally.church@rivieramm.com Korean Representative: Chang Hwa Park Far East Marketing Inc t: +82 2730 1234 e: chpark@unitel.co.kr Japanese Representative: Kazuhiko Tanaka Shinano Co., Ltd t: +81 335 894 667 e: kazujt@bunkoh.com Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Head of Content: Edwin Lampert Executive Editor: Paul Gunton Head of Production: Hamish Dickie Business Development Manager: Steve Edwards Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK

Subscribe from just £299 Subscribe now and receive six issues of LNG World Shipping every year and get even more: • Special reports: LNG Carrier Lifecycle Maintenance, Small-Scale LNG, Offshore LNG and Ballast Water Treatment Technology • access the latest issue content via your digital device • free industry yearplanner including key dates • access to www.lngworldshipping.com and its searchable archive. Subscribe online: www.lngworldshipping.com

LNG World Shipping | May/June 2017

Total average net circulation: 4,000 Period: January-December 2016

Disclaimer: Although every effort has been made to ensure that the information in this publication is correct, the Author and Publisher accept no liability to any party for any inaccuracies that may occur. Any third party material included with the publication is supplied in good faith and the Publisher accepts no liability in respect of content. All rights reserved. No part of this publication may be reproduced, reprinted or stored in any electronic medium or transmitted in any form or by any means without prior written permission of the copyright owner.

www.lngworldshipping.com

YOUR BENEFIT: LOWEST LIFE CYCLE COSTS

LABY -GI ®

1ST CHOICE FUEL GAS COMPRESSION MARINE DESIGN FOR LNGC, FSRU AND FPSO Fuel gas systems for ME-GI diesel engines No vibrations due to elimination of unbalanced forces and moments Maximum reliability and availability supported by unique piston sealing technology, robust marine standard design and advanced diagnostic solution

Best operation flexibility due to warm and cold gas operation capabilities and side stream gas delivery to auxiliary engines and reliquefaction systems Suitable for Boil-off gas suction temperatures down to –160 °C at best efficiency

Full range of services and top performing components through global organization and local service centers → www.recip.com/LNGC

COMMENT | 5

LNG shipping 2017 – the view from Tokyo

B Karen Thomas, Editor

www.lngworldshipping.com

y now, those of us who attended Gastech in Tokyo in April have unpacked our suitcases, sent out our suits for dry-cleaning and are busy following up myriad business leads and industry contacts from this year’s event. The mood at the last Gastech show, in Singapore in autumn 2015, was one of quiet pessimism, following a spate of floating and landbased production project delays and cancellations and amid a mounting oversupply of ships. If 2016 was a tough one for LNG shipping in which new ship orders and project approvals virtually dried up, the mood this year in Tokyo was buoyant, nevertheless. That optimism reflects growing LNG-import demand and the way that developing countries are turning to floating storage and regasification units (FSRUs) to take advantage of ever-cheaper gas prices, quickly and at a lower cost. The buzz in Tokyo this year was all about emerging import markets and how to tap them. Slowing demand from mature importers Japan and South Korea is being offset by growth in the Middle East and China and from new southern hemisphere importers, notably in the Indian subcontinent, Latin America, the Caribbean and Southeast Asia. Unveiled just before the Tokyo show, the latest LNG shipping vital statistics from the International Group of LNG Importers (GIIGNL) underpin that optimism, see page six. Last year, the total volume of LNG traded globally increased by more than 7 per cent to 263.2 million tonnes. Four countries joined the LNG-importers’ club in 2016, which comprised 39 states last year. Eleven new regasification terminals were commissioned, including five floating import terminals. Global regasification capacity reached 830 million tonnes a year (mta) by year-end. These figures go a long way towards explaining this year’s – relatively – upbeat mood in Tokyo. Woodside LNG chief executive Peter Coleman told the opening plenary session that emergingmarket demand is on course to increase from

5 per cent of global LNG demand to more than a quarter of the total by 2025. In the last four years, the volume of LNG imported via FSRUs has increased threefold, to 30 mta, Mr Coleman said.

“IN MARCH, THE LNG-FUELLED FLEET HIT THE 200-SHIP LANDMARK” Opportunities to unlock new, small or remote markets using FSRUs of varying sizes and specifications was a recurring theme at Gastech. That theme offset the conference’s gloomier messages about the risk of LNG oversupply switching to LNG shortages unless new production projects are approved, about the need to nail down project costs and about why it is critical to eliminate the risk of methane slip as supply chains grow longer, more diverse and involve more players. Another positive was the slow upturn in take-up for LNG as marine fuel, see our special report on page 21. In March, the LNG-fuelled fleet, based on ships in service and on order, hit the 200-ship landmark. Cruise ship newbuildings lead that take-up. However, Russian shipping giant Sovcomflot announced on the eve of the conference a deal with Shell Western LNG to supply gas as marine fuel to a new class of aframax tankers built to run on LNG. The ice-class 1A tankers join the Sovcomflot fleet next summer. However, there was a consensus among delegates that LNG shipping cannot take these new areas of demand for granted. Industry leaders must do everything they can – whether that’s pricing gas more competitively, or creating joint ventures to deliver new infrastructure, or approving new exploration and production – to encourage and support that fledgling demand. LNG Read our Gastech coverage on LNGworldshipping.com or at http://bit.ly/LNGWSgastech

LNG World Shipping | May/June 2017

WHAT WE HAVE LEARNED FROM THIS YEARâ&#x20AC;&#x2122;S GIIGNL REPORT 6 | RUNNING HEAD sub

LNG IMPORTS, 2016 versus 2015 China Egypt India Pakistan Spain Jordan France Indonesia

263.2

UAE South Korea

mt total LNG traded

Lithuania Taiwan Chile Kuwait Thailand Italy Portugal Israel Turkey Puerto Rico Greece Singapore

+7.3%

Sweden Dominican Rep.

increase on-year

USA Malaysia Canada Netherlands Argentina Mexico Belgium Japan UK Brazil

-4

-3

-2

-1

LNG World Shipping | May/June 2017

million tonnes

Source: International Group of LNG Importers (GIIGNL), 2017 Infographic: Richard Neighbour www.lngworldshipping.com Research: Karen Thomas

LNG imports, 2016 sub RUNNING HEAD | 7

830

new regasification terminals commissioned

mta total regasification capacity

new LNG importing countries

total number of importing countries

new floating import terminals

LNG shipping, 2016

478

LNG carriers demolished

LNG carriers

256,495m3 capacity demolished

Floating Storage & Regasification Units (FSRUs)

LNG exports, 2016

exporting countries

mt new LNG supply

new export FIDs

new liquefaction capacity

www.lngworldshipping.com

340

mta total nameplate liquefaction capacity LNG World Shipping | May/June 2017

Sin tĂtulo-2 1

21/04/2017 11:19:22

INTERVIEW | 9

MISC has taken delivery of two of its five Seri C-class vessels

MISC EYES GLOBAL LNG SHIPPING OPPORTUNITY Malaysia-based shipowner MISC is about to take delivery of three LNG carrier newbuildings. President and group chief executive officer Yee Yang Chien tells Karen Thomas why floating LNG is opening a new opportunity and why, when it comes to future fleet growth, MISC is thinking bigger

LNG World Shipping: what is the latest news on MISC’s plans to expand its fleet? Yee Yang Chien: We own and operate 27 LNG vessels and two floating storage units (FSUs). Three remaining newbuildings will be delivered in the second half of 2017 and first-half of 2018. These three newbuildings are part of a fleet of five sister ships: the first two were delivered last year and early this year. These vessels will be the first Moss-type vessels that we own and operate, and will serve the new Petronas floating LNG (FLNG) facility. Their delivery marks our entry into this new market. We have also become the first shipowner in the world to experience cargo loading from an FLNG unit.

What are MISC’s fleetinvestment plans beyond 2017 and how will your LNG carrier fleet evolve and grow? Charterers are now requesting larger vessels, between

www.lngworldshipping.com

170,000m³ and 180,000m³, to benefit from economies of scale. They also prefer fuel-efficient ships that have evolved from steam to dual/tri-fuel dieselelectric (DFDE/TFDE) to slow-speed diesel gas injection (SSD-Gi) propulsion systems. Membrane remains the preferred containment system, mainly due to price competitiveness compared with self-supporting systems. We will continue to expand our fleet if we have secure, longterm employment arranged. Doing this enables us to remain flexible and build vessels with a design specification that matches the requirements of our customer. Our current newbuildings are fitted with Moss containment systems and use reheat steam propulsion as this provides the optimum solution for our charterer.

How will MISC diversify its fleet? The MISC fleet has always been diversified, with sizes ranging from 18,900m³ for the Aman-class vessels

to 157,000m³ for our Seri B-class, DFDE vessels. We operate both steam and DFDE propulsion systems. We remain flexible in terms of our vessels’ technical specifications to ensure that we meet project and/or charterer requirements. In small-midsize carriers, we are monitoring the development of LNGbunkering vessels, and engaging with shipyards and several major LNG companies.

What are MISC’s plans to scrap or convert older tonnage? All our older tonnage is chartered on long-term contracts. In 2012, we converted two of our firstgeneration vessels, Tenaga Satu and Tenaga Empat, into FSUs for a 20-year charter with Malaysia’s first regasification terminal in Malacca. In 2015, we extended the contract for our Puteri-class vessels for another 10 years and so we put the vessels, which had reached their 20-year service life, through a repair and life-

LNG World Shipping | May/June 2017

10 | INTERVIEW

extension (RLE) programme at our own shipyard. In 2016, we also secured a 10-year charter for Aman Sendai from January 2018. That vessel is now 20 years old and will also undergo RLE to service the new charter contract. We continue to secure conversions and contract extensions, but have also been successful selling old ships into the second-hand market. We keep our options open in managing our older tonnage with preference for converting those assets into FSUs or FSRUs, selling back into the market or, finally, sending them for scrap at the right commercial consideration.

What are your plans for cutting costs and improving efficiency? We continue to adopt the latest technology for our newbuildings to improve efficiency. We took delivery of our new Moss-type LNG carriers Seri Camellia and Seri Cenderawasih in September and January. These newbuildings are powered by ultra-steam turbine (UST) technology, which gives 13 per cent higher efficiency than a conventional steam turbine plant. In addition, the pre-swirl duct and propeller boss cap fin fitted to the ships contribute energy savings of about 4 per cent. The fitting of an X-twisted rudder to the vessels reduces cavitation and enhances manoeuvring performance, which also improves energy efficiency. The improved structural strength of the vessels is gained by the integrated hull structure (IHS) design. This enables a steel reduction of about 5 per cent, which makes the vessels lighter than conventional Moss-type LNG carriers. Optimisation of the hull form was rigorously tested during the design and testing phase to minimise hull resistance,

LNG World Shipping | May/June 2017

increase propulsion efficiency, reduce the power requirement and improve energy efficiency. The use of low-friction anti-fouling paint on the vessels also reduces speed loss during operation. The coatings we use are free of tributyltin and comply with IMO's antifouling system convention. Last year, we successfully completed the FSU Tenaga Satu and FSU Tenaga Empat boiler retrofit project. After having shore power facilities installed, both were retrofitted with smaller deck boilers to deliver substantial fuelconsumption savings.

with several spot-shipping requirements with Brunei LNG, Pluto LNG and Shell. Our previous third-party charterers include Engie, BP, BG, Trafigura and Gladstone LNG. We continue to expand our third-party portfolio by pursuing business opportunities in Europe, India and Indonesia.

What are MISC’s plans to expand overseas?

Yee Yang Chien: pursuing business opportunities in Europe, India and Indonesia

How is MISC responding to changing LNG trade patterns, particularly in Asia; what opportunities and challenges does this present? The LNG shipping business has become more competitive and we are seeing charter periods contracting, from 15 years to 10 years – or even seven. We are continuing to expand our capabilities to provide more than just conventional LNG shipping services. Our capabilities now include floating storage and regasification units (FSRUs), FLNG vessels, small-scale LNG and LNG bunkering. We are also looking at LNGto-power (L2P) projects for niche markets. These initiatives will ensure we can continue to maintain a long-term, sustainable revenue stream.

What progress has MISC made pursuing additional third-party time charters? Our current third-party charterers are Yemen LNG (Total), where the project has halted but the charters are valid, and with International Gas Transportation (IGTC) and Koch Commodities Europe. Last year, we successfully expanded our third-party charterer profile

MISC IN FIGURES Live LNG carriers

27 Live fleet capacity (m³)

3.5 million Floating storage units (FSUs)

FSUs' total capacity (m³)

260,000 LNG carrier orderbook

Orderbook capacity (m³)

450,600

As a global player that has provided LNG shipping services to major companies BG, Engie, Yemen LNG, BP, North West Shelf LNG, Shell, KOCH, Trafigura, Brunei LNG, Gladstone LNG and Pluto LNG, we continue to pursue business opportunities globally. MISC’s LNG business is headquartered in Kuala Lumpur, assisted by regional offices in Yokohama in Japan and London, UK. Our presence in Yokohama is important because most of our LNG vessels call at Japanese regasification terminals. This provides a rapid response, ensuring smooth and efficient operations throughout a vessel's charter period. Our London office provides the KL team with continuity in business development and supports our five-year strategy aspiration to expand our business presence in the Atlantic region.

How will MISC adjust as other LNG-producing states overtake Malaysia, notably Australia and the US? Most of our vessels are chartered by Petronas delivering cargoes originating in Malaysia. However, we continue to pursue business opportunities globally. In the past, we have pursued shipping requirements for Sabine Pass in the US and Australia’s Gladstone LNG, North West Shelf and Ichthys LNG projects. We will continue to pursue other business opportunities. LNG

www.lngworldshipping.com

The Future is Clear ME-GI dual fuel done right

MAN B&W MC/MC-C Engines MAN B&W ME/ME-C/ME-B Engines MAN B&W ME-GI/ME-C-GI/ME-B-GI Engines The new ME-GI generation of MAN B&W two-stroke dual fuel ‘gas injection’ engines are characterised by clean and efcient gas combustion control with no gas slip. The fuel exibility and the inherent reliability of the two-stroke design ensure good longterm operational economy. Find out more at www.mandieselturbo.com

EXTREME COMPLIANCE The Unitor Dry Chemical Powder Fire Extinguishing System is designed to provide you with Polar code compliance. Tested to -28˚C with a typical distribution pipe conﬁguration.

www.survitecgroup.com

Tested down to

-28˚C

Tested in

190m pipes + 33m hose

POLAR SHIPPING | 13

Polar operations need bolstered winterisation Arctic and Antarctica operations pose challenges that require new levels of vessel winterisation. The Polar Code is a useful first step, writes Mike Corkhill

esigners, builders and operators of ships active in ice-covered waters have traditionally referred to the ice class 1A Super and 1A notations detailed in the Swedish-Finnish rules for their most robust ships. While an excellent standard, they are predicated primarily on Baltic operations where ice is a winter-only phenomenon. To underscore the extent of the winterisation challenges faced in the Arctic and Antarctica regions, consider the following: commercial operations at the Yamal LNG terminal at Sabetta in the Russian High Arctic are due to begin in the second half of 2017. Ice cover persists for 300 days of the year, the average annual temperature is -9˚C and winter readings of -40˚C are not unusual. The polar environment presents many more hazards than ice cover and robust winterisation rules are needed to protect people, vessels and the environment from the effects of a cold climate, such as the effect of low temperatures on materials, equipment and systems, ship icing and particular propulsion and manoeuvring challenges in ice. For Tronde Spande, winterisation expert and vice-president offshore and marine solutions at Norway’s Safe Yards, the measures covering winterisation in the Polar Code are a useful first step. But he foresees future revisions offering more precise definitions and including mandatory elements, such as making it mandatory that escape routes, muster stations and staircases are all available and free of ice. Mr Spande estimated that the cost of completely winterising a US$100 million vessel for polar operations would range between US$300,000 and US$400,000. This creates a market for winterisation services. Safe Yard's parent company has set up a new entity, Safe Arctic Technology, which is working with leading cable specialist Bartec.

Its design, construction and equipment are in line with the ice rules of the vessel’s twin class societies, Bureau Veritas and the Russian Maritime Register of Shipping, which were both closely involved in developing the Polar Code. The Unified Requirements Concerning Polar Class developed by the International Association of Classification Societies (IACS) in 2008 also provided guidance, as did IMO’s 2009 predecessor to the code, Guidelines for Ships Operating in Polar Waters. The 15 Yamal icebreaking LNG carriers are being built to the RMRS Arc7 standard, which falls between the Polar Code’s PC3 and PC4 classes. Their 45MW propulsion system uses three ABB Azipods to power through ice up to 2.5m thick in year-round operations. Yamal LNG chose a double-acting design, with a heavy icebreaking profile and three azimuthing propellers aft, a moderate icebreaking bow, forward and aft ice belts and additional internal ribs. The LNGCs will move in a forward direction in light ice and open seas and stern-first in heavy ice. The BV winterisation notation for the Yamal ships – COLD (-45,-52) – indicates the extent to which they are ready for harsh polar conditions. The hulls will be able to operate in ambient temperatures as low as -45˚C while equipment will function down to -52˚C. LNG

LNG: a new era The world’s first icebreaking LNG carrier was delivered this spring, hot on the heels of the entry into force of the Polar Code, marking a new era in LNG shipping and Arctic transportation. The inaugural icebreaking LNGC is the 172,000m³ Christophe de Margerie, the first of 15 vessels being constructed by Daewoo Shipbuilding & Marine Engineering to load cargoes at the Yamal LNG terminal at Sabetta in the Russian High Arctic. Although its keel was laid well before the new regime’s stipulated January 2017 start date, the vessel was constructed in anticipation of the code. On 1 January 2018 the Polar Code will also become mandatory for existing ships in polar regions. The fact that the keels of several ships in the Yamal series will be laid after the code’s entry into force was another driver for following the Polar Code for the entire series.

www.lngworldshipping.com

The enhanced winterisation requirements for the Russian Arctic have helped drive the Polar Code’s agenda

LNG World Shipping | May/June 2017

LNG & LPG Ship/Shore Interface conference

16-17 November 2017, London

Book now! www.lngshipping conference.com

The challenges of optimising ship and terminal operations at the jetty, offshore and bunker station The 2017 LNG World Shipping Ship/Shore Interface Conference looks at LNG carrier and terminal operations when they link and are at their most intense. It is also the point at which aspects such as cargo and custody transfer systems, berthing and escort tugs, mooring and jetty arrangements and cargo-handling equipment performance are at their most critical. This conference provides a unique and rare opportunity for carrier and terminal operators to discuss the leading business and operational challenges arising at the ship/shore interface. KEY TAKEAWAYS FOR DELEGATES INCLUDE: A comprehensive update on the latest industry developments, showcasing the most innovative technologies and projects, operational best practice, and a dynamic networking platform. PROGRAMME HIGHLIGHTS: • Comprehensive update on key industry developments and order book • Jetty design and compatibility with different size vessels • New range of small and mid-scale terminals that are emerging • Port approach, berthing and mooring technologies • FLNG and FSRU ship/shore interface challenges • Tandem mooring operations for less hospitable offshore environments • The latest in cargo transfer technologies • Risk management and emergency response procedures • Identifying training needs for specific ship/shore interface operations To reserve your place online please visit www.lngshippingconference.com/book-now or contact Ian Pow on +44 20 8370 7011 or ian.pow@rivieramm.com

platinum sponsor

official publication

organised by

SPECIAL REPORT | 15

North West Europe ponders new deepsea LNG-import capacity US export ambitions, the UK’s exit from the European Union, and regional small-scale and transhipment plans may drive a new wave of terminal expansion in North West Europe. Karen Thomas reports

urope’s LNG imports are set to rise this year, but analysts believe the pattern of growth may be one of volatile highs and lows, rather than the immediate US export-led supply glut that many observers have feared. Gas demand grew 6 per cent last year, according to Platt’s, which noted a marked shift in North West Europe from coal to gas. Both the UK and France experienced significant rises in demand, to meet a

growth in need for power generation in the former country and to offset a partial nuclear shutdown in the latter. By 2020, the US will export some 70 million tonnes a year (mta) of LNG. Europe is likely to become the final destination for unfixed US cargoes. It is not yet clear how many will head towards North West Europe and how much volume this market can absorb. Cheniere expects half its LNG exports to go to Europe in

Europe is well-placed to receive US LNG exports (Credit: Rosario Flore)

www.lngworldshipping.com

future. However, it sent just five cargoes to European Union member states last year from Sabine Pass LNG – three to Spain and one apiece to Portugal and Italy. Shell head of integrated gas Martin Wetselaar told a London press briefing this spring that European demand prospects face many variables, including the volume of piped gas imports from Russia, the regulatory environment and how quickly or slowly the continent's home-grown gas production dries up.

New capacity

US exports underpin plans in North West Europe to add four deepsea import terminals – although these projects will also respond to specific local conditions. Germany has no deepsea import terminal and Ireland needs to reduce its dependence on the LNG it receives from the UK as Brexit looms. Germany’s LNG-import plans have come and gone over the years. It can source natural gas via Belgium’s Fluxys LNG terminal and the Gate terminal in The Netherlands, and several proposed small-scale ventures will support growth in demand for LNG as marine fuel. However, Netherlands-based Gasunie is proposing to develop a midsize LNGimport terminal on the River Elbe, to supply 2-3 mta. Director Ulco Vermeulen told a conference in January that the plans include a jetty for marine bunkering, truck loading and small-scale distribution. North West European plans to add LNG-import capacity are concentrated in the British Isles. The UK’s three established import facilities – Grain LNG in Kent and South Wales’ South Hook and Dragon LNG terminals – can receive up to 35 mta. Industry sources say the UK uses just a third of its import capacity. And reports suggest that Shell wants to divest from its 50-50 partnership with Petronas in Milford Haven-based Dragon LNG, and will give Malaysia first refusal. Nevertheless, the UK

LNG World Shipping | May/June 2017

16 | SPECIAL REPORT

looks set to develop two additional deepsea import terminals in the north of England, positioning itself as a hub to store and sell on US export cargoes. In December Meridian LNG extended its offtake agreement with Louisianabased Magnolia LNG to supply a floating storage and regasification unit (FSRU) to Morecambe Bay. The new arrangement extends a deal signed two years ago to supply 2 mta to the vessel. LNG Ltd-owned Meridian has until December to close the offtake

agreement. Höegh LNG is tipped to supply the FSRU to Barrow-in-Furness in the northwest.

Comeback project

Meanwhile, commodities giant Trafigura is to reopen Teesside GasPort in the northeast of the UK to LNG imports. It is working with landowner PD Ports to secure permits for the project, aiming to receive the first shipments next summer and to develop the terminal as a UK energy hub.

Trafigura will invest US$30 million in recommissioning the terminal and will charter an FSRU. A spokeswoman confirmed the plan but declined to discuss it in detail. Analysts say Trafigura is cashing in on falling LNG prices and reducing its exposure to falling demand for coal. “We’re interested in having more infrastructure, both in Europe and around the world,” Trafigura head of LNG trading Hadi Hallouche told the Financial Times. Trafigura may also position Teesside as ›››

EXISTING and PLANNED: North West Europe deepsea LNG-import terminals and services

Country

Terminal

Germany

Gasunie, River Elbe

Netherlands

Gate, Rotterdam

Belgium

Fluxys, Zeebrugge

France

Montoir, Bretagne

Reloading

Transhipment

Bunker-supply ship loading

Truck loading

Rail loading

Dunkerque LNG UK

Grain LNG Terminal South Hook LNG Dragon LNG Teesside Gasport Meridian LNG

Ireland

Shannon LNG YES

LNG World Shipping | May/June 2017

PROPOSED/PLANNED

IMPORT TERMINAL PLANNED

www.lngworldshipping.com

Your Partner in

DESIGN: ARTGARDEN | FOTO: Â© ADOBE STOCK

SHIP PERFORMANCE MONITORING KYMA Office WEB

KYMA WEB API

PERFORMANCE analysis

MRV and EMISSIONS reports

KYMA

CHARTER PARTY module

BIG DATA

STEAM analysis

SHAFT POWER measurements

ENGINE condition

G/E LOAD optimization

TRIM optimization

+47 55 53 00 14

sales@kyma.no

service@kyma.no www.kyma.no

SPECIAL REPORT | 19

››› a European gateway for US LNG exports. “Given the growth in volumes globally and the flexibility of US supplies, it is likely that LNG shipped from the US will make up the lion’s share,” Mr Hallouche said. “LNG infrastructure is coming down in cost, and liquidity in the LNG market is getting deeper, making these kinds of projects possible.” US-based Excelerate Energy launched Teesside GasPort in 2007 as the world’s first dockside floating regasification project, receiving gas from a visiting FSRU. The site near Middlesbrough delivered natural gas into the UK’s national transmission system, providing access to national balancing-point markets. Teesside GasPort can handle LNG carriers up to 150,900m³. Excelerate boasted that it brought the project into service within a year of selecting the site and for 10 per cent of the cost of building a landbased LNG terminal. In fact, it received few shipments.Excelerate closed the site in 2015,

saying that the terminal had come “to the end of its commercially viable life”.

Brexit battles

Meanwhile, Brexit fears are forcing Ireland to reconsider its dependence on the UK, supplier of 60 per cent of the republic’s gas requirement. Dublin cannot negotiate a bilateral energy-supply deal with London, post-Brexit, and has applied for European Union funding for two proposed import ventures. One is the Celtic interconnector project, a 600km subsea power link from Brittany in the northwest of France to Ireland’s south coast. EirGrid and RTE must decide whether to back the project in 2020-2021, but have support from the Irish government. If they go ahead, the interconnector could open in 2025. The second proposal is to revive Ireland’s long-stalled Shannon LNG import terminal. The €500 million (US$536.6 million) project won planning permission

11 years ago, but in 2015 owner Hess sold up to an unnamed private equity company. Hess shipped out after Ireland’s energy regulator ruled that the project would have to contribute to the cost of interconnector pipes to Scotland that the project would not use. Now that the UK has voted to leave the EU, Ireland is looking to resuscitate the Shannon venture. Energy minister Denis Naughten has described Shannon LNG as “the best solution available to us, post-Brexit, from a supply-security perspective.” Reports from Ireland this spring suggest that a new investor is seeking funds from the European Investment Bank (EIB) and the Ireland Strategic Investment Fund. Ireland believes the Shannon LNG project is “imperative” post-Brexit. Some reports suggest Ireland could opt for an FSRU as a quicker, cheaper solution to its predicament. And sources close to the latest talks say the country must tackle the question of contributing to the cost of the Scottish interconnector pipes if Shannon LNG is to go ahead.

North West Europe's LNG hubs diversify to grow

Gate Terminal handled fewer large import cargoes last year

Gate Terminal in the Netherlands saw a sharp drop in large import unloads last year, down from 21 to 15 – in tonnage terms down from 1.5 million tonnes (mt) to 1 mt – as the expected glut of US cargoes failed to materialise. Few had materialised in the first three months of year and Gate, like other regional terminals, says import trends will remain volatile. Commercial manager Stefaan Adriaens says Gate will focus on large re-exports, which have proved resilient. Last year, Gate made 12 shipments, compared with 14 in

www.lngworldshipping.com

2015. Gate also carried out 10 small reloads and two LNG transhipments last year. Gate carried out one transhipment in first-quarter 2017 and is focusing this year on this business and on small-scale opportunities, having opened a third jetty dedicated to small-scale services for launch customer Shell. In March, it secured a second customer that, at the time of going to press, it had chosen not to name. Shell will deliver a dedicated 6,500m³ LNG bunker-supply ship to be positioned at Gate this summer. “Momentum in ordering LNG-fuelled ships is keeping a steady pace,” Mr Adriaens concludes. In Belgium, Fluxys LNG is building up its transhipment business and preparing itself to launch commercial ship-to-ship LNG bunker-supply operations, having taken delivery in February of the 5,000m³ Engie Zeebrugge, the world’s first purpose-built LNG-bunkering vessel. Fluxys opened Zeebrugge’s second jetty in December. The terminal operator is now studying demand for a third jetty, dedicated to small-scale shipments. With two of its four deepsea LNGimport terminals in the northwest range, France takes in LNG via Elengy’s Atlantic coast terminal Montoir de Bretagne and,

since September, through Europe’s newest deepsea import terminal at Dunkerque. Last autumn, Elengy signed a memorandum of understanding with Gate Terminal to develop regional truck-loading and bunkering services, and to promote LNG as marine fuel in the region. Montoir is to position itself as a transhipment hub. Elengy parent Engie has agreed with Russia-based Novatek to transfer cargoes loaded at Yamal LNG in the Arctic Circle for onward shipment via Montoir. Yamal LNG should produce its first cargoes next year. Dunkerque LNG is owned by trading giant EDF, Fluxys and Total. The 9.4 million tonnes a year (mta) terminal has storage for up to 190,000m³ and supplies both the French and Belgian national grids. EDF is building up its LNG portfolio, positioning Dunkerque to support its trading ambitions. This year, EDF Trading activates its eight-year deal with South Korea-based Kogas to divert surplus cargoes of up to 4 mta to Europe. Dunkerque is also studying demand for ship-to-ship and truck-loading LNG distribution. LNG

LNG World Shipping | May/June 2017

BUTTERFLY VALVES FOR

EXTREME CONDITIONS Meet us at stand no:

C04-26C

www.westad.com

SMALL-SCALE LNG | 21

THE LNG-FUELLED FLEET HITS THE 200-SHIP LANDMARK

by Mike Corkhill

he in-service and on-order fleet of LNG-powered seagoing ships has reached the 200 mark. The double century was achieved on 20 March 2017 when Sovcomflot confirmed orders for four ice-class Aframax tankers of 114,000 dwt at Hyundai Samho Heavy Industries. The complement of LNG-fuelled vessels that are not LNG carriers comprises 103 in-service ships and 97 on order. The total represents a yearon-year jump of 23 per cent. In March 2016, when LNG World Shipping last carried out a comprehensive review of the LNG-fuelled fleet, there were 74 such vessels in service and 88 on order. The LNG World Shipping survey breaks the LNG-fuelled fleet into four categories – passenger ships; tankers and bulk carriers; containers and dry cargo ships; and service and supply ships.

Passengers and tankers

Passenger ships are the largest single segment, accounting for 72 of the 200-ship total. The in-service passenger ship fleet stands at 40 ships (up from 30 last year) while there are 32 such vessels on order (23 last year). The 36 per cent annual jump in the passenger ship fleet owes much to the interest in clean-burning LNG as marine fuel by the leading cruise ship operators. Between them, Carnival Group, MSC Cruises and Royal Caribbean Cruises have ordered 13 newbuildings for delivery between 2019 and 2026. The most dynamic sectors over the past 12 months have been tankers and bulk carriers, thanks to a slew of shipyard completions. Avic Dingheng has handed over the four-ship series of chemical/product tankers it was building for Terntank and service on Baltic Sea routes, while four ethane carriers – three for Navigas and one for operation in the Gaschem pool – have also been delivered. The Terntank vessels and the ethane carriers are also notable for their low-speed propulsion systems. The Terntank quartet are the first ships to be propelled by low-pressure two-stroke dualfuel engines, in this case supplied by WinGD, while high-pressure MAN gas-injection engines were specified for the ethane ships. Newbuilding

www.lngworldshipping.com

Passenger ships account for 72 of the 200 LNG-fuelled ships

contracts in the tanker and bulker segment have kept the orderbook topped up, even as the in-service fleet expanded from six to 19 vessels. Between them, Furetank, Älvtank and Thun Tankers, the three members of the Gothia Tanker Alliance, have ordered 10 chemical/product tankers, made up of six of 16,300 dwt and four of 8,000 dwt. The four Aframax ships for Sovcomflot mentioned above represent another notable newbuilding programme. The vessels will be taken on charter by Shell, a company which now, following the takeover of the BG Group in February 2016, has LNG sales of 57 million tonnes per annum, or around 22 per cent of the global market.

Container ship hiatus

The container and dry cargo ship segment of the LNG-fuelled fleet is the smallest of the four and has actually shrunk over the past year. The orderbook has fallen by a third, to 14 ships, as a result of three deliveries, four cancelled contracts and the absence of any new orders to compensate. The cancellations – two for Containerships and

LNG World Shipping | May/June 2017

22 | SMALL-SCALE LNG

two for Matson Navigation – were prompted by decisions to switch shipbuilders from the originally nominated yard. In the case of Containerships, the order was reduced from six 1,400 teu container ships to four while Matson opted for LNG-ready vessels from its chosen new yard rather than the LNG-powered box ships first specified. Despite the hiatus of the past year, the container ship segment will undoubtedly grow in the years ahead, as evidenced by the United Arab Shipping Co’s current newbuilding programme of 17 LNGready ships, comprising six 18,800 teu vessels and 11 of 15,000 teu, and CMA CGM’s stated intention of emulating UASC’s propulsion system choice when specifying its next generation of large box ships. Upgrading the LNG-ready capability to running on gas will happen when the necessary LNG bunkering infrastructure is in place, not least on the key Asia/Europe container ship trade route. The transformation will create the most LNG fuel-intensive vessels afloat.

Dynamic dredgers

The service and the supply vessel segment has been the subject of least change over the past year, both the in-service and on-order fleets rising by three vessels, to 33 and 23, respectively. Platform supply vessels (PSVs) figure prominently in the operational LNG-powered service and supply vessel fleet, accounting for 20 of the 33-ship complement. The orderbook, in contrast, shows much more variety, with a portfolio encompassing dredgers, a jack-up rig, a semi-submersible crane vessel, a cablelayer and a windfarm installation vessel. DEME of Belgium has been a leading advocate of LNG-fuelled dredgers and has investigated the challenges of using gas to power such vessels. Factors to be weighed up include bunker tank size and location, LNG bunker availability, shipboard bunkering connections, crew training and the step load capability of the various gas-burning engine options. In combination with its cold box encasement, an LNG Type C bunker tank occupies about three times as much space as a tank of marine gas oil (MGO) possessing the same energy content. Accommodating LNG tanks has a significant impact on vessel layout, while the tank location restrictions imposed by the new International Code of Safety for Ships using Gases or other Low-Flashpoint Fuels (IGF Code) add another level of complexity to the design challenge. Naval architects working on the DEME dredgers found that dual-fuel diesel engines worked best for the vessels due to their better step load capability than gas engines. Such propulsion units also allowed the vessels to be provided with a mix of LNG and MGO bunker tank capacities. The aim is to optimise the use of LNG, assuming the cost of this fuel is lower than MGO, but to

LNG World Shipping | May/June 2017

provide sufficient MGO as a backup. The crew would switch to MGO if the dredger has to operate longer than planned before the next LNG bunkering stop.

Size counts

The average size of the 97 LNG-fuelled ships now on order is notably greater than that of the 88 ships in last year’s orderbook. This reflects not only the acceptance of LNG fuel among owners of a growing array of ship types but also recognition of the fact that the 0.5 per cent global sulphur cap will be implemented in 2020 rather than the alternative 2025 date. The four 180,000gt vessels that AIDA and Costa, both Carnival Group companies, have on order at the Meyer Papenburg and Meyer Turku yards, for example, will be able to carry up to 6,600 passengers, giving them the largest guest capacity of any cruise ship. Each ship will be fitted with three Type C LNG bunker tanks with an aggregate capacity of 3,600m3, enabling their dual-fuel engines to operate on gas for up to 14 days before the need for replenishment. Although the LNG bunker tank capacity of the Aframax tanker quartet just ordered by Sovcomflot is yet to be announced, they would require about 5,500m3 of space to provide the vessels with the same amount of energy contained in the heavy fuel oil tankage typically specified for such ships. Smaller ships for emission control areas and dedicated regional routes will continue to dominate the LNG-fuelled vessel orderbook, but the growing presence of larger ships is encouraging the LNG market. The need for more extensive bunkering infrastructure reinforces momentum for LNG as marine fuel, raising hopes for another year of 25 per cent growth in the LNG-fuelled fleet. LNG

Even nuclear icebreakers can use LNG as marine fuel

www.lngworldshipping.com

LNG Solutions for the Marine Industry

Nor Shipping 2017, Oslo, Norway May 30 − June 2 Chart Booth Hall E No. E03-28

Cryogenic Solutions for:

• LNG ship fueling systems

• Bunkering vessels

• FLNG

• Bunkering stations

• FSRU

• Port power applications

www.ChartLNG.com Chart Ferox Marine halfpg ad_LNG WorldShip2.indd 1

9/10/15 10:46 AM

Marine Service GmbH

Pioneering Solutions:

LNG as fuel for Cruise Ships committed to the quality of the world fleet

We are committed to upholding the values of safety, security, and environmental protection. This is evidenced through the quality of our fleet and outstanding port State control record as the only major international flag to remain on the United States Coast Guard’s Qualship 21 roster for 13 consecutive years. Visit us at Booth D01-21 during Nor-Shipping 2017. International Registries (U.K.) Limited in affiliation with the Marshall Islands Maritime & Corporate Administrators

london@register-iri.com blog.register-iri.com www.register-iri.com

Worldwide first provider

www.ms-de.eu

From Hamburg ... to the World

SMALL-SCALE LNG | 25

Cruise ships boost the LNG-fuelled passenger fleet

AIDAPrima was the first cruise ship to run on LNG in port

Carnival Group, MSC Cruises and Royal Caribbean Cruises have ordered an aggregate 13 gasburning newbuildings for delivery between 2019 and 2026

www.lngworldshipping.com

rather than the alternative 2025 date. Against this background, the companies mentioned above have chosen LNG as the optimum propulsion system fuel for their newbuildings. The appearance of cruise ships in the LNGfuelled fleet listing is also indicative of the trend towards the specification of larger vessels among today’s newbuilding contracts. Whereas the longest-serving LNG-fuelled passenger vessels are small Norwegian cross-fjord ferries, the concept of LNG as marine fuel is now winning favour much more widely. As an example, the four 180,000gt vessels that AIDA and Costa, both Carnival Group companies, have on order at the Meyer Papenburg and Meyer Turku yards will be able to carry up to 6,600 passengers, the largest guest capacity of any cruise ship yet built. Each ship will be fitted with three Type C LNG bunker tanks with a total capacity of 3,600m³, here are more passenger ships in the enabling their dual-fuel engines to operate on gas LNG-powered fleet than any other type for up to 14 days before the need for replenishment. of vessel. LNG World Shipping’s latest Despite the entrance of cruise ships onto the LNG-fuelled fleet review shows that as of 20 LNG-fuelled fleet stage, roro ferries continue March 2017 there were 40 such passenger ships to dominate the passenger vessel listings. in service, compared with 30 a year ago, Aside from the cruise ships and three and 32 on order, up from 23. passenger-only ferries serving Oslo, The 36 per cent annual jump all the other vessels in this segment 2016 in the combined in-service and are ferries able to accommodate LNG-FUELLED on-order passenger ship fleet vehicles and passengers. PASSENGER SHIPS IN owes much to the interest in This in-service and on-order SERVICE: 30 clean-burning LNG as a marine complement includes four highON ORDER: 23 fuel by the leading cruise ship speed catamarans. operators. Carnival Group, MSC Because passenger/car ferries Cruises and Royal Caribbean Cruises usually shuttle between two ports, have ordered an aggregate 13 gasputting the necessary LNG bunker supply burning newbuildings for delivery arrangements in place is relatively between 2019 and 2026. straightforward. Norway was the 2017 Cruise ships spend, on only player during the early days of LNG-FUELLED average, 40 per cent of their LNG-fuelled ferries but has since PASSENGER SHIPS IN time in port and the remainder been joined by Sweden, Finland, SERVICE: 40 in coastal waters and regional Germany, Denmark, Argentina, ON ORDER: 32 seas moving between ports. The Canada and Estonia. scheduled itineraries for many The orderbook shows that of these ships fall within emissionScotland, Spain, Italy, the Netherlands control areas (ECAs) where restrictions on and France are soon to introduce LNGatmospheric pollution levels are particularly strict. powered passenger/car ferries. And, judging from Another consideration for cruise ship owners the current intense level of project development was the IMO decision in October 2016 to introduce work worldwide, this may only be the start of an the 0.5 per cent global sulphur cap in 2020 evolving gas ferry network. LNG

LNG World Shipping | May/June 2017

26 | SMALL-SCALE LNG

PSVs dominate LNG-fuelled service and supply ships

here has been little change in the than MGO, but to provide sufficient MGO as number of service and supply vessels in a backup. The crew can switch to MGO if the the world LNG-fuelled fleet over the past dredger has to operate longer than planned year. According to LNG World Shipping’s before the next LNG bunkering stop. new review of gas-powered ships Harbour tugs are the second most that are not LNG carriers, both the popular type of LNG-fuelled service 2016 operational and on-order fleets of and supply vessel, after PSVs. TOTAL LNG-FUELLED service and supply vessels rose by There are now six gasSERVICE AND SUPPLY three units. powered tugs in service and SHIPS IN SERVICE: 30 Platform supply vessels (PSVs) eight on order. Wärtsilä, with its ON ORDER: 20 figure prominently in the at-sea medium-speed dual-fuel engines, LNG-powered service and supply and Rolls-Royce, with its gas-only fleet, accounting for 20 of the 33-ship units, have both enjoyed success in complement. The orderbook, in contrast, providing tug propulsion systems. shows much more variety, with a LNG-fuelled tugs are in operation portfolio encompassing dredgers, in Norway, China and Japan, while 2017 a jack-up rig, a semi-submersible Dubai and Singapore are poised TOTAL LNG-FUELLED crane vessel, a cable-layer and a to join the club as a result of SERVICE AND SUPPLY wind farm installation ship. vessels on order. The next new SHIPS IN SERVICE: 33 DEME of Belgium has been a member could well be the US ON ORDER: 23 leading advocate of LNG-fuelled where a number of designs for dredgers and has investigated the gas-fuelled tugs and towboats have challenges of using gas to power them. been tabled. Factors to be weighed up include bunker Three of the tugs on order are under tank size and location, LNG bunker availability, construction at the Gondan yard in Spain for shipboard bunkering connections, crew training Østensjø Rederi AS. The owner has opted for and the step load capability of the various gasWärtsilä engines and the series is slated to provide burning engine options. ship assist and escort services for the LNG carriers Combined with its cold box encasement a loading cargoes at the Statoil export terminal near cylindrical Type C LNG bunker tank occupies Hammerfest in northern Norway. LNG about three times as much space as a prismshaped tank of marine gas oil (MGO) containing the same energy. While Type C pressure vessel tanks offer many advantages, accommodating them has a significant impact on vessel layout. Also, the tank location restrictions imposed by the new International Code of Safety for Ships using Gases or other LowFlashpoint Fuels (IGF Code) add another level of complexity to the design challenge. Naval architects working on the DEME dredgers found that dual-fuel diesel engines worked best for the vessels as they have a better step load capability than gas engines. The mix of LNG and MGO bunker tank capacities associated with such propulsion units also offers a measure of redundancy. The aim is to optimise the use of LNG, assuming that the cost of this fuel is lower

LNG World Shipping | May/June 2017

DEME of Belgium has been a leading advocate of LNGfuelled dredgers and has investigated the challenges of using gas to power them

BELOW: LNG-fuelled harbour vessel Econuri is deployed at Incheon in South Korea

www.lngworldshipping.com

Meet us at Stand 02-25, Hall D

Air Products nitrogen generators

When reliability matters Now onboard more than 450 LNG carriers

High T/C Levels? See us at Stand C02-34a, Hall C Norwegian Pavilion

Since 1982, Air Products offers low maintenance, economic, and easily installed nitrogen generation systems applicable to a wide range of nitrogen capacities, nitrogen purities and system physical dimensions.

Minimize your time in yard for Special Surveys  Repair WBT coatings on voyage prior to SS  Prepare for CAP surveys; - easier CAP 1 and 2 ratings  Keep yard stays to a minimum Ballast Tank Upgrades Deck Upgrades Hull / Superstructure UHP Blasting Spray painting Marine Scaffolding Steel repairs SPS Overlay

Coating Inspectors Steel Inspectors Brazil Norway Singapore Gdynia Nigeria

www.msi.no — info@msi.no — T (47) 64 93 30 03 www.airproducts.no

The “Voyage Repair” Specialists

28 | SMALL-SCALE LNG

Container ship owners prepare for LNG era T

he container and dry cargo ship segment is the smallest of the four vessel type categories into which the LNG World Shipping survey breaks down the in-service and on-order LNG-fuelled fleet. It also continues to suffer from a paucity of newbuilding activity, actually shrinking over the past year. Although there are now 11 LNG-fuelled container and dry cargo ships in service, following the completion of three further vessels during the 12-month period, the orderbook has fallen by a third, from 21 to 14 ships. Besides the three deliveries and the absence of any new orders to compensate, two container ship newbuilding contracts were cancelled and two were confirmed to be LNG-ready, rather than LNG-fuelled vessels. The cancellations were prompted by a Asia-Europe trade lane. The shipowner has also Containerships decision to switch shipbuilders opted for LNG bunker tanks built to the IHI-SPB from the originally nominated yard. design for installation on its LNG-ready box ships Containerships has also reduced its order from at the appropriate time, due not least to the six 1,400 TEU container ships to four. optimised space utilisation and zero sloshing The pair of LNG-powered box damage risk advantages of the concept. ships at the Aker Philadelphia yard Two of the vessels in the container for Matson Navigation that we and dry cargo ship category entering 2016 featured in last year's listing have service this year are Auto Eco and LNG-FUELLED CONTAINER AND DRY been deleted, as they are being Auto Energy, the world’s first LNGBULK SHIPS ON built as LNG-ready vessels. powered pure car and truck carriers THE WATER: 8 Despite the hiatus of the past (PCTCs). The Finnish/Swedish ice ON ORDER: 21 year, the container ship segment class 1A Super pair were built for will undoubtedly grow in the years United European Car Carriers (UECC), ahead, as evidenced by the current an NYK/Wallenius Lines joint venture, by United Arab Shipping Co (UASC) the NACKS yard in China. newbuilding programme of 17 LNGEach PCTC can transport 3,800 2017 ready ships, comprising six 18,800 vehicles on 10 decks and about 20 LNG-FUELLED TEU vessels and 11 of 15,000 TEU. per cent of the revenue-earning CONTAINER AND DRY Elsewhere, CMA CGM has stated space, or 6,000m2, is able to BULK SHIPS ON it will also opt for LNG fuel when accommodate high and heavy THE WATER: 14 specifying its next generation of cargo with a maximum cargo unit ON ORDER: 11 large box ships. weight of 160 tonnes. Upgrading the LNG-ready The two UECC ships are fuelled by capability of the UASC ships to run means of ship-to-ship transfers from the on gas will happen when the necessary recently delivered 5,000m³ Engie Zeebrugge, bunkering infrastructure is in place, expected the world's first purpose-built LNG bunkering vessel. within three years. The transformation will create Each UECC vessel is powered by a single the most LNG fuel-intensive vessels afloat. eight-cylinder, high-pressure, two-stroke MAN UASC, in co-operation with Qatargas and gas-injection engine. Each ship's 760m³ LNG Shell, is exploring LNG bunker supply options at bunker tank enables 14-day roundtrip voyages a Middle East location, halfway along the vessels’ running solely on gas. LNG

LNG World Shipping | May/June 2017

Tote took delivery of Isla Bella in 2015

Two container ship newbuilding contracts were cancelled and two were confirmed LNG-ready, not LNG-fuelled vessels

www.lngworldshipping.com

SMALL-SCALE LNG | 29

Tanker and bulker owners turn to LNG I

n terms of LNG-fuelled newbuilding the problem of securing a supply of LNG at a completions and orders over the past 12 time when the development of the necessary months, the most dynamic segment has been bunkering infrastructure is in its infancy. tankers and bulk carriers. Following the delivery Among the recent orders for tankers and bulkers of 13 ships, there are now 19 tankers and is a major play by the Baltic Sea operator bulkers in service. Contracts for 17 Gothia Tanker Alliance. Between them, new vessels augmented this activity Furetank, Älvtank and Thun Tankers, 2016 and boosted the tanker and bulker the three members of the Alliance, LNG-FUELLED orderbook to 28 ships as of 20 have ordered 10 chemical/product TANKERS AND March 2017. tankers, comprising six of 16,300 BULKERS According to LNG World dwt and four of 8,000 dwt. IN SERVICE: 6 Shipping’s latest review of A Sovcomflot order for four ON ORDER: 24 the global fleet of LNG-fuelled Aframax tankers of 114,000 dwt at seagoing vessels, the past year's Hyundai Mipo also merits a mention. notable shipyard handovers include Announced in March 2017, the contract a four-ship series of 15,000 dwt highlights the fact that gas-burning 2017 chemical/product tankers, built engines are now gaining favour as a LNG-FUELLED by Avic Dingheng for Terntank's propulsion system for larger ships, TANKERS AND Baltic Sea service and four including those whose sphere BULKERS 35,000m³ ethane carriers. of operations is not limited to a IN SERVICE: 19 The latter complement dedicated route. ON ORDER: 28 comprises three vessels for Although the LNG bunker tank Navigas and one for Ocean Yield capacity of the Sovcomflot tanker and operation in the Gaschem pool. quartet is yet to be announced, each The Terntank vessels and the ethane would require about 5,500m³ of space carriers are also noteworthy for their low-speed to provide the vessel with the same amount of dual-fuel propulsion systems. The Terntank energy contained in the heavy fuel oil tankage quartet are the first ships to be propelled by typically specified for an Aframax tanker. LNG low-pressure two-stroke dual-fuel engines, in this case supplied by Winterthur G&D, while high-pressure MAN gas-injection engines were specified for the ethane ships. The ethane carriers may never have occasion to burn LNG. When dual-fuel diesel engines were introduced as a viable propulsion system option a decade ago, the initial focus was on LNG carrier applications to enable the units to run on cargo boil-off gas (BOG). However, manufacturers soon adapted their engines with a few minor adjustments to enable them to run on other hydrocarbon gases, including ethane. The new generation gas tankers being built to carry US ethane exports, including the four ships mentioned above, are all burning cargo BOG in their engines. Thanks to the shale gas revolution, US ethane is a plentiful, low-cost product while the ability to use cargo BOG as propulsion system fuel simplifies ship operations. It also gets around

www.lngworldshipping.com

The tankers and bulk carriers segment has been the busiest for new orders of LNG-fuelled tonnage

Bergen Tankers converted Bergen Viking to run on LNG

LNG World Shipping | May/June 2017

CARGO-HANDLING | 31

GASTECH HIGHLIGHTS

CARGO-HANDLING INNOVATION This year’s Gastech conference and exhibition in Tokyo was a showcase for new cargo-handling technology and innovation. Here are some of the latest developments in the field

Neuman & Esser (NEA) has launched a new LNG fuel-gas compressor that delivers suction pressure for injecting LNG boil-off for two-stroke and fourstroke engines and for gas turbines. The latest launch expands the company’s range of compressors, developed for LNG handling, on shore and offshore, to manage boil-off gas. It has been installed on a floating regasification and storage unit (FSRU) deployed in the Middle East to feed natural gas into the national grid. NEA supplied a feeding system, comprising a centrifugal compressor and a reciprocating compressor. The suction condition from the LNG tanks for the upstream centrifugal compressor is approximately 1 bar at -140°C. The first two compressor stages permanently compress 5,500kg of gas to 6.5 bar every hour with a 650kW power drive. NEA says that the centrifugal compressors can supply large volumes, even at very low temperature, with no wear and is “ideal for large throughput quantities and non-continuous conditions”.

Daewoo Shipbuilding & Marine Engineering (DSME) has invited TMC Compressors to supply a complete marine compressed-air system to the 134,000m³ FSRU that it is building at the Okpo Shipyard for delivery in 2019 to Singapore-based BW LNG. The shipyard has contracted Oslo-based TMC to engineer, manufacture and supply the complete system, comprising three 40kW frequency-controlled control air compressors and three 40kW service air compressors. Neither the shipyard or the manufacturer has disclosed the value of the contract.

www.lngworldshipping.com

TMC managing director Per Kjellin said: “Any FSRU is a vital component in the LNG value chain. That is why DSME and BW LNG have opted for compressors built especially for marine application, as continuous up-time is crucial for both the on-board compressor system and for the vessel as a whole.”

Finland-based Valmet is to supply all the automation engineering to Gasum’s Nordic region LNG operations. Valmet is to identify and develop optimal automation to collect and centrally control all of the measurement data belonging to Gasum’s LNG terminal subsidiary Skangas. Valmet declined to disclose the value of the deal. It expects to conclude the basic automation engineering at the end of May. Gasum and Valmet will then work together to define the functionality and equipment that Skangas needs, based on Valmet’s DNA automation system. If Gasum chooses that solution, Valmet will install the systems at all of Skangas’ Nordic terminals. Valmet is targeting growth in smallscale LNG, says director process automation Jani Hautaluoma.

Wärtsilä and COSCO Shipping Heavy Industry Co (CHI) have secured approval in principle from Lloyd's Register for their joint development of a natural gas operating fleet concept. The three companies signed a memorandum of understanding last summer to develop the project. The fleet comprises four vessels; a pusher tug, an LNG-storage barge, an LNG-regasification barge and a

floating liquefaction barge. The partners claim the concept offers flexibility and competitive capital expenditure and operating expenditure. Wärtsilä hopes to fit the vessels with its own dual-fuel engines and steerable thrusters, LNGPac gas storage and supply system, liquefaction module, LNG cargo handling system, and regasification module. The three partners also say that not every project will need all four units: “The number and choice of units will depend on the project, since not all of the concept's units are necessarily needed for every project. “For example, the concept can be utilised to act as an LNG carrier, using only the pusher tug and LNG storage barge, or it can be used for more complex projects involving liquefaction and regasification systems, using all units. “The modular design of Wärtsilä's liquefaction and regasification units makes this an ideal concept for gas plants in the 50-200MW range. The low-draught design also makes it very attractive for gas power plant projects in Southeast Asia.” LNG

LNG World Shipping | May/June 2017

Installing insulation for KC-1 in the SK newbuilding's hull

LNG CONTAINMENT SYSTEMS: DAVID BATTLES GOLIATH GTT’s large royalty bills have prompted South Korea’s shipyards to develop a home-grown LNG containment system. But can KC-1 erode the GTT systems’ vast market share? KC LNG Tech chief executive Chul-hee Lee outlines his plans to Karen Thomas

LNG World Shipping | May/June 2017

C-1, the South Korea-built containment system, has some way to go to erode the vast 80 per cent market share of French company GTT. But the country’s government and shipbuilders are determined to back the new technology wherever possible, to transfer expertise and to cut costs. But, speaking to LNG World Shipping at Gastech this year, KC-1 developer KC LNG Tech was waiting to secure that all-important second order for its new membrane containment technology. Two weeks later, Korea Line confirmed that it has ordered two small-scale LNG carriers from Samsung Heavy Industries (SHI) to be fitted with the KC-1 system. One of the 7,500m³ LNG carriers will operate as a coastal carrier, delivering LNG from Tongyeong to Jeju Island in South Korea, which needs 350,000 tonnes a year for power generation and city gas. The other looks set to become the first purpose-built LNG bunker-supply ship based in Asia, supporting the drive by Seoul, Busan and other major cities to switch service and support vessels to use the cleaner-burning marine fuel wherever possible. Korea Line will take delivery of the ships in May and December 2019. South Korean shipyards have paid a high price to use GTT containment systems. Between them, the country’s Big Three shipyards – Hyundai

Heavy Industries (HHI), Samsung Heavy Industry (SHI) and Daewoo Shipbuilding & Marine Engineering (DSME) – build 20-30 LNG carriers a year. Together, the shipbuilders have paid GTT royalties worth some US$2 billion, says KC LNG Tech chief executive officer Chul-hee Lee. National utility Kogas – the world’s largest singlecompany importer of LNG – has a 32 million tonne portfolio. It, too, has thrown its weight behind KC-1. Kogas requires 70 LNG carriers to deliver these imports. It owns 22 ships and charters the remaining 48. The company is also investing heavily midstream, and has led the drive to develop and promote KC-1 as an alternative to the membrane containment systems of market-leader GTT. It owns 50 per cent of KC LNG Tech, set up in February 2016. The remaining stake is split equally between the three shipbuilders. KC-1 finally goes live later this year. SHI will deliver the first two ships fitted with KC-1 – two 174,000m³ LNG carriers for South Korea’s SK Shipping – in November and December. “KC-1 is finally entering the market,” Mr Lee says. “From 2019, we hope to enter the second phase of development. We plan to expand our technology to suit floating storage and regasification units (FSRUs), floating LNG (FLNG) and other offshore vessels.

www.lngworldshipping.com

CONTAINMENT | 33

South Korea’s shipbuilders have paid royalties worth some US$2 billion to GTT, KC LNG Tech estimates

Chul-hee Lee: From 2019 KC LNG Tech will enter the second phase of development

“KC-2 will weigh less than our first system and we are working on standardisation and on reducing the rate of boil-off gas.” Take-up will depend heavily on home-grown demand, Mr Lee acknowledges. On the one hand, South Korea wants to resume nuclear power production; on the other hand, it also needs to tackle pollution, reducing dependence on coal for power generation. That is prompting South Korea to invest upstream, particularly in North America, to secure future supply. From 2022, some of the more bullish forecasts suggest that the global LNG fleet will need to add 100 carriers to meet forecast demand. At that point, Mr Lee says, European shipowners will be in the market for new containment systems, too. Whether that ship-demand forecast plays out remains to be seen. But in the meantime, KC LNG Tech sees opportunity in South Korea’s ageing home-grown fleet. “Kogas will grow its LNG interests,” Mr Lee predicts. “It is considering investing in new projects in Canada – and that could support new orders for LNG carriers. Seventeen of the 22 wholly owned Kogas carriers are older, steam turbine ships that are not efficient. They are also small vessels and the trend has been towards larger tonnage.” Industry sources predict a new round of ship orders from Kogas, as it phases out its

www.lngworldshipping.com

17 vessels powered by steam turbines that are smaller than 135,000m³. These could well be redeployed as floating storage units, of course, rather than scrapped altogether. Kogas will also need to ensure that its charter fleet complies with the new IGC Code and that these ships’ containment systems are liquid and gas-tight. Ships that fail to comply will need to be replaced. South Korea-booked replacement tonnage is well-placed to choose the home-grown containment system, Mr Lee concludes. LNG

SK Shipping starts sea trials on the LNG carrier fitted with the first live KC-1 system

LNG World Shipping | May/June 2017

34 | CONTAINMENT

BOOK NEW SHIPS NOW TO MEET ASIA DEMAND FOR DESTINATION-FREE US LNG, URGES GTT BOSS

GTT secured just one order for a containment system for an LNG carrier in first-quarter 2017

LNG World Shipping | May/June 2017

www.lngworldshipping.com

CONTAINMENT | 35

our of the five containment system orders that GTT landed in the first quarter of this year were for floating storage and regasification units (FSRUs), highlighting growth in demand for floating import solutions and the continued dearth of orders for conventional tonnage. GTT chairman and chief executive Philippe Berterottière told LNG World Shipping at Gastech that he expects continued demand this years for FSRUs, particularly to support new gas-to-power schemes, reflecting lower international gas prices that make LNG more competitive in price against traditional commodities such as coal, strengthening the business case for switching to the cleaner-burning fuel. However, Mr Berterottière maintains that shipowners will return to the shipyards in the coming months, to book LNG carrier newbuildings. “There is additional demand for ships to deliver cargoes from LNG-export projects that have already been sanctioned – ships that have not yet been ordered,” he says. “Because US cargoes are to be sold destination-free, we do not yet know whether they will go to neighbouring Latin America or across the world, to Asia. These two destinations create completely different shipping requirements. That uncertainty weighs heavy on the LNG-carrier business. “We were saying last year that the decisions should be made in 2016. Now, we are saying those decisions must be made in 2017. In the first quarter of this year, we received one order from an LNG carrier – there needs to be a strong acceleration. The industry needs to realise that, whatever happens, this LNG is going to end up in Asia – and that it is going to create an important requirement for ships.” France-based GTT has supplied containment systems to most of the LNG carriers on the water to date. But last year’s slowdown in orders for new tonnage has prompted the company to turn its attention to containment systems for LPG carriers.

Philippe Berterottière: whatever happens, US LNG will end up in Asia

plywood boxes filled with glass wool. This allows LPG vessels to transport more liquid than competitive technologies, and offers a lower heat capacity than other systems. LPG is a much larger shipping segment than LNG, with around four times the number of ships, at some 2,000 vessels. “This is a disruptive technology,

allowing more liquid to be transported in any given ship, with much smaller thermal inertia,” Mr Berterottière said. “That offers practical advantages of being able to transport greater volumes, and having to spend less time warming up and cooling down the cargoes. That can save several days’ operating time in a year, so that’s an operating advantage.” GTT is talking to a prospective shipowner customer about the new design, helping shipyards to build the units and atechnical service agreement to maintain the units, similar to the recent deal that GTT signed with Teekay LNG. GTT is pursuing newbuilding contracts, rather than retrofits, said Mr Berterottière – despite the oversupply that characterises today’s LPG fleet. GTT is promoting Mars’ twin advantages of increased volume, and improved efficiency for future orders. The company is also developing fuel tanks for ships that are not LNG carriers that use dual-fuel engines. However, Mr Berterottière is relatively pessimistic about prospects for take-up of LNG as marine fuel, despite the IMO decision last year to bring forward to 2020 its proposed sulphur cap of 0.5 per cent. “We would see a lot more interest in LNG as marine fuel with a sulphur cap of 0.1 per cent,” he says. “Frankly, unless there is a significant increase in the price of oil, we are not expecting a significant switch to LNG. The logistics is not yet there and will take a little more time to build.” LNG

Mars launch

GTT unveiled the new system at Gastech, with project partner Lloyd’s Register. GTT Mars adapts the technologies that GTT uses in its range of LNG containment systems to transport liquids at -55°C or above with densities up to 700 kg/m3. The LPG system combines the corrugated stainless steel membrane of the Mark III LNG containment system, with

www.lngworldshipping.com

GTT and Lloyd's Register launched the Mars containment system at Gastech

LNG World Shipping | May/June 2017

36 | SHIPORDERS AND DELIVERIES

YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

On time: Hilli Episeyo will launch later this year, becoming the second FLNG vessel in service

A QUARTER OF THIS YEAR’S NEWBUILDINGS WILL BE DELAYED LNG carrier owners and builders continue to delay newbuilding delivery dates. And that's a win-win for both, Mike Corkhill believes

LNG World Shipping | May/June 2017

y mid-April, postponements had been finalised for handing over 12 of the 48 LNGCs scheduled for completion this year. Delayed LNGC deliveries are assisting shipowners by easing the effects of fleet overtonnaging, speeding a return to healthier freight rates. Shipbuilders are benefiting from later completions because they extend and spread construction workloads, deferring lay-offs and redundancies, at a time when further newbuilding orders are scarce. Most of the 12 LNGCs leaving their shipyards later than originally intended will do so by only a month or two. However, several will be tardy by up to half a year. Four ships scheduled for completion this year will now be ready only in 2018. Notable among this quartet are the 174,000m3 Flex Endeavour and Flex Enterprise. Both will now enter service six months later than planned due to recent negotiations between John Fredriksen’s Flex LNG, their owner, and Daewoo, their builder. The LNG World Shipping LNG carrier orderbook as of 14 April 2017 shows that 11 ships have been delivered so far and 37 are scheduled for completion this year.

Notable year

Among the ships commissioned so far are the 5,000m3 Engie Zeebrugge, the first purpose-built LNG bunkering vessel, and JS Ineos Innovation and JS Ineos Intuition, the last two in a series of six 27,500m3 multipurpose gas carriers built by Sinopacific for Evergas and chartered to Ineos. This year’s upcoming deliveries include five floating storage and regasification units (FSRUs) and the world’s second and third LNG bunkering vessels. The latter

www.lngworldshipping.com

YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

pair are the 5,800m3 Coralius that the Royal Bodewes yard is building for Sirius Veder Gas and chartering to Skangas commencing in June and the 6,500m3 Cardissa that STX Offshore & Shipbuilding is due to hand over to Shell in May. A fourth LNG bunker vessel will be put into service this year but its non-propelled status prevents its inclusion in LNG World Shipping’s list of LNGCs on order. The 2,200m3 barge Clean Jacksonville, nearing completion at Conrad’s yard in Orange, Texas will allow Tote Maritime to fuel its LNG-powered trailer carriers and container ships, initially at Tacoma, Washington and later at Jacksonville, Florida. JS Ineos Innovation and JS Ineos Intuition, like their sisterships, can carry a variety of gas cargoes, including LNG and ethane, and can run on either LNG or ethane cargo boil-off gas (BOG). Ineos is employing these Dragon-class ships in the carriage of US ethane to Europe for use as petrochemical feedstock and has them burning ethane BOG as propulsion system fuel. However, Evergas has embarked on the construction of two Ineos Max pure ethane carriers of 32,000m3 for the same charterer and holds options for additional ships of

this type. The idea is to replace Dragon-class vessels with Ineos Max ships, enabling the 27,500m3 carriers to come off charter with Ineos and enter the small-scale LNG trades. The Evergas drive to build an LNG presence will take a step forward in 2018 when the first two Ineos Max gas carriers reach completion. The only new LNGC orders logged since LNG World Shipping’s previous bimonthly orderbook/fleet review are the two 173,400m3 vessels that Daewoo Shipbuilding & Marine Engineering (DSME) will build for Flex LNG for an August 2019 delivery. The John Fredriksen company now has six LNGCs on order.

First floater

This year will go down in history as the first in which a cargo transhipped from a floating LNG production (FLNG) vessel made its way to the world market. The historic shipment of LNG produced by PFLNG Satu off Malaysia’s Sarawak coast and offloaded to the 150,000m3 Moss spherical tank Seri Camellia in a side-by-side shipto-ship (STS) transfer operation, took place earlier in April. For several years the industry has been watching to see which of four contenders

Exmar is exploring opportunities for its first floating LNG (FLNG) vessel

www.lngworldshipping.com

SHIPORDERS AND DELIVERIES | 37

would be the first to put an FLNG vessel into service. First-mover advantage went to Shell and Exmar, both of which made final investment decisions (FIDs) in May 2011, Shell to proceed with its 3.7 million tonnes per annum (mta) Prelude FLNG scheme and Exmar to press forward with its 0.5 mta Caribbean FLNG barge. Petronas did not get around to the FID for its 1.2 mta PFLNG Satu project until March 2012. Golar LNG entered the fray in September 2015 when it won the contract to supply the FLNG vessel to service the 1.2 mta Cameroon LNG export project. The Golar solution centres on the conversion of its 125,000m3, 1975-built, spherical tank LNGC Hilli into a floating LNG producer. Many expected Exmar, with its small-scale Caribbean FLNG vessel, to be first past the finishing post. However, the anticipated charter with debtridden Pacific Rubiales and employment off Colombia’s Caribbean coast, complete with LNG sales to Gazprom, began to unravel in 2015. The project was subsequently cancelled and Exmar has been exploring alternative opportunities for the FLNG vessel ever since. The Wison yard in China has completed construction and commissioning work on Caribbean FLNG and Exmar recently stated that it will formally accept possession of the vessel from the shipbuilder this month. Exmar and Wison have agreed that the FLNG barge will be laid up at the yard until suitable work is found. The principals also reported that an Exmar order for a second FLNG vessel at the yard, of 0.7 mta in capacity, would be cancelled. There is no chance that Caribbean FLNG will be functioning as a floating LNG production vessel before 2018 at the earliest, which is when Prelude is set to commence

operations off the coast of Western Australia as the world’s largest such project. In contrast Hilli, now renamed Hilli Episeyo, could be operational later in 2017 as the world’s second functioning and first converted FLNG vessel. The modification work, at the Keppel yard in Singapore, has entered its final phase and Hilli Episeyo is due to commence trial operations in the Kribi fields off the Cameroon coast in September this year. Golar LNG has concluded an eight-year time charter contract with Société Nationale des Hydrocarbures (SNH) and Perenco Cameroon, developers of the fields, to underpin employment of Hilli Episeyo. The SNH/Perenco scheme revolves around the production of 1.2 million tonnes a year (mta) of LNG and Gazprom has signed up for the full output. Hilli Episeyo will have the capacity to liquefy up to 2.4 mta of LNG, giving Cameroon the potential to boost exports. This option will depend on the extent to which any newly discovered gas reserves exceed the needs of planned domestic fertiliser and power plants. Golar LNG, in tandem with its One LNG joint venture partner Schlumberger, is making progress in efforts to secure employment for a second converted spherical tank ship into an FLNG vessel. If negotiations are successful, Gandria would process LNG on behalf of Equatorial Guinea’s Fortuna project. One LNG and Fortuna project partner Ophir Energy are expected to make an FID on the scheme in the first half of 2017, enabling Gandria to commence work as an FLNG vessel in 2019. LNG World Shipping lists FLNG newbuildings in its LNGC orderbook statistics but not FLNG conversion projects. LNG

LNG World Shipping | May/June 2017

38 | BEST OF THE WEB

YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

BEST OF THE WEB The LNG World Shipping website is updated daily, tracking the latest developments in shipping, projects, products and services. Our news coverage is now online-only. Here are the ten most popular web-only stories and online comment pieces published this spring

Fredriksen-owned Flex LNG linked to DSME ship orders South Korea’s Daewoo Shipbuilding & Marine Engineering (DSME) has landed a US$363.3 million order to build two 173,400m³ LNG carriers for “a European shipowner”, reported to be John Fredriksenowned Flex LNG. DSME will deliver the two ships, both fitted with MAN ME-GI engines, in August 2019. The order comes with two options and could therefore double in value. The announcement, in the first week

lngworldshipping.com

of March, was the first confirmed fresh conventional LNG carrier order of the year. In January, Mitsubishi Corp confirmed that it is exercising the contract it signed in 2015 with MI LNG to build a 165,000m³ LNG carrier to deliver cargoes from US-based Cameron LNG. bit.ly/2mwElDe

LNG carrier La Mancha Knutsen evades pirate attack off Nigeria Knutsen confirmed that the LNG carrier La Mancha Knutsen came under armed attack from pirates in an incident in the Gulf of Guinea, some 90 miles south of Port Harcourt in Nigeria, in mid-March. Spain’s ministry of defence reported that a skiff containing “a group of armed pirates” approached the 2016-built, 176,300m³ vessel and fired shots at the bridge. La Mancha Knutsen’s master raised the alarm, alerting the Spanish Navy, and increased the sailing speed to prevent the attackers attempting to board. Vessel and crew escaped the incident without damage or injuries. Ship operator Knutsen OAS is investigating the incident. bit.ly/2mBpiW0

LNG rapidly accelerates in the cruise sector Reporting from Seatrade Cruise Global, Passenger Ship Technology editor Rebecca Moore revealed that a quarter of the tonnage on the global cruise fleet orderbook is LNG powered, as operators see LNG as the fuel of choice for their future fleets. Of the 97 cruise ships on order on the global fleet orderbook, 13 will be dualfuelled by LNG. RINA marine and transport chief commercial officer Paolo Moretti said: “When you make the comparison using gross tonnage, we are actually talking about a quarter of these vessels being fuelled by LNG. The number 13 out of 97 does not sound much, but with the gross tonnage ratio one in four is dual-fuelled.” http://bit.ly/LNGcruise

BMI backs prospects for smallscale FLNG projects in Africa Attractive cost structures, opportunities for smaller and more flexible volume contracts and existing production assets in the area will strengthen the case for New Age to develop a floating LNG

Editor’s selection: www.lngworldshipping.com/s/knowledgebank

WinGD – XDF technology

To view more whitepapers visit the Knowledge Bank on www.lngworldshipping.com

To develop its low-pressure dual-fuel lean-burn technology for its two-stroke engines, Wärtsilä used its experience from its fourstroke development. This paper explores some of the opportunities and challenges that this involved, such as the additional time available in a two-stroke engine for gas mixing and the benefit of a two-stroke engine’s exhaust-valve timing.

To upload a whitepaper to the Knowledge Bank, please email Steve Edwards at steve.edwards@rivieramm.com

www.lngworldshipping.com/s/knowledgebank/ download,view_106.htm

LNG World Shipping | May/June 2017

www.lngworldshipping.com

YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

(FLNG) venture off Congo Brazzaville. New Age has proposed to develop a 1.2 million tonne a year (mta) FLNG project, to go live from 2021-2022. Analyst BMI says New Age FLNG is unlikely to reach a final investment decision (FID) until the end of this year at the earliest. However, the FEED and construction contracts could be issued by this summer. BMI says smaller FLNG projects may move forward faster than major land-based projects. It has studied four proposed FLNG projects off Africa, and concludes that prospects are strongest for small-scale FLNG projects, of around 1.2 mta. bit.ly/2mBPrTl

Asia: a tale of two LNG importers China may overtake South Korea to become the world’s second-largest importer of LNG as early as next year, as Beijing tightens national laws on air pollution and increases the contribution of gas to the energy mix. In contrast, Japan is heading for an annual average 1.1 per cent decline in import volumes over the next decade. Last year, China imported 26.06 million tonnes (mt), according to national customs data – an annual increase in volume of more than a third on the 19.5mt it imported in 2015, the first year in which China imported less LNG. bit.ly/2mi72B3

Japan traders move to charter LNG carriers Japan’s trading houses have built on their involvement in the LNG supply chain by long-term chartering LNG carriers directly for the first time, Mike Corkhill reports. Since 2014, Mitsui & Co and Mitsubishi have booked 12 ships built in Japan and South Korea to lift cargoes from the Cameron LNG project in Hackberry, Louisiana for up to 25 years. Japanese traders have traditionally served as middlemen, smoothing sale and purchase agreement (SPA) negotiations

www.lngworldshipping.com

between national utility buyers and LNG sellers and newbuilding contract discussions between shipowners, shipyards and charterers. The country’s traders now hold equity stakes in LNG-export projects and ships, co-ordinate project financing, facilitate payments and customs clearances and support technical innovation. http://bit.ly/LNGtradeJAPAN

One week; two LNG shipping firsts As the biggest names in LNG shipping converged on Tokyo for Gastech, the industry had two landmark events to celebrate. Zeebrugge’s Fluxys LNG terminal was expecting to welcome the world’s first purpose-built LNG bunker-supply ship. The 5,000m³ Engie Zeebrugge is owned by Gas4Sea partners NYK Line, Mitsubishi and Engie. That landmark followed confirmation that the world’s first floating LNG (FLNG) production project is now live. MISC-owned, 144,000m³ LNG carrier Seri Camellia loaded the first commercial cargo from Petronas-owned PFLNG Satu.

BEST OF THE WEB | 39

Bernhard Schulte Shipmanagement has ordered to deliver gas as marine fuel across the Baltic. bit.ly/2oLNpCg

Floating transfer terminals ‘take the jetty to the LNG ship’ Houlder, Wärtsilä and Trelleborg have developed a floating transfer terminal concept to transfer LNG cargoes from ship to shore without the need for a jetty, which could help small and mid-scale LNG importers to cut their costs. It features a self-propelled barge that shuttles to and from LNG vessels moored as far as 800m offshore. The barge provides a base for a Houlder transfer system developed with KLAW LNG. The hybrid hose handling system supports a safe and secure connection with the LNG vessel. LNG and boiloff gas are transferred between barge and shore-based plant using Trelleborg Cryoline LNG floating hoses that aim to combine flexibility, reliability and a long service life. bit.ly/2nu8np6

bit.ly/2oyizQl

Höegh LNG eyes demand for smaller-scale FSRUs Höegh LNG is evaluating opportunities for smaller-scale floating storage and regasification units (FSRUs) to tap growing demand for smaller cargo parcels for domestic or industrial use. President and chief executive Sveinung Støhle told LNG World Shipping that the company has set up a team to look at opportunities for newbuildings with capacity ranging between 10,000m³-30,000m³ that may be built as LNG-delivery barges. Höegh sees as an early business model its Lithuania-based FSRU Independence, chartered to Klaipedos Nafta to meet Lithuania’s domestic demand but also supplies LNG to Coral Energy for deliveries across Scandinavia. However, from next year, Independence will also supply LNG to the 7,500m³ bunker-supply ship that

Yamal LNG transhipment requires 10 conventional LNG carriers, says Novatek boss Cargoes transhipped from Yamal LNG in the Russian market will require 10 additional conventional LNG carriers to supplement the 15 ice-class vessels booked to the project, says Novatek chairman and chief executive Leonid Mikhelson. Speaking to journalists at Gastech in Tokyo, Mr Mikhelson said the non-iceclass ships will support transhipment of cargoes via the ports of Montoir in France and Zeebrugge in Belgium. Novatek expects to charter in that tonnage from the existing fleet. Novatek will charter in the tonnage and could fix the vessels this autumn. LNG bit.ly/2n77GVr Follow the news your business needs by signing up to our free weekly newsletter: http://bit.ly/LNGmust-read

LNG World Shipping | May/June 2017

40 | VIEWPOINT

Ice-class LNG carriers test marine coatings to the max

F by Michael Hindmarsh

ifteen ice-class LNG carriers will soon test Arctic coatings under the most challenging conditions that ships of this type have ever faced. The ships, built at Daewoo Shipbuilding & Marine Engineering (DSME) in South Korea, are billed as the world’s largest icebreakers. Deployed on long-term charter to Yamal LNG, they will be among the first commercial ships to sail the northern sea route, which traverses the Russian Arctic from the Kara Sea, past Siberia, to the Bering Strait. The first 172,600m³ ship, Christophe de Margerie, left DSME bound for Murmansk earlier this year and successfully completed its sea trials. These vessels are remarkable in design terms, operating without assistance through some of the world’s thickest navigable ice.

Protecting ships and equipment in these conditions presents a challenge for coatings manufacturers. The Arctic’s delicate ecosystem makes operations in this region complex, and compounding the difficulty is severe cold, deep water, large waves, remote locations, ice drifts, long winter nights and freezing sea spray. As if that was not enough, icebreaking ships must also be protected from ice abrasion. Ships and floating structures in Arctic regions rely heavily on their coatings selection. Expenditure on correct paint materials in the first instance will save millions of dollars in the long run. AkzoNobel’s abrasion-resistant Intershield 163 Inerta 160, part of the International brand’s range of marine coatings, was the choice for the protection of these vessels.

Abrasion and corrosion The choice of coatings matters, as the effects of ice can be disastrous. A vessel trading in multi-year or first-year ice encounters huge forces of impact and abrasion. If ice abrasion removes the paint, this exposes the bare steel to rapid corrosion. However, there are specialist coatings, formulated to withstand ice abrasion. These require specific film properties and application conditions to achieve their anti-ice abrasion characteristics. Class societies recognise these properties and can make allowances that reduce steel scantling thickness if these coatings are used, allowing the vessels to be lighter and more fuel-efficient. Field measurements show that these lowfriction coatings retain their smooth surfaces even when moving through heavy ice. The formulation of Intershield 163 Inerta 160 has not changed since it was first introduced to the market more than four decades ago. This high-solids, two-pack epoxy abrasion-resistant coating has a low volatile

LNG World Shipping | May/June 2017

organic compound content. It has low frictional resistance and is designed for ships operating in temperatures as low as -50 oC. The coating provides corrosion protection, controls hull roughness and can be applied to newbuildings or to older vessels undergoing maintenance and repair. The LNG carriers operating for Yamal LNG will not need antifouling protection, due to their high latitude trading routes and low temperature operation. As these pioneering new vessels venture into new waters, what matters most is to protect the fragile ecosystems they encounter and the ships’ crews. Coatings manufacturers play a critical role here, providing the protection and security to enable a new generation of LNG carriers to navigate the Arctic. LNG Michael Hindmarsh is business development manager for AkzoNobel ’s marine coatings business