- Port Targets 200 Methanol-Ready Vessels on Singapore–Rotterdam Route.
- Existing Infrastructure Enables Immediate Bunkering Trials.
- DNV Rates Kandla’s Methanol Readiness at 6–7 on IAPH Scale.
The Deendayal Port Authority, which is run by the government, is working to establish Kandla port as a key renewable methanol bunkering hub. This move aims to support vessels travelling along the Singapore-Rotterdam corridor, especially as shipping companies gear up for tougher EU emissions regulations. Sushil Kumar Singh, the chairman of the port authority, mentioned that the initiative is focused on around 200 vessels that will be compliant with methanol standards. This is a great opportunity, as methanol has a lower energy density than traditional fossil fuels, allowing for convenient mid-route refuelling, reports S&P Global.
Existing Infrastructure and Trials
“Kandla port is aready handling methanol as a cargo… so now we are trying to reconfigure the whole infrastructure there, or the facilities there, to handle methanol as a bunker,” Singh said on the sidelines of S&P Global Commodity Insights’ World Hydrogen India conference that concluded Sept. 26. “We can start the bunkering trials immediately, as of now, in a controlled condition. So we have tankages. We have pipelines. We have the bunker infrastructure and the safety regulatory mechanisms in place for handling methanol as a bunker.”
A recent gap analysis by the classification society DNV has evaluated Kandla’s preparedness for methanol bunkering operations, giving the port a rating between six and seven on the International Association of Ports and Harbours scale, as noted by Singh.
e-Methanol and Hydrogen Plans
The authority is working on plans for a facility that will produce 150,000 metric tons of e-Methanol per year, which Singh believes will satisfy demand for the next five to six years. The port is also actively collaborating with industry partners to set up an integrated plant for renewable hydrogen production.
“Some of the industries have shown interest in investing money at Kandla to set up the facility, an integrated plant-kind-of-a-thing for eMethanol, which is the methanol, which is based on green hydrogen — through the electrolysis route,” he said. “The demand is … to make their projects bankable, they want an assured offtake.”
Competing with Global Bunker Markets
Kandla port will face a competitive global bunker market, but Singh said it will find ways to gain a foothold in the environmentally friendly fuels industry as the energy transition progresses. “In terms of viability, we have to ensure at Kandla that when we offer this methanol as a bunker, it should be cheaper or competitive or comparable — done at a comparable pricing as is being offered at Singapore,” he said.
“Even if our cost of procurement or cost of production is higher than Singapore, we will give that subsidy by cross-subsidising and taking that differential on the cargo handling charges of the port,” he said. “We’ll try to keep the cost of methanol close to the cost being offered at Singapore or Rotterdam.” “If they come to our port, they will bring in some cargo also,” he said. “We’ll be offering bunker at a lower price, but we’ll be taking the charges on the other operations also.”
Collaboration with Rotterdam
The Deendayal Port Authority has teamed up with the Port of Rotterdam to create matching dispatch and reception facilities for a renewable shipping corridor that will connect Kandla and Rotterdam, as shared by Singh. Meanwhile, Platts, a part of Commodity Insights, reported that the price of low-carbon methanol FOB Shanghai remained stable at $910/mt on September 29, following thin discussions on pricing. Additionally, the price for low-carbon methanol marine fuel delivered in Shanghai held steady at $930/mt on the same date, with limited spot discussions taking place.
Renewable Ammonia in the Basket
The port is also aiming to produce 5.6 million mt/year of renewable ammonia by 2031, utilising 1 million mt/year of electrolytic hydrogen as an alternative fuel. This will complement their renewable methanol efforts, creating a diverse fuel basket, according to Singh. “So they are ordering vessels which are dual-fuel compatible,” he said. “They can work on diesel or very low sulfur fuel oil, and they can work on alternative fuel like methanol also.”
“If we are in a position to give [renewable] methanol about the same price as VLSFO, somehow bring it at $700/mt-$750/mt, they’ll take it,” he said. However, the carbon will be a cost to the operators if they continue using VLSFO, as they’ll be emitting more and will have to pay a penalty, so the first choice of fuel is likely to be renewable methanol, Singh said. “The only decision that has to be taken is how to structure the offtake agreement, [and the pricing part of it,” Singh said, adding that the port was in active discussions with the buying parties.
Infrastructure and Power Needs
The port authority is developing what Singh described as “plug-and-play kind of infrastructure,” including a 300 million litres/day desalination plant to supply water for electrolysis, with other necessary infrastructure such as access to land and power.
“One of the constraints will be the renewable power that will have to be fed to these electrolyzers… so around 4.5 GW has already been sanctioned,” he said. “We will require around 12 GW of power for 5.6 million mt/year of green ammonia… that power is available in the grid. The approvals are in process.”
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Source: S&P Global
