- The global LNG-fueled fleet has witnessed robust growth.
- Concerns over the lagging pace of LNG bunker fuel infrastructure development.
- IMO’s emission control area designation for the Mediterranean in 2025.
The global LNG-fueled fleet has witnessed a robust 181% growth since 2020, with 520 vessels currently in operation, a significant increase from 471 in 2023 and 354 in 2022.
Moreover, the order book for LNG vessels reflects a promising trend, with 195 vessels set for delivery in 2024, projected to rise to 348 in 2025 and 514 in 2028, reports SP Global.
Shift in Dynamics
While LNG-fueled vessel orders have seen a surge, concerns loom over the lagging pace of LNG bunker fuel infrastructure development.
Martin Christian Wold of DNV emphasized that this shift in dynamics might lead to a supply crunch for LNG bunkering, potentially impacting the market around 2025.
Infrastructure Challenges
Despite the rapid growth in LNG-fueled vessels, the infrastructure for LNG bunkering faces challenges. With only 73 LNG bunkering vessels globally, including 45 in Europe and 19 in Asia, there are concerns about the adequacy of infrastructure to meet the growing demand for LNG marine fuel, especially with upcoming regulatory changes like the IMO’s emission control area designation for the Mediterranean in 2025.
Burgeoning Demand
Demand for LNG fuel is on the rise, driven by the shipping industry’s efforts to decarbonize and comply with stricter emission regulations.
S&P Global Commodity Insights analysts project an increase in LNG’s share of bunker fuels from 0.04% in 2021 to 7.8% by 2030 and 12% by 2050.
The increasing price competitiveness of LNG fuel further supports its demand, with prices in Rotterdam, Barcelona, and Singapore showcasing a significant discount compared to conventional fuels.
Addressing Bottlenecks
To mitigate potential bottleneck issues in the future, market players must invest in expanding LNG bunkering infrastructure and fostering partnerships between LNG suppliers and shipowners.
Long-term LNG bunkering contracts can instill confidence in investing in new capacity, ensuring a smoother transition to LNG as a marine fuel.
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Source: SP Global
