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People's Daily Online>>China Business

LNG rises as ships' fuel source

By Richard Fu (Shanghai Daily)

08:27, November 30, 2011

Liquefied natural gas is gaining momentum as a fuel source for ships worldwide due to tighter environmental regulations and high oil prices, according to Det Norske Veritas, a major maritime classification group.

"We believe 500 LNG fueled ships will be on order by 2015 and several thousands by 2020," said Remi Eriksen, chief operating officer of DNV Asia Pacific & Middle East, at the Marintec China 2011 show.

Presently there are only about 25 ships that use LNG as a fuel source, mostly in the North Sea, he added.

The International Maritime Organization has required ships to use fuel with a sulfur content of no more than 0.5 percent by 2020 from 4.5 percent now. By 2015, the upper limit drops to 0.1 percent from 1 percent now in regions called the Emission Control Areas, which include the North Sea and North American coasts. The emission of sulfur dioxides causes acid rain.

Meeting the new stringent standard means significant changes need to be done either to the ship or to the fuel, Eriksen said. He added ship owners have either to switch to ultra-low sulfur fuel, or keep using heavy fuel oil and install exhaust gas scrubbers, or switch to LNG.

LNG is promising because oil prices may rise while large new finds will increase the availability of natural gas. The major countries are also developing LNG infrastructure which may boost the use of the fuel as an energy source for power production and other industrial use.

China, meanwhile, has been building LNG receiving terminals on its coast. China National Offshore Oil Corp will jointly invest 5.7 billion yuan (US$893 million) with Tianjin Port (Group) Co and Tianjin Gas Group Co to build a 2.2 million ton-a-year floating LNG facility to meet gas demand in the northern city, Tianjin Port said yesterday.

They also plan to build a second phase which will include a land-based LNG terminal with an annual receiving capacity of no less than 6 million tons a year.

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MEC at 2011-11-30121.245.29.*
A key thing that needs to be kept in perspective is that LNG is cheaper as compared to other oil based fuels. As, LNG adoption as fuel gains momentum - resulting in building of infrastructure and know-how; LNG could become the preferred fuel for the shipping industry. It is interesting how Chinese Shipping and Ship Equipment industry will use this disruption...
  

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