Review: LNG fuelled crude / chemical tankers

Jan 14 2021


There are developments with LNG fuelled chemical / crude tankers happening around a number of ‘focal points’ – Shell, Swedish owners, Sovcomflot and shuttle tankers.

There are a number of developments happening around the world to use LNG fuel for crude / chemical / products tankers – which seems to be happening around ‘focal points’ of Shell, Swedish owners, Sovcomflot and shuttle tankers. This article reviews the developments.

 

There is nothing new about using LNG fuel for LNG carriers – as a way to use their own boil off gas. Using LNG to power tankers for normal liquid cargoes – crude and chemicals – is still very now.

 

Oil major Shell is taking a leading role, taking LNG powered tankers into its own fleet and its long term chartered fleet.

 

In May 2020, Shell added 12 LR2s (105,000 to 115,000 dwt product tankers) to its newbuilding program.

 

These vessels will be built by China State Shipbuilding Corporation (CSSC), with contracts signed by China’s Bank of Communications’ leasing arm, BoComm Financial Leasing.

 

They will all be delivered by 2023, being built at Shanghai Waigaoqiao Shipbuilding and Guangzhou Shipyard International. The vessels are reported to cost $54m each, and to be 120,000 dwt capacity.

 

Shell has its own LNG bunkering operations in Rotterdam (delivering throughout Europe) in the US East Coast, and in Singapore. 

 

The deal follows Shell Tankers (Singapore) agreeing in August 2019 to charter a new fleet of 10 LNG fuelled crude oil and products tankers, owned by Sinokor Petrochemical Co Ltd, which expects to take delivery of them from Samsung Heavy Industries in South Korea in 2021.

 

It also agreed long term charter for four LNG dual fuel product tankers, owned by “institutional investors advised by J.P. Morgan Asset Management,” with delivery of the vessels expected from 2021.

 

Shell also has a number of LNG fuelled Aframax tankers on charter from Sovcomflot (see below).

 

Sweden

There is a cluster of activity with LNG fuelled tankers in Sweden.

 

The Gothia Tanker Alliance pool have 6 LNG dual fuelled tankers in operation, and a further vessel in construction and another on order. The pool members include Furetank, Thun Tankers, Wisby Tankers, Rederi AB Älvtank, Uni-Tankers, OHM and DSD Shipping.

 

The Alliance announced in April 2020 that its 7th LNG tanker had started construction China’s Avic Dingheng shipyard, with a keel ceremony held on April 18.  The vessel has a working name of AD0037. A further 8th vessel has been ordered from Avic Dingheng.

 

In 2019, the fifth and sixth of the LNG dual-fuelled vessels were launched. These vessels are all 16,000 dwt, ice class 1A.

 

The fifth vessel, Fure Ven, was the first non-US flagged vessel to bunker LNG in the US, in September 2020, at JAXPORT’s Talleyrand Marine Terminal, Florida.  At the time it happened, Lars Höglund, CEO of Furetank, said, "We note with pleasure that LNG bunkering is becoming available in more and more places, not least the U.S."

 

The first of the series, Fure Vinga, was delivered in April 2018, for Furetank Rederi.

 

Separately, in August 2020, Gloryholder Liquefied Gas Machinery (LGM Engineering) announced that it had been contracted to supply integrated LNG equipment for two dual-fuel 13,000 dwt chemical tankers for Swedish operator Tarbit, being built at Jiangsu New Yangzi Shipbuilding Company Limited (YZJ).

 

In September 2019, LSM announced it had contracted Chart Industries to provide fuel tanks for two 22,000 dwt dual fuel products and chemical tankers being built at Wuhu Shipyard, China. These vessels were ordered by Rederi AB Donsötank of Sweden, taking delivery in 2021.

 

The Bit Viking, also owned by Tarbit, was the first ship to be converted from heavy fuel oil to LNG operation in 2011 by Wartsila, and the first cargo-carrying merchant vessel other than a gas carrier to use LNG as fuel.

 

Sovcomflot

Sovcomflot (SCF) has taken delivery of 5 LNG Aframax tankers since 2018 - Lomonosov Prospect, Mendeleev Prospect, Korolev Prospect, Vernadsky Prospect, and Samuel Prospect. The Samuel Prospect is named after Sir Marcus Samuel, the founder of its client, Shell Transport and Trading Company. 

 

The ships are operated in the Baltic and North Seas. Each vessel is 114,000 dwt, with an ice class 1A hull.

 

It follows the launch of the Gagarin Prospect in mid-2018, a 114,000 dwt Aframax ice class vessel chartered to Shell.

 

In June 2019, Sovcomflot (SCF)’s chief executive Sergey Frank accepted the Nor-Shipping “Next Generation Ship Award” for the LNG fuelled Aframax Gagarin Prospect, a 114,000 dwt ice class vessel delivered in 2018 by Hyundai Samho Heavy Industries. 

 

The other contenders to the award were Yara Birkeland, an autonomous 120 TEU container ship planned to be launched in 2020 (project delayed due to Covid-19), and AET’s LNG Aframax shuttle tanker project, and Teekay’s own shuttle tanker project.

 

Sovcomflot has five further LNG-fuelled tankers on order. The company is building two Aframax tankers for charter to Russia’s Rosneft, and three dual fuel 51,000 dwt MR tankers with ice class 1B, to be chartered to Russian energy company Novatak.

 

These are being built at Zvezda Shipbuilding complex in Russia.

 

Sovcomflot is also providing technical supervision for the construction of five LNG-fuelled tankers for Rosneft at Zvezda Shipbuilding complex. It is likely to provide technical management for the vessels in operation, with the first LNG-fuelled tankers of Russian construction to begin operating in the Baltic in 2022.

 

LNG shuttle tankers

In March 2019, Teekay Offshore launched its first LNG powered “e-shuttle” tanker Aurora Spirit, at Samsung Heavy Industries, South Korea, a 130,000 dwt vessel, with battery packs for power distribution and back-up power. It is the first of four vessels to be operating in the North Sea.

 

In February 2020, Italian oil major ENI announced a plan to take two LNG powered shuttle tankers on up to ten year (long term) time charter, owned and operated by Knutson NYK Offshore Tankers.

 

They are 124,000 dwt capacity and will be built by Daewoo in Korea, with delivery of mid-2022. They will operate in the North Sea. They will also use batteries to power their dynamic positioning systems.

 

Equinor is chartering two AET LNG shuttle tankers, and two of Teekay’s LNG shuttle tankers.

 

The AET vessels are Eagle Blane and Eagle Balder.

 

One of these vessels, Eagle Blane, saw its first ship-to-ship LNG bunkering in Rotterdam in April 2020, with approx. 1480 m3 of LNG, filling 87 per cent of its tank capacity. LNG was provided by Shell.

 

Other projects

Cosco Shipping reported in December 2019 that it had signed a "supplemental agreement" with Dalian Shipbuilding, that its VLCC on order at the yard would be dual fuel, with LNG as its principal fuel. It said that this agreement increased the order value by $6m, and led to the delivery date being pushed back from March 31, 2021 to December 31, 2021.

 

Samsung Heavy Industries reported in April 2020 that it had an order for $209m for two LNG powered VLCCs, for an unnamed “Bermuda based shipowner”, scheduled for delivery on April 30, 2022.

 

MISC, the shipping division of Malaysia state oil company PETRONAS, stated in December 2019 that it planned to replace half of its 60 tanker fleet to run on LNG dual fuel by 2030.

 

In August 2019, Samsung Heavy Industries published a stock filing saying it had orders to build 10 x 113,000 dwt LNG fuelled crude oil tankers for an “Oceanian customer”, in a deal valued at USD 620m, to be delivered by the end of 2022. 

 

(Oceania is a little used term which describes the region of Australasia, Melanesia, Micronesia and Polynesia.)

 



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