LNG – Strategic Challenge for the Mediterranean Shipping

The approach of LNG is something rather new; it is the chicken and the egg issue. Do we need firstly the terminal, do we need firstly the fuel, do we have the appropriate ships? In order to take the decision, we need both the ships and also the terminals for LNG. I would like to highlight the important factors to be considered; social perception, financial issues, regulatory and authorization aspects, logistics scenario and the technical solutions.

2013.08.08 - LNG Strategic Challenge for the Mediterranean Shipping Figure 1

Regarding the social perception, it is clear that there is fear due to the fact the LNG is a flammable and also dangerously cold. It is true that LNG is clean but not in my back yard. There are many discussions about who will take the responsibility for LNG development. Regarding the financial issues, there is no market for LNG. LNG is cheaper than the heavy fuel oil. However, there is a need for investments to become on the logistic chain and on existing ships.

2013.08.08 - LNG Strategic Challenge for the Mediterranean Shipping Figure 2

US prices of LNG are six times different in comparison to Japan prices, which is an important difference. If we change 650 USD heavy fuel oil tonnes to energy unit (BTU) it would be about 15,3 USD per million BTU. In order to calculate the total cost of LNG investment, we have to include more expenses. So, practically, the hypothetical price of LNG for 4 USD per million BTU including small scale distribution cost is about 13 USD per million BTU.

2013.08.08 - LNG Strategic Challenge for the Mediterranean Shipping Figure 3

LNG funding is problematic due to Negative World Financial Outlook and uncertainty on LNG price. LNG fuelled new building is 20-25% more expensive and also retrofitting a ship is quite expensive, around 30% for larger ships and 60% for smaller ships which are considerable investments. However, having economics of scale and widespread use of LNG would reduce the equipment cost, the spread between MDO and LNG is not negligible and potential positive cash flows could come from carbon credits. There are also opportunities to be considered, because LNG network (bunker barges or tanker, feeder tankers) does not exist, so building LNG terminals would create more jobs.

There is regulation concerning gas fuelled ships, RINA is one of the class societies that has already published relevant regulation. But, there are still lot of things under development, such as IMO IGF Code and EU directive for inland water LNG transportation. A study on LNG bunkering rules and procedure, commissioned by EU, has just been published.

2013.08.08 - LNG Strategic Challenge for the Mediterranean Shipping Figure 4

Logistic scenario is very important factor to be considered, because even if I have the ship and all requirements, I need to be able to do bunkering.  For that reason, I need LNG on shore storage and terminals, truck and containers, feeder tankers and bunkering tankers.

Also, there are many technical solutions available for dual fuel engines, type C store tank with tank room and gas preparation facilities, installation criteria to minimize damages consequent to collision, double pipe gas distribution systems, emergency shut down systems and redundancy of essential installation.

There are many options; however the question is if we are ready for LNG. Social perception as mentioned before is important to be considered. Maybe sooner or later this will change due to regulations. Then of course regulatory things have to be solved and a network to be created. So, practically, LNG is cheap, is safe, what else do we need?

Above article is an edited version of Mr. Spyridon Zolotas, Area Manager, Greece & Cyprus, RINA, presentation during the 2013 Green4Sea Forum.

Click here to view relevant video

The article has been initially published in SAFETY4SEA.


  1. This is a wonderful article, Given so much info

    in it, These type of articles keeps the users

    interest in the website, and keep on sharing

    more … good luck.

Leave a Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: