LNG may claim up to 10% of marine fuel market by 2035

Oil&Gas Materials 18 December 2019 15:14 (UTC +04:00)
LNG may claim up to 10% of marine fuel market by 2035

BAKU, Azerbaijan, Dec.18

By Leman Zeynalova – Trend:

By 2035, liquefied natural gas (LNG) may claim up to 10 percent of the marine fuel market, according to Major Trends in the Global Liquid Hydrocarbon Market to 2035 report released by Russia’s Lukoil company, Trend reports.

“The most active conversion to LNG is expected among fixed route vessels such as ferries and barges. In addition, with the development of international trade in LNG, the number of methane tankers will increase, which will also contribute to an increase in the consumption of natural gas in shipping,” the company believes.

Lukoil estimates that as of 2019, the marine fleet using LNG as a fuel totals 170 vessels, with a further 184 vessels on order for construction.

“Europe is the key region for LNG powered marine operations. Development of the LNG Masterplan project is currently underway. The project focuses on LNG conversion of river barges running on European navigable rivers,” reads the report.

Moreover, as the company says, the imposition of more stringent climate policies in many countries is increasing the popularity of natural gas as a motor fuel.

“In the transportation sector, natural gas is used in a compressed (CNG) or liquefied (LNG) state. The advantage of LNG compared to compressed gas is the increased energy capacity of this type of fuel. This helps to reduce the size of the fuel network and increase range. However, there are a number of factors that prevent the rapid spread of LNG as a motor fuel,” said the company.

Firstly, Lukoil said LNG has a higher production cost than compressed gas.

“With the current gas to diesel price ratio in a number of countries, it is not economical to convert heavy duty vehicles. We estimate that the acceptable cost recovery parameters of converting heavy-duty trucks are in place in Europe, where diesel is subject to high taxes, and in China, where LNG trucks are cheaper than in many other countries. “

Secondly, the cost of LNG refueling infrastructure is significantly higher than the cost of constructing pumping stations, said the company.

Lukoil is one of the largest publicly traded, vertically integrated oil and gas companies in the world accounting for more than 2 percent of the world's oil production and around 1 percent of the proved hydrocarbon reserves.


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