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Sharp rise in gas hub prices may undermine competitiveness of gas in automotive, shipping industries

Oil&Gas Materials 19 November 2021 17:49 (UTC +04:00)

BAKU, Azerbaijan, Nov.19

By Leman Zeynalova – Trend:

In the short term, the transportation sector is likely to retain positions of a niche market for the gas industry, with its consumption representing around 1 percent of the global gas demand, Trend reports with reference to the Gas Exporting Countries Forum (GECF).

A sharp rise in gas hub prices in 2H 2021 may undermine the competitiveness of gas in the automotive and shipping industries in the short term, however the tightening of environmental regulations may encourage gas consumption by the transportation sector in the medium term, according to the GECF report.

The organization notes that after a slowdown in sales amid the COVID-19 pandemic, NGVs sales may rebound to 2 million units per year, with LNG-fuelled trucks gaining a momentum.

“The building of LNG-fuelled vessels may accelerate over the next five years, as LNG bunker fuel infrastructure develops and environmental regulations become stricter. The announced inclusion of CO2 emissions from the shipping industry into the EU’s Emissions Trading Scheme by 2023 may further encourage the usage of LNG bunker fuel, since emissions fees may put LNG at an advantage over oil-based shipping fuels,” the report says.

In the meantime, GECF analysts believe that there will remain some constraining factors for the promotion of LNG bunker fuel, including the ones of regulatory nature.

“IMO is aiming at adopting limitations of CO2 emissions by the shipping industry. LNG bunker fuel is not so much effective in reducing CO2 emissions, as in the case of sulphur oxide emissions. In this context, the LNG industry should step up efforts to mitigate the carbon footprint attributable to the gas industry chain, mainly by developing CCUS and decreasing methane leakages,” reads the report.

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Follow the author on Twitter: @Lyaman_Zeyn

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