IMO Regulations to Lead to Increased Adoption of LNG as Bunkering Fuel

Published By : 11 May 2016 | Published By : QYRESEARCH

For the past many decades, oil-products have been the exclusive norm for transport fuels owing to the simple reason that oil-products are abundantly available, are practical for use and are cheap. Natural gas and liquefied natural gas (LNG) were recognized as better fuel options over conventional oil-products in terms of energy content and environmental footprint. However, since LNG was not abundantly available and was comparatively more expensive, the use of LNG in application was limited to a few areas of research and very specific market areas. In the past few years, however, many factors have converged to bring a radical change in the LNG market and the applications of LNG are rising at a favorable pace.

The global demand for energy is still outpacing the global supply of cheap oil-products, resulting in the exponential price structure of crude oil and oil-products. A continuously rising share of world’s oil production is operated by national oil companies, making oil a geopolitical issue. This restricts the availability of resources from certain regions, making the imbalance between supply and demand worse. This scenario, combined with the rising global production and availability of LNG is leading to an increased adoption of LNG as a bunkering fuel for the marine transportation industry.

Some of the major drivers enabling this change are:

  • IMO Regulations: The International Marine Organization (IMO) has put strict regulations in place to restrict emission of greenhouse gases, sulfur, nitrogen oxides and other particles from marine vehicles. The restrictions have already been brought into force in several regions and international waters, which are being referred to as emission control areas, and will be enforced for the rest of the world by 2020. LNG being a relatively cleaner fuel as compared to conventional bunker fuels, is being looked upon as a very good option for the marine bunkering fuel market. 
  • Favorable Development of LNG Supply Chain: The lack of effective and reliable supply chains is one of the major restraint holding back the widespread adoption of LNG as a bunkering fuel in the global market. To overcome this hurdle, numerous initiatives have been initiated or are under development in major ports and terminals worldwide. 
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