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LNG Bunkering Market Overview
Growing adoption of liquefied natural gas (LNG) as a bunker fuel and technological advancements in ship-to-ship LNG bunkering are the key trends witnessed in the LNG bunkering market. LNG produces lower sulfur content and greenhouse gas emissions than traditionally used maritime fuels, such as heavy fuel oil, marine diesel fuel, and marine gas fuel.
LNG bunkering is the practice of providing LNG fuel to ships for their consumption. Many laws by international organizations and governments are focusing on encouraging the adoption of LNG as a marine fuel, which, in turn, is supporting the growth of the LNG bunkering market, globally.
In the report, the LNG bunkering market is segmented on the basis of end user and region. Based on end user, the market is classified into tanker fleet; container fleet; bulk and general cargo fleet; and ferries and offshore support vehicles. The category of ferries and offshore vehicles accounted for a significant share in the market during the historical period on account of the relative ease of supplying LNG to these vehicles and their favorability as a means of marine transportation.
Based on region, the market is categorized into North America, Europe, Asia-Pacific (APAC), Latin America, and the Middle East and Africa. Historically, Europe accounted for a significant share in the global LNG bunkering market. This can be attributed to the early adoption of LNG as a marine fuel and the presence of emission control areas (ECAs) in the region.
In addition, European countries are framing stringent environmental regulations for reducing air pollution, which, in turn, is expected to encourage the adoption of LNG as a marine fuel in the region. North America is also a prominent market for LNG bunkering. The LNG bunkering market in the region is primarily driven by the upsurge in shale gas exploration and stringent environmental regulations implemented by the government.
LNG Bunkering Market Dynamics
Benefits of using LNG as a marine fuel, global concerns over increasing air pollution, and stringent regulations on gas emissions are expected to drive the growth of the LNG bunkering market in the coming years.
In October 2016, the International Maritime Organization (IMO), a United Nations agency, revised the cap on sulfur content in marine fuels from 3.5% to 0.5%. The new regulation is expected to come into force by 2020. However, this could compel refineries to make additional investments and modifications in their process to produce marine fuels that meet the sulfur content guidelines. Moreover, studies by the International Petroleum Industry Environmental Conservation Association (IPIECA) and the Baltic and International Maritime Council (BIMCO) indicate a trend that the current refineries are expected to fall short of integrating such modifications by 2020, which, in turn, will result in the shortage of traditional marine fuels.
LNG fuel, on the other hand, has lower sulfur content and needs comparatively less processing to meet the sulfur content limits. It, thus, requires less expensive modifications in its manufacturing process as compared to conventional marine fuels. Therefore, the economic viability of LNG is expected to translate into its increased adoption in the coming years. This development is expected to drive the LNG bunkering market during the forecast period.
The marine industry is witnessing a downtrend as a result of reduced offshore oil and gas activity. Slow growth of the offshore oil and gas industry is affecting the demand for offshore service vessels, which, in turn, is hindering the growth of the LNG bunkering market. Besides, factors such as huge capital investments for the development of LNG bunkers and the availability of alternatives to LNG for reducing the sulfur content, i.e., with the use of scrubbers, are restraining the market growth to some extent.
The growing public support toward ECAs and introduction of global regulations for these areas are expected to encourage the adoption of LNG as a marine fuel, thereby generating ample growth opportunities for the players operating in the LNG bunkering market.
ECAs are the sea areas where stringent regulations are established to control airborne emissions of sulfur from the marine modes of transportation. From May 2005 to June 2010, the sulfur emission limit was 15,000 ppm in ECAs, which was reduced to 10,000 ppm during July 2010–December 2014. The limit was further reduced to 1,000 ppm in January 2015, which can be viewed as a propellent for the growth of the LNG bunkering market.
As of 2011, ECAs comprised the North Sea, the Baltic Sea, the North American ECA, and the US Caribbean ECA. More such regions are expected to come under the ECA category in the coming years. The proposal for the inclusion of Japan, Southeast Asia, and the Mediterranean under this category and the massive market potential in the unexplored APAC region are creating opportunities for the growth of the LNG bunkering market.
LNG Bunkering Market Competitive Landscape
Some of the major companies operating in the global LNG bunkering market are Gazpromneft Marine Bunker LLC, Royal Dutch Shell PLC, Bomin Linde LNG GmbH & Co. KG, Skangass AS, Korea Gas Corporation, Harvey Gulf International Marine LLC, ENGIE, Polskie LNG SA, Eagle LNG Partners, and ENN Group.
The study provides the historical as well the forecast market size data for various countries, including the U.S., Canada, France, Germany, the U.K., Italy, Spain, Japan, China, India, Brazil, Saudi Arabia, and South Africa.