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Endesa’s Algeciras facility will be Spain’s largest LNG bunkering terminal ©Endesa
Endesa’s Algeciras facility will be Spain’s largest LNG bunkering terminal ©Endesa

IT’S A GAS

The future looks a lot like gas in the western Mediterranean, with hydrogen projects joining LNG on the region’s future fuels list, John Rickards reports

Spain has bought heavily into building up its LNG bunkering infrastructure over the course of the past couple of years. These efforts received a further boost in the late part of 2020 with electricity and gas company Endesa given the green light to add bunkering services to its Algeciras gas terminal. Adapting the facility will cost an initial €15.6 million by 2022, with a second phase expanding gas storage to 4,080 cubic metres costing a further €34.5 million by 2023, and will make it the largest LNG bunkering terminal in Spain.

According to Endesa’s general director of energy management Juan María Moreno, “The strategic location of our terminal offers opportunities for growth and diversification into new lines of business, such as LNG bunkering, which are a good fit and will enable us to make progress with our decarbonisation strategy by focusing on activities that lead to a reduction in emissions.”

 

According to Endesa, the Los Barrios terminal has additional space for possible future expansion depending on demand to the tune of two additional docks. The facility will be able to progressively increase its storage capacity further as bunker demand grows to around 10,000 m3 within the decade. The company also plans to open a gas station to supply LNG by road. As part of the approval from the Port of Algeciras Bay Authority (APBA) Endesa was granted a 10-year terminal concession extension.

 

Endesa’s compatriot company Enagás, meanwhile, has been given the green light for joint financing by the European Commission for the building of a dedicated LNG bunkering barge to operate at Algeciras, the port’s first such. The project consists of the construction of a 12,500 cubic metre bunkering barge, entering into service in 2023. Once in operation, the vessel will be loaded with LNG at the Enagás terminal in Huelva and will then either supply it directly to ships or transfer it to smaller barges for subsequent supply to smaller vessels berthed in Algeciras.

 

Not to be left behind, on the other side of the bay, the Gibraltar government has granted Shell’s application for an LNG bunkering licence. Minister for the Port, Vijay Daryanani said: “I am pleased to see that Shell has been successful in its application and welcome the trust and confidence that Shell continues to place in Gibraltar with the completion of its application.

“The Gibraltar Port Authority now looks forward to working with Shell to further develop the range of bunkering service at the Port of Gibraltar to include LNG bunkering. This is in line with the aspiration to keep Gibraltar on the leading edge of developments in the bunkering industry and to reinforce our position as a bunkering hub.”

 

Chief Minister Fabian Picardo said: “Including LNG bunkering as one of the services on offer at our port demonstrates our forward-thinking approach to developing the maritime industry, as well as ensuring that Gibraltar is part of the transition to cleaner fuels and reduced environmental impact.”

 

Spanish sustainable transport association Gasnam, in its 2020 review of the industry released in January, said that the year saw 741 LNG bunkering operations, up from 199 in 2019, involving just over 122,000 cubic metres of LNG, and that the number of Spanish ports offering regular LNG bunkering had increased from six to nine. 68.5% of the volume supplied was to ferries, 31.1% to cruise ships and 0.4% to other vessel types.

 

Gasnam also pointed out that LNG bunkering operations have continued to gain flexibility and efficiency, and that more than 75% of supplies have been carried out using multitruck to ship operations to reduce refuelling time.

 

“2020 has been marked by important regulatory changes that, added to Europe’s support for infrastructure development, will be determining factors to accelerate the incorporation of this sustainable maritime fuel,” the association said.

“In October 2020, the new Spanish LNG bunkering tolls, which are the most competitive in Europe, came into force.

Also this year, the European Commission’s support for the LNGhive2 strategy was announced for the construction of two new LNG supply ships that will operate in the ports of Barcelona and Algeciras, thus showing its support for the development of the LNG market as maritime fuel.

 

“Both milestones will allow our country to continue consolidating its position as a benchmark for LNG bunkering in Europe.”

 

Endesa isn’t the only Spanish energy interest making significant investments in decarbonisation and alternative fuels. Oil major Repsol has launched two major projects aimed at producing commercial quantities of renewable fuel.

 

The first, announced in late October, is the building of an €188m advanced biofuels plant at Repsol’s Cartagena refinery which will have an annual production capacity of 250,000 tonnes of various grades of fuel, including biodiesels, once operational.

 

At the press conference unveiling the development, the first on this scale in Spain, Repsol CEO Josu Jon Imaz said: “With this initiative, we at Repsol are decisively promoting a new technological route that will be key in our path towards carbon neutrality. It is added to the projects we have already implemented in energy efficiency, low-emissions electricity generation, renewable hydrogen, circular economy, synthetic fuels, and CO2 capture, use, and storage, among others.

 

“Spain must base its decarbonization strategy on its industrial and technological capabilities, because that will be the way to promote a competitive and innovative business fabric,” said Imaz, before adding that “all forms of decarbonization are valid and complementary and incentivizing them so that they can all contribute, without exclusion, will accelerate the energy transition and help us, as a society, achieve a speedy economic recovery, so necessary under the current circumstances of the coronavirus pandemic.”

 

The biodiesel produced at the plant, rising up to 600,000 tonnes by 2030, is likely to be used as with Repsol’s existing production and similar biofuels on the market as a drop-in. While the full array of end products and target markets hadn’t been released at the time of writing – and Repsol were approached for comment but unable to provide before going to press – the company specifically noted that the IEA considers biofuels a key part of transportation decarbonisation from 2030 and particularly in sectors where electrification is difficult, such as maritime transport. So watch this space, I suppose.

 

The company is certainly looking at e-fuels – methanol made from green hydrogen and atmospheric CO2 in particular – for the maritime market. At the unveiling of its new five-year plan this winter, across which it will invest €18.3 billion, €5.5 billion of it on low-carbon projects, and which it promises will be self-financing at $50/barrel of Brent and $2.5/MBtu at the Henry Hub, Repsol said:

 

“Renewable hydrogen will be another important vector for the decarbonization of the industry. The applications range from its use as a raw material to produce synthetic fuels to the storage of renewable energy. Repsol has the ambition to be a leader in renewable hydrogen in the Iberian Peninsula by reaching a production of the equivalent of 400 MW by 2025 and with the ambition of exceeding 1.2 GW in 2030.

The capture and use of CO2 will also be key to this transformation process, thanks to projects like the one developed at Petronor in Bilbao, the only refinery in the Iberian Peninsula and one of few in Europe that has implemented this kind of processes.”

 

The Petronor plant was announced in June last year in the port of Bilbao, at an initial investment of €60m. The facility, planned to be operational in 2024, will act as a pilot plant – one promised to be scalable if results are promising – producing green hydrogen from renewable energy and captured CO2 to produce e-fuel for use across all transport and industrial sectors. The pilot plant will only produce 50 barrels per day when operational, but if successful – and if it can be scaled to commercial levels still using renewable energy, which seems achievable on the face of it – then adoption could be relatively swift in the years to come.

 

It’s not only Spanish energy majors eyeing green hydrogen either. France’s Total – which has also snapped up the country’s biggest producer of biogas in a deal which the Managing Director of its bunkering arm described as “an important step forward for us to realise bio-LNG as a real marine fuel solution for shipping’s decarbonisation” – inked a deal with gas group Engie in January to develop and operate the Masshylia project, the country’s largest green hydrogen production plant at Châteauneuf-les-Martigues near Marseille. Some of the hydrogen produced is earmarked for load-balancing electricity generation, but the rest will be used at Total’s nearby La Mède biorefinery for producing biofuels.

 

Meanwhile, Italy’s national energy producer Enel has announced a partnership with oil major Eni to produce and use the gas at two Eni refineries, with production hopefully beginning by 2023.

The Petronor plant in Bilbao will pilot renewable e-fuel production for Repsol ©Repsol
The Petronor plant in Bilbao will pilot renewable e-fuel production for Repsol ©Repsol

The country’s gas firms are continuing to push towards establishing LNG bunkering infrastructure, albeit not at the same pace as Spain. It was only in October that the first Italian LNG bunkering operation took place, with Costa Cruises’ Costa Smerelda taking on a stem at La Spezia supplied by Shell.

 

Greater scope for gas bunkering is coming, though. In December, Venice LNG became the latest firm to receive government approval to construct and operate an LNG storage and bunkering terminal in Porto Marghera, which like similar ventures in Spain has co-financing from the European Commission to the tune of €18.5m. Once built, Venice LNG expects to have a storage capacity of 32,000 cubic metres and handle a maximum of 150,000 cubic metres annually during its first phase of operations, eventually rising to 900,000 cubic metres. LNG bunkering will be offered by truck and barge.

 

Other gas terminal proposals have included possible LNG bunkering, or seem likely to support it –

 

such as OLT Offshore LNG Toscana’s FSRU terminal off the Tuscan coast, given approval for LNG carriers and bunker barges to refuel in October. It’s a little rarer for Italian terminal plans to specifically cover bunkering, so this hopefully augurs well for the future.

While waiting for LNG infrastructure to catch up, Italian shipowners have had to find other ways to reduce their carbon footprint. At the turn of the year, Grimaldi Group took delivery of the Eco Barcelona, the second of its series of ro-ros – the largest in the world for short-sea shipping, the company says – late last year, and will similarly operate between Italy and Spain.

 

As well as voyage fuel optimisation, the scrubber-equipped vessels generate electrical power through shaft generators and solar panels while en route for storage and use at berth, meaning zero emissions in port.

 

A third vessel in the class should have followed by the time of going to print, and a further nine are on order.

The Eco Barcelona generates electrical power for at-berth operations en route ©Grimaldi
The Eco Barcelona generates electrical power for at-berth operations en route ©Grimaldi

TANGER MED IN 2021

Tanger Med has established itself as a global maritime and logistics hub, with a strategic location at the crossroads of major routes for the largest global maritime alliances

 

On the southern side of the Med, Tanger Med has spent 2020 building its position as a major cargo hub and targeting partnerships with ports in Europe, inking deals with Algeciras and Hamburg to add to the port’s existing alliances.

 

Bunkering was a particular success, despite the proximity of its rivals across the Strait, with nearly 1.6million tonnes of bunkers sold across 2020.

 

Given that degree of local competition, and the overall context of bunker trade at post-Covid trade levels, those are very healthy volumes indeed.

 

Cargo tonnage at Tanger Med, which handles nearly 50% of all throughput in and out of Morocco, was up 23% last year to 81 million tonnes despite trade reductions due to the pandemic, while box traffic of 5.7 million TEU put it, the port says, at the number one slot for the Mediterranean as a whole.

 

From the beginning, Tanger Med has positioned itself as a major transshipment platform for intercontinental trade to and from Africa, which represent nearly 40% of the container traffic handled. Major maritime players such as Maersk and CMA-CGM, major logistics players such as DHL, CEVA Logistics, Nippon Express and Decathlon and major industrial players such as Varroc, Hands Corporation, SIEMENS, Valeo and Magneti Marelli are located in the industrial-port complex, which is now the number one container port in the Mediterranean.

 

Tanger Med maintains partnerships with its port partners, joining the initiative of the Port of Singapore in January this year to guarantee the continuity of global logistics chains during the epidemic, and it maintains a close collaboration with the port of Algeciras and has an agreement with the port of Hamburg dealing with operational and technical ideas exchange.

The port is the number one export platform for Morocco. It saw over 350,000 TIR trucks in 2020, including 180,000 trucks and 100,000 TEU for exports, mainly driven by agribusiness products. The port has 19 hectares of dedicated export infrastructure, able to process more than 2,100 units per day with a transit time of 2 hours through digitised processing. Exports are expected to grow to 600,000 units by 2025.

 

Passenger traffic was obviously much reduced by Covid-19. Activity was suspended in March 2020 due to the closure of borders as a result of the health crisis. Traffic resumed slightly in June 2020 in strict compliance with health measures; 701,599 passengers travelled through Tanger Med port in 2020, a decrease of 75% compared to 2019.

 

Tanger-Med’s tank farm and fuel terminal operates on a 24/7 basis to deliver multiple grades of bunkers, including VLSFO, IFO380, and MGO. Tanger Med and its partners HTTSA and Minerva Bunkering say they have been able to offer IMO 2020 compliant fuel since day one without any interruption.

 

Over 80% of the bunker stems at Tanger Med to the Strait of Gibraltar is delivered at two anchorage areas by seven barges of 6,500 tonnes capacity each. Fnideq-Tanger Med East and Alkazar-Tanger Med West are emerging as a major global bunkering hub for ships passing through the Strait of Gibraltar.

©Yassine Abbadi/CC-BY
©Yassine Abbadi/CC-BY

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