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©Jordi Sanchez Teruel Barcelona’s been home to many of the major moves in Spain’s bunker sector of late

Going for LNG

The coastal states of the Western Med have clearly decided that the future is going to involve a lot of gas, as John Rickards reports

In the wake of the announcement of the mega LNG supply deal between Marseille-based CMA CGM and Total, French Prime Minister Edouard Philippe announced that the country was going to reverse its existing stance to allow lNG bunkering in ports, as well as considering changes to fiscal rules on amortising investments in new ships and engines in order to support French owners in making the transition to gas.

The 10-year supply deal between the French container giant and Total’s marine services arm will see Total supply around 300,000 tonnes of LNG per year to nine 22,000 TEU dual-fuel newbuilds,

the first of which is due for delivery in 2020. The ships will operate on the Europe-Asia trades, carrying 18,600 cbm of LNG each, enough to require bunkering only while in Europe. The scale of the deal, and CMA CGM’s commitment, is hard to overstate: 300,000 tonnes is widely held to be around three quarters of total annual global LNG

bunker demand.


While the plan is for those ships to take LNG bunkers in northern Europe where the infrastructure is most advanced, Mediterranean ports are working hard to catch up, particularly on the

Iberian Peninsula.


Gibraltar is among the LNG pioneers in the Western Mediterranean. Last year the Acting CEO of Gibraltar Port Authority (GPA), Manuel Tirado, said that his port was working on the regulatory framework for LNG as a bunker fuel. He explained: “We are now constructing an LNG plant within the port to supply LNG fuel to our new generating station, which will be online early summer 2018. We want to move into the bunker industry for LNG because we see that is the fuel of the future. This was a good opportunity for Gibraltar to get involved, exploring and paving the way towards an LNG bunker code of practice.”


Gibraltar is a member of the Society for Gas as a Marine Fuel (SGMF) and has been actively involved interntional forums considering issues relating to LNG bunkering. Most recently the GPA attended the IQPC LNG bunkering summit in Amsterdam which also included a technical focus day. The event united global players from leading ports, LNG terminal operators, ship operators, ship owners, LNG suppliers, and LNG technology providers to develop strategic partnerships and common strategy to drive the LNG bunkering market forward. According to the GPA, the summit provided an opportunity to hear perspectives from the entire supply chain, offering their insights into their decision making, planning, development, operation, safety and training processes.

Tirado commented that it was important for the GPA to attend high profile events such as this as it brought together the major players,

top bunkering ports and decision makers from around the world and provided an excellent stage for Gibraltar to promote its involvement in LNG bunkering services.

A market study released by DNV Gl last year and conducted on behalf of the Enagas-coordinated CORE LNGas hive project predicts that by 2030 up to two million cbm of LNG could be bunkered in Iberian ports, with Algeciras, las Palmas and Barcelona leading the way, and up to 8 million cbm by 2050. DNV Gl’s analysis of demand patterns is to be used by the project when making recommendations on infrastructure investment and development across 40 different ports. The report suggests that in order to meet that level of demand for LNG bunkers by 2030, €1bn of investment would be needed, and a total of €3.7bn

by 2050.


Enagas, itself, which owns five of Spain’s seven regasification plants, has been talking up the market and its own willingness to develop the necessary support systems for it. Speaking at a gas conference in Barcelona last October, Enagas manager Fernando Santamaria said that even though volumes were currently only small, the company could draw on its own experience with early LNG truck deliveries to serve as a major force in developing marine LNG.


The company’s regasification plant in Cartagena was the site of what was reported to be Europe’s first ever pipe-to-ship LNG bunkering operation last year. 370 cbm of gas supplied by Repsol was piped to the Canadian combo carrier Damia Desgagnés using flexible cryogenic hoses connecting the ship directly to the terminal.

“This type of supply was made possible as a result of the adaptations made to the Enagas plant jetty in the Port of Cartagena, in accordance with industry standards,” the company said. “It also highlights the commitment to innovation in the provision of new services by regasification plants. This initiative is turning Spain into the leader in this field in Europe, which is also aided by its privileged geographical placement as the gateway to the Mediterranean and the Atlantic.”


At around the same time, Cepsa claimed to be the first company in Spain to be able to supply LNG bunkers ship-to-ship through its Mediterranean Multi-product Barge in Barcelona. CEO of the company’s commercial gas arm Antonio Melcón said, “For LNG to attain a position of leadership as the main fuel for maritime transport on a global scale, it is essential that the players involved in its management – ship owners, authorities, distributing companies, infrastructure operators, etc. – work on its development in a coordinated manner. Thanks to our management capacity, Cepsa has become a world benchmark in the supply of LNG to ships.”


AIDA Cruises has begun taking LNG bunkers ex-truck by arrangement at the ports of Barcelona, Marseille and Civitavecchia, and potentially Palma de Mallorca, for its dual-fuel AIDAperla. The vessel runs on LNG primarily while at berth, though as parent company Carnival noted at the time of the announcement that cruise ships spend 40% of their time docked, making the fuel of particular relevance for power generation aboard.


The Spanish port of Ferrol-San Cibrao and local gas firm Reganosa have also used the addition of a call by another AIDA dual-fuel vessel to add LNG bunkering capacity based out of Reganosa’s existing small gas terminal.


Italy doesn’t benefit from a coordinated programme like CORE LNGas Hive adding funding and the country’s LNG bunkering regulations and infrastructure are less developed than elsewhere, but Italian energy and maritime interests are making plenty of efforts of their own.


Italian energy firm Eni has signed an R&D partnership deal with shipbuilder Fincantieri to work together on developing gas technology on vessels, supply chain, and better gas extraction and exploitation.

“The MoU is part of Eni’s strategy to tackle climate change, promote sustainable development, and support the use of gas for transport,” the company said. “It underlines the company’s commitment to minimise CO2 emissions, particularly in the naval sector.”


At the same time, Caronte & Tourist, which operates ferries between the smaller Sicilian islands and between Sicily and the mainland, has announced its plans to spend €200m on ten LNG-fuelled ferries over the next ten years, completely renewing its fleet. The company was the first Italian owner to order such a vessel, with the ferry in question due to be delivered from Sefine shipyard in Turkey this year.


The company’s manager Lorenzo Matacena said: “Gas as a new fuel certainly represents the future of shipping, despite the fact that infrastructure is still to be built in Italy and the bunker regulations

are lacking.”


And Stolt-Nielsen has ordered two 7,500 cbm LNG carriers capable of functioning as bunker tankers from Keppel Singmarine, both due for delivery in 2019, one of which will be employed in support of the company’s planned LNG terminal and distribution facility in

Oristano, Sardinia.


Away from the glittering world of the far future, the region’s seen its usual tranche of developments, with Spain once again dominating as Barcelona steps up its bunker offerings.


Last summer, Peninsula Petroleum moved a 7,500 dwt barge to the port to launch physical supply operations there.

©Jeanne Menjoulet Marseille seems set to be home to Ecoslops’ second recycled bunker refinery

Peninsula said that despite being such a busy port, there was a “seasonal shortfall” in fuel supply capacity there that it could take advantage of to make a niche for itself.


CEO John Bassadone said: “We believe that there is a significant supply gap in the market in Barcelona. This move is part of a wider strategy of leveraging our asset base to provide regional optionality for our clients. By developing a powerful and flexible supply capability, we can provide innovative service not only in our traditional home ports of Gibraltar and Algeciras, but across the wider Western Mediterranean/Iberian Peninsula.”


Cepsa meanwhile has started offering RMK500 at the port, targeting larger vessels, particularly container ships, working long distance routes, and has added a second supply vessel to the port in order to support the initiative. Cepsa had already offered the fuel in Algeciras and Gibraltar.


“The new Cepsa bunker operations in the Port of Barcelona strengthens the company’s leadership in supplying this type of fuel in the Mediterranean, as it is the first and only supplier of this product in the ports of Algeciras, where more than one million tonnes were delivered in 2016; and in that of Gibraltar, where Cepsa made it available to its customers in June 2017,” the company said in

a statement.


The port of Marseille, meanwhile, has joined the World Ports Climate Initiative and started offering port dues reductions for ships with a better Environmental Ship Index score. The measure was first applied to container and cruise ships, but this year should see other vessel types added to the scheme.


The city is also home to the newest recycled bunker refinery of French firm Ecoslops. Last autumn the company put in a formal request to operate an oil residue reprocessing plant at La Mède in partnership with Total. The micro-refinery should have a 30,000 tonnes per year production capacity and is expected to be operational by the end of

the year.


After some years in development, Ecoslops has been producing recycled bunkers on an increasingly major scale for both IFO and MDO grades. In the first half of 2017 (the most recent reporting period at the time of going to press), the company produced 12,200 tonnes of fuel at its similar micro-refinery in Sines, Portugal, with sales of 9,700 tonnes. Ecoslops claims that 98% of the waste product feedstock is regenerated into bunkers by the process, leaving very little waste.

The company signed a long-term deal with Galp last autumn that will see Galp buy up its lighter grade product; Galp operates a refinery of its own in Sines, making the logistics of the trade simple for

both companies.

And further East…
At the other end of the Mediterranean, another expansion move last year saw petroleum group Coral enter the Greek bunker market for the first time. World Bunkering caught up with Coral Marine’s Minas Hatzistamatiou to find out more.


WB: It’s a hard market to move into. What does Coral bring to it?

MH: Coral expanded into bunkering despite the fact that this market is very competitive, challenging and capital intensive. We are the only supplier at the port of Piraeus to offer RMK 500 & 700, using our own state of the art newbuild barge, equipped with a mass flow meter and pumps with high delivery rates. Both attributes assure delivered quantity and significantly reduce delivery time. Supplies are loaded from our own terminal where a central in-house laboratory department conducts extensive tests during product receipt, storage and delivery. This infrastructure enables us to guarantee quantity and quality in each supply together with the ability to respond to short notice enquiries.


WB: Is it an advantage as a supplier to be part of a larger fuel and energy group?

MH: The prerequisites for entering international bunkering are: strong and flexible infrastructure, supply and financial robustness and strategic partnerships. Coral Marine has already established a solid supply network with key refiners including MOH Refinery, the parent company of Coral. Furthermore, Coral owns and operates a versatile storage facility in Perama with a total capacity of 120,000 cbm, 50,000 cbm of which are allocated exclusively for marine fuels, making this terminal the largest marine fuel terminal in Mediterranean area. Our infrastructure and logistical connections have already proven a strong asset in deploying strategic alliances with key customers,

traders and shipowners.


WB: What do you see as the main challenges and opportunities for the year ahead?

MH: Since 2016, Coral Marine has implemented an investment plan which will exceed US$10m by 2020 in order to further advance our infrastructure. This intensive investment focuses on the upgrade and modernization of the terminal and jetty, together with modifications to our time chartered barge to meet our high standards.


Bunker demand in Piraeus should see further growth in 2018 and onwards because there should be an increase in the number of visiting container and cruise ships. Foreseeing this demand growth and aiming to increase our market share, we will continue with our investment plan.


WB: The global 0.5% sulphur cap is only a couple of years away. How ready do you think Coral and the Greek market as a whole are for the switch to lower sulphur fuels?

MH: Coral Marine will comply with the 2020 0.5% sulphur cap, and will be in position to offer full range of products of commercial interest. We have entered a period of high uncertainty and high costs. The transition to LSFO 0.5% will cause more changes to the global marine industry than the switch to 0.1% sulphur fuel in the ECAs.


Operating a terminal of 50,000 cbm for marine fuels beside Piraeus container terminal, Coral can facilitate any product of commercial interest. In particular, while supply of HSFO 3.5% will continue for shipowners who have installed abatement technologies (scrubbers or exhaust gas cleaning systems) the new ULSFO 0.5% will also be available in our product range.


WB: Traditional fuel oils are also facing competition from a surge in interest in alternative fuels, particularly LNG. Do you think Greece is likely to see much of a switch in fuel usage?

MH: The strategic investments carried out at the port of Piraeus aim to make the port the largest in the Eastern Mediterranean, and thus inevitably all bunker products need to be available, including LNG. The scale of investment in LNG shipping is uncertain since a significant shift from shipowners to LNG is not expected soon and also the capital investments and operational costs for LNG bunkering remain very high.

Minas Hatzistamatiou , Coral Marine

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