DNV GL © 2014
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MARITIME
LNG as Ship Fuel in ChinaUnderstanding the status of regulations, incentives and infrastructure for LNG bunkering.
Dan-Hermann Thue
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Background
China has 7 of the worlds top 10 trafficked container ports. And handles 30% of the world’s containers every year
Needs to improve air quality Yangtze River is transporting more cargo than any other river in the world. China tightens regulations for air emissions for ships.– New Emission control areas ECAs
LNG as ship fuel is one solution to meet and surpass requirements Supply stations of LNG for ships needs to be built– Where and what type
Regulations need to be simplified Government support needed to incentivize change to cleaner solutions including
LNG
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Emission Control Areas
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New Chinese Emission Control Areas
SOx content in fuel maximum 0.5 % In order to meet requirement– Low sulphur marine diesel oil < 0.5% S– LNG as fuel – Scrubber (not feasible for smaller ships)– Shore to ship Electrification
11 key ports to start the effect from Jan 2017 (see map)
Ships need to comply from 1 hour after docking to one hour before departure.
Tianjin, Qinhuangdao, Tangshan and
Huaye Shanghai Ningbo-
Zhoushan, Suzhou and
Nantong
Shenzhen, Guangzhou and Zhuhai
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Timeline of Implementation of ECA regulations
Implementations in beginning of each year
2016 - Voluntary
implementation in key ports.
Shanghai only one so far.
2017 - Implementation in 11 key ports
2018 – All ports within ECA affected
2019 –Sailing within the whole ECA sea area also
affected
End of 2019 - Evaluate ECA policy. status quo? Expand area? 0.1% Sulphur?
Either 2020 or 2025 :
Global Sulfur Cap of 0.5%
Sulphur
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Strategy for cleaner shipping previous 5yr Plan
Phasing out and replacing old inefficient vessels more quickly.
Improve the regulations to encourage more energy efficient newbuilt ships.
Upgrading port infrastructure, and provide green alternatives such as shore to ship electricity at berth (Cold Ironing). Electric cranes etc.
No specific goals for LNG implementation mentioned.
Still The Govt. Ministry of Transportation published a report (2013) with goals to start pilots for LNG implementation for IWW.– Goal of 2% (2,000) of vessels on Yangtze
converted to LNG by 2015– And 10 % (10,000) by 2020
Inland waterways first approachSupport Newbuilds of LNG ships 800 million RMB annually.
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LNG fuel emissions savings
Emission type
Pure LNG reduction potential compared
to MDO 1% SHow
SOX ~100 % No sulfur in LNGParticulate matter ~100 % No black carbon
source from LNGNOx 85-90 % Better combustion
performance
CO2 20 – 25 %Higher energy
content in fuel per weight
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Graphical Comparison LNG and MDO 1% S
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Inland Waterway requirements
Currently 350 ppm Sulphur allowed in fuels for smaller vessels– Tighten to 50 ppm in 07.2017– Tighten to 10 ppm in 01.01.2018
Larger Coasters and Channel ships have requirement of 0.1% Sulphur– Same as is in force in European and American ECAs today– HFO is forbidden, but can be used with scrubbers
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Stage 1 IWW emeission requirements from 2017
Category Cylinder DisplacementPower
COg/kWh
HC + NOX
g/kWhPM
g/kWh
V 1:1
Vh,z < 0.9 l 5.0
7.5
0.4Pn > 37 kW
V 1:2 0.9 l < Vh,z < 1.2 l 5.0 7.2 0.3
V 1:3 1.2 l < Vh,z < 2.5 l 5.0 7.2 0.2
V 1:4 2.5 l < Vh,z < 5.0 l 5.0 7.2 0.2
V 2:1 5.0 l < Vh,z < 15.0 l 5.0 7.8 0.27
V 2:2
15.0 l < Vh,z < 20.0 l 5.0
8.7
0.5Pn < 3300 kW
V 3:2
15.0 l < Vh,z < 20.0 l 5.0
9.8
0.5Pn > 3300 kW
V 2:4 20.0 l < Vh,z < 25.0 l 5.0 9.8 0.5
V 2:5 25.0 l < Vh,z < 30.0 l 5.0 11.0 0.5
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Stage 2 IWW emeission requirements from 2017 Category Cylinder Displacement
PowerCO
g/kWhHC + NOX
g/kWhPM
g/kWh
Category 1
Vh,z < 0.9 l 5.0
5.8
0.3Pn > 37 kW
0.9 l < Vh,z < 1.2 l 5.0 5.8 0.141.2 l < Vh,z < 5.0 l 5.0 5.8 0.12
Category 2
5 l < Vh,z < 15 l
P < 2000 5.0 6.2 0.142000<P<3700 5.0 7.8 0.14
P>3700 5.0 7.8 0.27
15 l < Vh,z < 20 l
P < 2000 5.0 7.0 0.342000<P<3300 5.0 8.7 0.5
P>3300 5.0 9.8 0.5 20 l < Vh,z < 25 l
P<2000 5.0 9.8 0.27P>2000 5.0 9.8 0.5
25 l < Vh,z < 30 l
P<2000 5.0 11.0 0.27P>2000 5.0 11.0 0.5
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Incentives and cost for ship owners
$?
Diesel
$$
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Trend of weighted avg. import price of LNG, product oil China
Fuel LHV Fuel Density Energy/Volume MDO 42.7 900 38.43
LNG 54.7 442 24.18
Ratio MDO/LNG 0.78 2.04 1.59
Ratio LNG/MDO 1.28 0.49 0.63
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strengths
Government financial support
Meets requirements
for today
Lower Maintenance
cost of operation
Opportunities
Possible shortage of low
S Fuel oil
Meeting stricter future
requirements
IMO implements global 0.5%
sulphur cap in 2020
Natural Gas usage in China is growing
Threats
Recent and continuing
low Crude oil price
Lack of sufficient
incentives from Govt.
IMO doesn’t implement global 0.5% Sulphur cap until 2025
Weaknesses
Higher investment
cost
Loss of cargo space
Ship route and bunkering
flexibility
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Chinese conversion to dual fuel pilot projects
Vessel name Vessel type Gross Tonnage(ton)
Conversion costs USD
Changxun NO. 3 Bulk cargo ship 2590 193,000
Hongri NO. 166 Dry cargo ship 1808 85,000
Changneng NO. 12 Bulk cargo ship 3718 89,000
Jiangsu cargo NO. 3001 Bulk cargo ship 2000 66,000
Fuchou NO. 0608 Dry cargo ship 831 61,000
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Stakeholders in Chinese LNG bunker market
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Overview of stakeholders LNG China
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National Oil Companies
•LNG import market Pioneer
•Leading construction of LNG newbuilds
•Primary offshore NOC•Strongest offshore influence.
CNOOC
•Major Petroleum energy, refining and end user company.
•Strong influence in south and east China.
Sinopec
•Biggest Oil/Gas company
•Holds the most of the domestic land gas resources and pipelines
•Sphere of influence strongest in north and west
Petrochina
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LNG Infrastructure China
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Import terminals for LNG
Blue: Operational Red: Construction Mostly by NOCs – Mostly CNOOC, then CNPC then Sinopec
Notably Zhoushan LNG by private company ENN with PTS bunkering capability
Yellow: Possible major bunkering sites along Yangtze River (Chongching, Wuhan, Nanjing, Nantong)
LNG transport or fuelled ships may not pass Three Gorges Dam for safety reasons.
Needs smaller scale LNG transport ships for upriver and regional transportation (currently building 30,000m^3 carriers)
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Bunkering pathways
Truck to ship (TTS)Flexible but low volume and slow transfer rate.Proven tech, but higher civilian risk and interaction.
Ship to ship (STS)Suitable for simultaneous operations (unload)Flexible, no need to dock in port, high transfer rateMore expensive and more vulnerable to weather.
Port to ship (PTS)High transfer rate and volumeWell regulated in China, but long approval processing time. Needs designated jetty.
Portable LNG Containers• Lacks in regulation and standards.• Makes bunkering quicker by switching
tanks.
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Bunkering stations in China coast and IWW
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CNPC Plans for bunkering on IWW
LNG value chain assets and plans, Existing receiving terminals (Red) Storage facility (Blue) and number of possible planned river bunker sites (yellow)
Beijing-Hangzhou Grand canal
Yangtze River system
Pearl River system
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Known LNG bunkering facilities in China, including inland water ways
River Area Province Company Bunkering type LNG Capacity Status / In service from
Yangtze River
Yidu City
Hubei
Xilan NG Group Land based(PTS)
Storage facility with large
volume
2014
Wuhan Fortune oil
Land based (PTS) Storage facility with large
volume
Under construction ¬
4.2016
Chongqing
Chongqing Fortune Oil Land based (PTS) 2000 m3 10.2015
Shanghai Shanghai Gangqiang Gas Bunkering pontoon (STS)
2 x 250 m3 Construction
Nanjing Jiangsu Haiqi Ganghua Bunkering pontoon (STS)
2013
Wuhu Anhui Sinopec Bunkering Pontoon (STS)
500 m3 2015
Grand Canal Jiangsu Hongyun Green Energy
Planned
Pearl River Xi River Guangxi ENN Gas Holdings Bunkering barge (STS)
200 m3 2015
Coastal Dafeng Port, Yancheng,
Jiangsu Jiangsu Hongyun Green Energy
Land based(PTS)
2 x 60 m3 Construction¬ 4.2016
Zhoushan Zhejiang ENN Gas Holdings Regasification, Storage (PTS)
3 mtpa 2018
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ENN. Bunkering possibility for ocean faring vessels
Zhoushan LNG import and LNG bunkering facility
Close to Ningbo. And not far from
Shanghai Land to ship bunkering Estimated completion
2018
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First ENN bunker barge
Xijiang ENN 01 completed for Guangxi province
Bunkering Barge with small LNG (200 cubic meters) and diesel bunker capacity.
First LNG fuel barge classified by Chinese Classification Society (CCS)
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Summary Chinese LNG bunkering infrastructure
LNG storage tank sizes are usually less than 300 m3 to avoid requirement for individual locational safety studies which would raise costs.
The government is still subsidizing usage of marine diesel by tax incentives– Removing these incentives could lead to stronger case for LNG, but may lead to difficulties
for small size ship owners and family businesses. Much of the planned LNG bunker stations on IWW by CNPC and Fortune oil is on hold due to
lack of profitability in recent times. – Smaller budgets because of reduced profits from selling of Oil products.– Pilot projects by NOCs will be completed even at a net loss as development projects.– Regulations from previous pilots are then possible to follow for other companies, this was
seen with small scale LNG carriers orders rising after completion of CNOOC 30,000 m3 demonstration project and approval of the first fuel barges and pontoons.
Bunkering activities and stations are attractive to combine with LNG satellite facilities upriver to be used for power production. An approval to build a bunkering station can be exploited to distribute to other end users as well, such as residential gas. In fact this may be the main reason to invest.
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谢谢 !
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Dan-Hermann Thue ( 涂鹤丹)[email protected] For more Information and a more detailed report send an email request+86 18521400949