Shipping icon sets up LNG bunkering vessel business

Kuala Lumpur: The latest regulations on the sulphur dioxide level for exhaust gas emissions from ships’ engines has resulted in liquefied natural gas (LNG) becoming a viable alternative to traditional fuel, leading in an increase in dual-fuel vessels, which in turn generates demand for LNG bunkering vessels around the world.

Aware of the trend and mismatch in LNG facility supply in the region, Malaysia’s shipping icon Datuk Capt Ahmad Sufian Abdul Rashid (pic) has made a comeback and set up LNG Marine Sdn Bhd to meet the demand from both LNG producers and sellers.

“More than 100,000 vessels pass through the Straits of Malacca each year - the strait that connects the Pacific and Indian oceans and these containerships and vessels are moving towards complying with International Maritime Organisation’s (IMO) new sulphur limit, creating demand for ship-to-ship LNG bunkering.”

“This is deemed as a suitable solution to provide environmentally friendly bunker fuel to larger ships,” the former chairman of Malaysian Bulk Carriers Bhd told Bernama recently.

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“Hence, LNG Marine, which was set up by experienced engineers including our chief executive officer, Zahar Mohd Hashim Zainuddin, would focus on designing, building, operating and co-own bunkering vessels to meet the demand,” he said.

On the mismatch of LNG facility supply in the region, Ahmad Sufian said although Malaysia and Indonesia were among the biggest LNG exporters globally, Malaysia’s energy giant, Petroliam Nasional Bhd (Petronas) had just signed the time charter party with MISC Bhd and Avenir LNG to charter a 7,500 cubic metre LNG bunker vessel.

“Indonesia gave most of the LNG business to foreign companies, while on the other hand, LNG seller Singapore strives to be the global LNG bunkering hub, which creates demand for LNG bunker vessels although LNG is not produced in Singapore. Pavilion Energy Pte Ltd, which is the wholly-owned unit of government-linked Temasek, has announced that more than 100 LNG bunker vessels are needed to meet the annual demand of 30 million tonnes by 2030,” he said.

Zahar, who is also the managing director of LNG Marine, said the company has completed the design of its first vessel and has obtained approval from French classification society Bureau Veritas. He emphasised that the vessel will be equipped with the latest design features to provide LNG bunkering operations to all types and sizes of LNG fuel ships.

“Our vessel will also have design provisions for zero carbon emissions with hybrid and electric engines,” he added. LNG Marine is expected to leverage on Petronas’ status as an LNG producer in the world, said Zahar, adding that apart from Petronas, LNG Marine is also in discussion with other companies supplying LNG to the ships in the region including Pavilion Energy, Total and FueLNG, which is the joint venture between Keppel Offshore & Marine Ltd (Keppel O&M) and Shell Eastern Petroleum (Pte) Ltd.

“We need to take this opportunity as we are producing LNG. To date, there are about 20 LNG bunkering vessels, most of which are operating in Europe. Petronas is chartering one from Europe to use in Malaysia on a temporary basis and has been using it since November last year,” he said.

Zahar said, meanwhile, LNG Marine has issued a letter of intent to an experienced shipbuilding yard for its first LNG bunkering vessel.

“We are planning for the first vessel to be ready for delivery in 2023. However, if necessary, we are ready to charter vessels to meet the demand,” he added.

On the target market, he said LNG Marine is ready to serve clients globally, while at the same time, highlighted that Petronas has provided an uninterrupted supply of LNG to more than 25 countries around the world. Today there are more than 20 LNG bunker vessels in operation globally and the fleet will grow to 35 units offering an aggregated capacity of eight million tonnes per year by early 2023. While this growth has primarily been in North Europe, the number of LNG bunker vessels are also increasing in Asia, of which, nine will be positioned in Asia to serve a capacity of two million tonnes per year by 2023.

Commenting on Malaysia’s shipbuilding and ship repairing (SBSR) industry, Ahmad Sufian said construction of LNG bunker vessel is missing from the country’s SBSR portfolio.

“LNG was booming in the 1970s and France started to venture into the vessel building and subsequently, China, South Korea and Japan. There are also discussions among us to try and help the shipbuilding industry in Malaysia in this respect,” he added.

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Zahar added that LNG Marine is also approaching local shipowners to change their existing vessel system to be able to use LNG.

“We planned to talk to Malaysia Shipowners’ Association members in due course but we would focus on establishing business with LNG producers,” he added.

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