Kanfer eyes first charter deal for LNG bunkering this summer: interview
Norway’s Kanfer Shipping expects to sign the first charter agreement for its small-scale LNG bunkering vessels this summer, the company’s managing director Stig Hagen tells NGW in an interview.
Kanfer, part-owned by Singapore-based AG&P, is a developer of small-scale LNG carriers and bunkering vessels, as well as maritime LNG break-bulk and storage solutions. It signed a letter of intent (LoI) with China’s Taizhou Wuzhou Shipbuilding Industry in January for the construction of two small-scale LNG bunkering vessels.
The vessels, with storage capacities of 6,000 m3 each, are scheduled for delivery in the first half of 2023. Its contract with Taizhou Wuzhou Shipbuilding includes an option for more vessels in the future. Kanfer will own the ships together with its partners and charter them out under long-term contracts.
“Details regarding our contracts are commercial-in-confidence. There are however increased and concrete interests from different parties. Agreements like this and LNG projects generally take time, but we are confident to sign the first charter agreement during summer,” Hagen says.
Far more LNG bunkering vessels will be needed in the next three to five years than are currently available, Hagen explains, as the number of LNG-fuelled ships in service continues to grow.
“In the medium- to long-term, we plan to build a fleet of LNG bunkering and distribution ships, the size of which will vary depending on client’s requirements," he says. "We are also involved in medium scale LNG vessels as well as our unique DSV/ATB [detachable stern vessel/articulated tug barge] solution that is tailor made for gas-to-power projects."
The maritime sector is undergoing an important transition, with shipowners switching from heavy fuel oil, which has dominated the global shipping mix for many decades, to cleaner alternatives. This has largely been a response to new International Maritime Organisation (IMO) standards for shipping pollutants which came into force at the start of 2020. The sulphur content for fuels is now capped at 0.5%, versus 3.5% previously, and this has spurred the greater adoption of LNG as a fuel.
The number of dual-fuelled ships that run on LNG, such as containers, bulk carriers, tankers and cruise ships, is increasing substantially, Hagen says, and many more are on the order books. Regulation is driving this trend, and the price of LNG is competitive versus other fuels, he says.
Despite these promising prospects, there is a lack of LNG bunkering ships and related infrastructure to support this growth. The industry needs to address high infrastructure costs and the absence of economies of scale, Hagen notes.
“Challenges remain in building a more robust bunkering network, primary of which is the high cost of infrastructure,” he says. “Varying regulations per region and lack of bunkering facilities and standards are additional challenges.”
Kanfer believes that designing and building tailor-made and cost-efficient LNG bunkering ships without compromising on quality and safety will remain crucial. The company, for its part, is seeking to address the high infrastructure cost using small-scale yet scalable, modular bunkering designs that can be developed in a manageable, demand-specific timeframe and within the budgetary parameters of customers.
“Kanfer is focused on helping shipowners and port operators switch to LNG as a marine fuel. Together with its partners, Kanfer is combining scalable and flexible gas logistics solutions with smart engineering designs to build highly-cost efficient bunker vessels,” Hagen says.
Singapore, one of Asia’s largest trading spots, is the main hub for LNG bunkering in Asia, driving demand for the fuel and the industry's growth. But other countries like Malaysia, South Korea and Japan are also expanding LNG bunkering activities significantly. China is also becoming an attractive spot for bunkering, given its expansive and robust trading network.
“Kanfer is intent on taking part in this growing market by chartering our ships to first-class Chinese companies,” Hagen says.
LNG bunkering can also be seen in India, but the infrastructure is not as developed as elsewhere in Asia. Despite current constraints, Hagen believes LNG bunkering holds promise in the country given its broad policy support for LNG.
“With broad policy support, India is driving growth in gas demand in Asia, necessitating the development of import and distribution infrastructure including new import terminals, adequate storage and regasification facilities, and distribution networks to deliver gas to the end-customers,” he said.
LNG can help expand energy access in areas of southeast Asia that lacks pipeline connections. The super-cooled gas can be transported in smaller volumes to supply power stations, energy-intensive industries, pipeline hubs, and city gas centres.
“You cannot have pipelines to every corner around the world as this is environmentally unfriendly and extremely costly,” Hagen says. “Creating a virtual pipeline very much makes sense. This is what we are addressing in our DSV/ATB design/solution that takes care of both transportation and floating storage. This is our approach to such LNG segment. This could also be combined with LNG bunkering one way or the other.”