Sea/LNG Makes a Case for LNG-Fuelled VLCCs

Sea/LNG, the multi-sector industry coalition accelerating the widespread adoption of LNG, said December 12 that its third investment study underlines LNG “as a compelling investment solution” for very large crude carriers (VLCCs) on the Arabian Gulf to China trade route.

“Conducted by independent simulation and analytics expert Opsiana, the study demonstrates clear benefits of LNG as a marine fuel for a newbuild 300K DWT VLCC on the Arabian Gulf to China trade route, in comparison with other alternatives currently available and scalable to the shipping industry across three fuel pricing scenarios,” Sea/LNG said.

The business case compares the relative investment performance of four propulsion alternatives: a conventional VLCC sailing with very low sulphur fuel oil; a scrubber-equipped VLCC sailing mostly with heavy fuel oil; and two LNG powered VLCCs, one with a high-pressure two-stoke engine, the other a low-pressure two-stroke engine.

“The study clearly indicates that LNG as a marine fuel delivers a strong return on investment on a net present value (NPV) basis over a conservative 10-year horizon. The analysis is bolstered by compelling paybacks from three to five years,” Sea/LNG said.

The route was chosen because it is the major energy trade corridor from the Middle East to China. Providing greater clarity for those investing in LNG, the study highlights several key findings: compelling returns on an NPV basis, the diminishing CAPEX hurdle for LNG engines, LNG delivers competitive energy costs, has higher environmental performance, and is the most financially effective long-term method for complying with the IMO 2020 sulphur cap.

“Importantly, the higher investment return was achieved without including the significant additional benefits and branding value gained by choosing LNG as a more environmentally friendly marine fuel. When corporate sustainability and environmental goals are included, choosing LNG as a marine fuel brings additional benefits,” Sea/LNG said.

Banner image courtesy Sea/LNG