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NLNG’s Prospect High Over Use Of Gas As Marine Fuel

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Posted: Mar 23, 2016 at 7:47 am   /   by   /   comments (0)

The Nigerian Liquefied Natural Gas (NLNG) sub-sector may soon witness a beehive of activities if the current research being carried out to see the probability of using liquefied natural gas as marine fuel.

This is hinged on the recent collaboration between Maersk Group and Qatargas, world’s largest LNG exporter, which recently signed a technical agreement to explore opportunities related to the use of LNG marine propulsion.

Recently, Nigeria’s quest to expand its Liquefied Natural Gas market into Europe received a major boost as a visiting German trade delegation indicated desire to get gas from Nigeria.

Leading a large contingent of German business concerns on a visit to the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, at the headquarters of the Nigerian National Petroleum Corporation, the Vice Minister for Economic Affairs/Energy and member of the German Parliament, Mr. Uwe Beckmeyer, said the country was seeking development of business relationship with Nigeria to accelerate the supply of LNG, especially to his country’s shipbuilding industry.

Beckmeyer, according to a statement from the NNPC, said Nigeria’s LNG would come in handy as the country and other European industrial powers were seeking to cut down drastically on carbon dioxide emissions arising from heavy industrial operations since LNG was far friendlier to the environment.

“We have a lot of interest in LNG and I think this is one special thing we should develop in the next few years. I think there is increasing demand in Europe, especially as we seek to reduce emissions. It is useful for both sides to develop this special relationship,” he said.

Kachikwu said the oil and gas industry was ready to embrace the interest for improved business relationship expressed by the Germans, noting that the Federal Government was working assiduously with other relevant stakeholders to ensure the activation of the LNG Trains 7 to help accommodate potential off-takers from new markets.

Industry analysts are optimistic that once LNG has been proven to be appropriate as marine fuel, more attention would be shifted to Nigeria, being the seven largest gas producers in the world.

Exploring Potential of LNG

Independent learnt that Qatargas and the Maersk Group have been exploring opportunities for collaboration related to LNG marine propulsion technology for the last two years.

LNG has the potential to further reduce emissions from shipping of CO2 by up to 25 percent, of NOx by up to 40 percent and to completely eliminate SOx emissions.

It is estimated that the use of LNG propulsion can lead to a potential reduction in CO2 emissions of 25 percent compared to the use of conventional shipping fuels.

In addition to the technical collaboration agreement, a second agreement, a memorandum of understanding, was signed between Qatargas, Maersk Line and Shell International Trading Middle East Limited to evaluate LNG as a marine fuel.

Independent gathered that Maersk Line currently operates more than one in six of the world’s container vessels. Subject to the required infrastructure being made available and the development of cost-efficient LNG propelled vessels, early predictions suggest a larger scale use of this propulsion technology by ship owners in the future. Among their many innovations, Maersk has developed an on-board lubrication oil system to recycle used lubricants resulting in savings while maintaining safe, reliable and optimized engine conditions.

Chief Executive Officer of Maersk Group, Nil Andersen said: “This cooperation between Qatargas and the Maersk Group represents an important step in developing technology to use LNG as a viable fuel for maritime transportation. The possible use of LNG propulsion technology for ships presents an opportunity to reduce both SOx emissions and to reduce the transport sectors CO2 footprint.”

Chief Executive Officer of Qatargas, Khalid Bin Khalifa Al Thani said: “Qatargas has a proven track record of technology innovations for different uses for LNG. In an ever-changing industry, innovation becomes even more important to remain competitive. We look forward to pursuing this partnership with the Maersk Group, in order to explore new or improved technology for Qatar’s LNG carriers and at the same time being able to contribute to the development of alternative cleaner fuel technology for vessel operators.”

According to the report, the technical collaboration agreement, letter of intent, between Qatargas and the Maersk Group was signed by Al Thani and Andersen during a ceremony in Doha, Qatar.

Meanwhile, an LNG tanker docked at the Sabine Pass terminal in Louisiana recently, with only days to go before the United States ships its first export cargo of seaborne gas from the lower 48 states.

Independent gathered that ship tracking data showed that the Asia Vision LNG tanker docked at the Sabine Pass LNG terminal last Sunday. The tanker, the data said, arrived in December in the Gulf of Mexico, but has been anchored off the coast of the terminal after the first shipment from the facility was delayed due to mechanical problems.

The United State company, Cheniere Energy, also said that it expected its first cargo to leave the facility by the end of this month or in early March.

Cheniere Energy’s vice president for strategy, Andrew Walker, said during an energy industry event in Germany last week, that: “We will export the first cargo shortly. Touch wood, it’ll be at the end of February or in early March.”

Independent gathered that the Energy Atlantic LNG tanker, which was initially scheduled to pick up the first cargo from Sabine Pass, has also been sitting off the coast of the facility since January, gathering that once operational, Sabine Pass will be the first LNG export terminal outside of Alaska. The United States has been exporting LNG mostly to Japan from Alaska since 1969.

Independent also learnt that Cheniere Partners is developing up to six natural gas liquefaction trains at Sabine Pass, each with an expected nominal production capacity of approximately 4.5 million tonnes per annum (mtpa) of LNG.

The trains, according to a report, are in various stages of development, with construction of the first train complete and the commissioning process underway. Train 1 has begun producing LNG. Commissioning for train 2 is expected to commence in the upcoming months. The remaining trains are expected to commence commissioning on a staggered basis thereafter.

Construction on Trains 1 and 2 began in August 2012. Construction on trains 3 and 4 began in May 2013, and as of December 31, 2015, the overall project completion percentage for trains 3 and 4 was approximately 79.5 percent, which is ahead of the contractual schedule. Cheniere Partners expects Trains 3 and 4 to become operational in 2017.

Construction on train 5 began in June 2015, and as of December 31, 2015, the overall project completion percentage for Train 5 was approximately 14.9 percent, which is ahead of the contractual schedule. Cheniere Partners expects Train 5 to become operational in 2019.

Independent also learnt that Train 6 is currently under development, with all necessary regulatory approvals in place. Cheniere Partners expects to make a final investment decision and commence construction on train 6 upon, among other things, entering into acceptable commercial arrangements and obtaining adequate financing.

Meanwhile, Japanese ship owner, United Ocean Group (UOG) recently filed for receivership in Tokyo District Court over on December 31st having succumbed to over $1bn of debt. According to report, the company, failed to pay its dues to the creditors, including Mizuho and Tokyo Mitsubishi, due to cash flow deterioration resulting from profit slump as shipping market underwent an economic slowdown.

Namely, the tonnage supplier experienced difficulties in securing work for its vessels accruing losses and resorting to off hire.?The report noted that the court filing was submitted under the name Ramos Corporation and includes all 38 Panama and Singapore special-purpose ship owning companies operating under UOG.

Independent gathered that UOG’s financial problems started to affect the company in November and are linked to IBJ Leasing Co’s financing of the 81,918-dwt kamsarmax bulker United Prestige. The company’s fleet comprises 40 vessels, 33 bulk carriers and seven car carriers.