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Shipowners Still Not Sold on LNG

The preliminary results of a study launched by the European Commission show that stakeholders recognise the environmental advantages of LNG as a shipping fuel, but are still uncertain whether they offer a clear business case.

05 March 2015

The study reveals that the major motivation for stakeholders to engage in LNG as a shipping fuel is to be compliant with Emission Controlled Area (ECA) zone requirements and the related positive environmental effects. On the other hand, the most critical issues for further deployment are the financing of LNG as a fuel and the pricing of LNG itself.

For many companies, and especially shipping companies, LNG does not offer a profitable business model yet: the higher equipment costs for engines and tanks are not offset by savings in fuel or operating expenses. Also, the lack of existing bunkering infrastructure for LNG is another quite important barrier.

The European Commission's Directorate-General for Mobility and Transport (DG MOVE), PwC and DNV-GL are conducting the analysis and evaluation of the gaps that exist in the regulatory framework for LNG-fuelled ships and the provision of LNG fuel. The research is focusing on risks and opportunities of using LNG as a shipping fuel.

"This study gives us a solid overview of the opportunities and remaining challenges for the use of LNG for shipping. More importantly: the outcome helps us to feed a public debate on LNG for shipping and provides arguments for a stakeholder debate at local level." said Sandro Santamato, Head of Unit Maritime transport & Logistics, European Commission.

Final results of the study will become available in June/July 2015.