Korean shipbuilders, energy firms join hands to develop LNG bunkering market

Jul 17, 2016 12:00 AM

As part of efforts to have a grip on the growing liquefied natural gas (LNG) bunkering market, a group of South Korean companies including shipbuilders have come together to establish an association dedicated to developing LNG bunkering facilities and infrastructures including LNG-fueled vessels.

On Friday, officials representing 21 private and state-run entities in Korea gathered to attend the inaugural meeting of the LNG Bunkering Industrial Association. They were from major shipbuilding and energy companies including Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co., Samsung Heavy Industries Co., Korea Gas Corporation, Posco Co., Samchully Corp., GS Energy Corp. and SK Energy Co. The association was founded after four years of preparation work with an aim to nurture the country’s LNG bunkering industry that is yet in its infant stage.

The global LNG bunkering industry is widely expected to grow amid stricter environmental regulatory standards on offshore vessels to use clean fuels. The association seeks to expand the industry by developing facilities and infrastructures that are able to supply LNG fuel to vessels both onshore and offshore.

 

According to Norway’s DNV GL Group and the United Kingdom’s Lloyd’s Register Group, the global market for LNG-fueling vessels is expected to reach 31 trillion won ($27.3 billion) over 10 years from 2015 to 2025. About 20 trillion won is expected to be generated from the LNG bunkering shuttle market in which LNG-fueled vessels move around on sea to supply LNG fuel. The remaining 11 trillion won is expected to be from the floating offshore terminal that provides LNG fuel to vessels stopping by.

Industry observers note that the International Maritime Organization’s tightening regulations on sulfur oxide emissions in 2020 will serve as a momentum for the LNG-fueled ship market to grow even more. DNV GL Group projects that the annual volume of LNG-fueled ship orders will reach $16 billion in 2020.

The Korean government, meanwhile, has also rolled up its sleeves to support Korean shipbuilders expand their presence in the global LNG bunkering market. As it sees there is yet lack of international standards in the LNG fuel vessel and bunkering market, the government plans to initiate its own standardization work for the industry to become a first mover and gain more competitiveness.

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