LNG bunkering vital conduit for South Korea to comply with IMO 2020 rule

LNG bunkering

South Korea’s shipping sector is set to give a boost to LNG bunkering, with the country preparing to order its first LNG-fueled vessels to comply with upcoming global emissions rules, a senior official at the Ministry of Ocean and Fisheries said.

Local companies are considering buying two LNG-fuelled 200,000 mt bulk carriers for the South Korea-Australia route, Song Young-Dal, head of the marine policy department at MOF, said.

“It would be South Korea’s first order for LNG-fuelled vessels,” Song said.

The government on May 17 finalized measures to promote LNG-powered vessels as part of its preparation for the International Maritime Organization’s 2020 global sulfur limit rule for marine fuels, Song said.

The IMO will cap sulfur in marine fuels at 0.5% worldwide from January 1, 2020 from 3.5% currently. This applies outside designated emission control areas where the limit is already 0.1%.

Most LNG variants have no detectable sulfur, and emissions of particulates and nitrogen oxide by LNG-fueled vessels are considerably lower than other marine fuels. It also helps tackle greenhouse gas emissions.

South Korea’s total bunkering volume is estimated at around 7.8 million mt/year, much lower than marine fuel sales in Singapore, the world’s largest bunkering port, but still significant compared with bunker fuel sales in other ports in Asia.


In addition to ordering LNG-fuelled vessels, the government will facilitate a pilot project to develop LNG fueled vessels being initiated by a number of domestic players including POSCO, the country’s biggest steel maker by participating in feasibility studies, Song said.

Separately, plans were also under way to start a pilot project to replace towing ships that use bunker-C fuel oil with LNG-powered ships, he said.

Financial support such as lower interest rates and lower guarantee rates for LNG-fueled carriers are also being considered to promote LNG bunkering, Song said.

The government will provide subsidies of 10% of the cost of replacing old vessels with LNG-powered versions and cut acquisition taxes on LNG-powered vessels, while reducing port facility fees for LNG-powered vessels, he added.


While introducing various measures to encourage ship owners to opt for LNG-fuelled vessels, infrastructure will also be strengthened as it is key to the widespread adoption of LNG as a marine fuel, Song said.

The government plans to establish LNG bunkering facilities in major ports in Busan and Ulsan on the southeastern coast and to build a shipping facility at the LNG terminal in Tongyeong on the southwestern coast, Song said.

In 2016, the Ulsan Port Authority became part of an international focus group that was initially formed in 2014 by Singapore, Rotterdam, Antwerp and Zeebrugge to deepen cooperation and information sharing on LNG bunkering.

Ulsan is the world’s fourth largest liquids handling port. Last year, a record 202,355 mt of cargo passed through the 55-year-old port, of which 82% was liquid bulk, Platts reported earlier.

“South Korean shipyards have outstanding expertise in building LNG carriers and bunkering shuttles, but they are still in the early stages when it comes to LNG-powered ships and related bunkering infrastructure. Only one LNG-propelled vessel is operated in the country,” Song said.

To strengthen the capacity of domestic shipyards and related equipment manufacturers to build LNG-powered ships, the government will develop core technologies related to LNG-fueled carriers and support international standardization and infrastructure construction of LNG-powered carriers, Song said.

Source: Platts



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