Wednesday, February 1, 2023
HomeHeadlinesSearch for renewable methanol may mean more varied bunker locations: Maersk


To our FREE newsletter
Get all the latest maritime news delivered straight to your inbox.

Search for renewable methanol may mean more varied bunker locations: Maersk

Container giant Maersk’s announcement of eight deepsea vessels to run on sustainable methanol will stretch supply lines and may mean a shake-up of favored bunkering locations amid higher prices, a company official said.

There will be a roughly two-fold increase in the cost of fueling these ships, Maersk’s head of decarbonization innovation and business development Jacob Sterling told S&P Global Platts.

The renewable methanol will cost at least as much as conventional fuel oil on a metric ton basis and as methanol’s density is around half of fuel oil’s this implies the renewable fuel will cost about twice as much, he said.

S&P Global Platts data for conventionally-produced methanol and for fuel oil broadly corroborates this pricing relationship, allowing for uncertainty about the cost of renewable methanol.

Platts assessed methanol T2 FOB at Rotterdam at $448.51/mt Aug.31 and delivered 0.5% sulfur fuel oil at Rotterdam at $519/mt. This works out at $20.90/gigajoule and $11.90/gj, respectively, showing conventional methanol as almost twice the price of fuel oil.

Platts said Aug. 13 it was proposing to launch daily methanol bunker fuel price assessments, effective Sept. 27.

Maersk’s eight 16,000 twenty foot-equivalent unit vessels, which were announced Aug. 24, imply annual demand of 300,000-360,000 mt of renewably-sourced methanol, depending on factors like deployment and operational requirements, Sterling said. There is the potential for an additional four ships in 2025.

The whole Maersk container fleet consumed 10.344 million mt of marine fuel in 2020, the company’s annual report showed.

“All future new buildings will be dual-fueled and ready for carbon neutral operation, but there are no concrete plans for more ships,” Sterling said.

The new methanol-powered vessels were announced after Maersk had already said it had signed an off-take agreement with renewable energy suppliers REintegrate and European Energy to establish a new Danish facility to produce approximately 10,000 mt/year of carbon-neutral methanol.

Discussions with other potential suppliers of renewable methanol are under way but securing the 360,000 mt for the new vessels will be a challenge and could mean less of a focus for the methanol-powered ships on traditional bunker hubs, such as Rotterdam, than for conventionally-fueled ships, Sterling said.

“Especially in the beginning, we will have to be a little creative about where we bunker… Especially in the first years, when the supply of green methanol will be scattered in different places,” he said.

To some extent this is business as normal as vessels already bunker where fuel is cheapest and so there is already flexibility in fuel purchasing for the company, he added.

“We will try to bring the bunkering as close to the production of the fuel as possible,” Sterling said.

There is the potential for a shake-up in bunkering locations as the shipping industry makes progress with its energy transition, market watchers have said.

Brazil, India, Mauritius and Malaysia could see their main ports develop as bunkering locations with the right regulatory and financial backing, as the maritime sector pivots from petroleum-based fuels to greener options, the World Bank said in April.

Access to renewable energy resources or to natural gas to use in conjunction with carbon capture will be key, as will shipping volumes calling at a country’s ports, the bank said in its “The Potential of Zero-Carbon Bunker Fuels in Developing Countries” report.

However, while key bunkering locations for ships running on renewable fuel may show more variation than conventionally-fueled vessels do, shipping routes themselves will not change, Sterling said.

Closing the price gap

Putting a price on carbon will be crucial to making new bunker fuels economically viable, Sterling said.

The European Union Emissions Trading Scheme will expand to include CO2 emissions from shipping for the first time, according to draft legislation unveiled by the European Commission July 14. This system will cover two thirds of the sector’s CO2 emissions — estimated at 90 million mt, the European Commission said.

The system will cover emissions from ships calling at an EU port or voyages within the EU as well as 50% of the emissions from voyages starting or ending outside the EU, and emissions that occur when ships are at berth in EU ports.

“We are engaging actively with the EU on pushing it in the right direction so that it actually achieves real and meaningful reductions of the greenhouse gas impact of shipping,” Sterling said. “What’s really important for us is that when you look at fuels you look at not only CO2 emissions but also CO2 equivalents,” he said.

This includes methane and calls into question LNG as a sustainable shipping fuel, Sterling said.

Global progress, as dictated by the International Maritime Organization, is slow, Sterling said.

A proposal by the Marshall Islands and Solomon Islands to introduce a levy of $100/mt of CO2 equivalent on oil used as a bunkering fuel was not adopted by the IMO’s Marine Environment Protection Committee in June. This is due to be discussed at an intersessional working group in October.

“We would like to see a global carbon tax of $150/mtCO2e, which in terms of [conventional fuel] is equivalent to around $450-$500/mt,” Sterling said.

Q2 saw the start of methanol bunkering at the port of Rotterdam, with volumes at 250 mt total, data from the port authority showed.

Methanol is receiving growing attention as a bunker fuel but still lags behind LNG. Taking the clean tanker segment, owners are investing in vessels that will run on methanol, LNG, and in a few cases on battery propulsion, analysts at S&P Global Platts Analytics said. “Our base case 2030 fleet model forecasts that 440 LNG dual fuel vessel are delivered compared with 79 methanol fueled vessels along with a handful of other alternative fuels,” it said.

This equates to 0.5% of the 2030 fleet, the analysts added.

Source: Platts

Related Posts


Finance & Economy
Shipping News

Wartsila: A challenging year with strong annual growth

HIGHLIGHTS FROM OCTOBER–DECEMBER 2022 Order intake decreased by 24% to EUR 1,638 million (2,150)Service order intake increased by 6% to EUR 791 million (747)Net sales...

Hapag-Lloyd achieves extraordinarily strong result in its anniversary year 2022

On the basis of preliminary and unaudited figures, Hapag-Lloyd has concluded the 2022 financial year – in which it celebrated its 175th anniversary –...

Bahri sees profits soar in 2022

Saudi Arabia’s Bahri has seen its profits soar by over 400% in 2022 following a boom in tanker rates, boosting the shipping giant’s oil...

Euronav Files Second Arbitration Against Frontline

Euronav NV hereby informs its shareholders that on 28 January 2023 it has filed an application request for arbitration on the merits in relation...

Oaktree looking at block sale of existing shares in Hafnia Limited

OCM Luxembourg Chemical Tankers S.à r.l. which is ultimately controlled by funds managed by Oaktree Capital Management L.P. (the "Seller") has retained Fearnley Securities,...

Baltic index logs worst month in 3 years

The Baltic Exchange’s main sea freight index registered its biggest monthly percentage fall in...

Baltic index snaps 9-day losing streak as panamax, supramax rates rise

The Baltic Exchange’s main sea freight index snapped its nine-session losing streak on Tuesday,...

Cyprus shipping making waves – report

Cyprus shipping, the steady driver of the economy, is sailing for better times, having...

Baltic index hits fresh multi-year lows on capesize dip

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Baltic index falls for seventh session on lower capesize demand

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Port of Long Beach Closes 2022 with Second-Busiest Year

The Port of Long Beach marked its second-busiest year on record by moving 9.13 million twenty-foot equivalent units in 2022, allowing for a return...

Hapag-Lloyd AG acquires share in J M Baxi Ports & Logistics Limited

Hapag-Lloyd AG signed a binding agreement today under which it will acquire 35% of J M Baxi Ports & Logistics Limited (JMBPL) from a...

Nigeria opens ‘game changer’ billion-dollar deep seaport

Nigeria opened a billion-dollar Chinese-built deep seaport in Lagos on Monday, which is expected to ease congestion at the country’s ports and help it...

SC Ports handles nearly 3 million TEUs in record 2022

South Carolina Ports had a record 2022 with the most containers ever handled at the Port of Charleston. SC Ports moved nearly 2.8 million TEUs...

January oil loadings from Russia’s Baltic ports set to jump 50% vs Dec

Urals and KEBCO crude oil loadings from Russia’s Baltic ports of Primorsk and Ust-Luga in January are set to rise by 50% from December...