Japan’s Kyushu Electric Power has signed a memorandum of understanding with Saibu Gas, The Chugoku Electric Power Co. and Nippon Yusen Kabushiki Kaisha for discussions on the commercialization of a new business to supply LNG bunker fuel in Japan, Kyushu Electric said.
The new business is targeting supplying LNG as a marine fuel to ships in the Setouchi and Kyushu areas of western Japan, it said in a statement last week.
Among the four partners, Nippon Yusen Kabushiki Kaisha, or NYK Line, is already a part of SEA\LNG, a global multi-sector industry coalition that is working on promoting the widespread adoption of LNG as a marine fuel.
The thrust on LNG bunkering comes at a time when increased focus on shipping’s carbon emissions in conjunction with the International Maritime Organization’s global sulfur limit rule for marine fuels, is expected to accelerate the use of LNG as marine fuel.
The IMO rule will cap sulfur in marine fuels at 0.5% worldwide from January 1, 2020, from 3.5% currently. This applies outside the designated emission control areas where the limit is already 0.1%.
Most LNG variants have no detectable sulfur, and emission of particles and nitrogen oxide by LNG-fueled vessels are considerably lower than by ships using other marine fuels. It also helps tackle greenhouse gas emissions.
According to Wood Mackenzie estimates last year, LNG bunkering is expected to rise from 500,000 mt/year in 2016 to 16 million mt/year by 2025. This equates to an LNG penetration rate of between 7% and 10% of the global bunker fuel demand by 2025.
Japan’s Ministry of Land, Infrastructure, Transport and Tourism is already part of a network of global ports to promote LNG bunkering worldwide through the development of the world’s first harmonized LNG bunkering standards, a guideline to facilitate ports seeking to be LNG bunker ready.
Earlier this year, the Ministry of Land, Infrastructure and Transport also said it was planning an aid project for private enterprises that will develop LNG bunkering base in Japan port this fiscal year.
Japan, which is the world’s top LNG importer, currently uses many LNG bases and the move to advance LNG bunkering will increase the port of calls to Japan by ships navigating the Pacific, increasing the international competitiveness of the country’s ports, it had said at the time.