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Egypt Proceeding with Plans for LNG Bunkering Operation at Suez Canal

LNG bunkering Suez Canal
Plans call for LNG bunkering operations at the Suez Canal by 2025 (SCA file photo)

Published Jul 25, 2022 5:17 PM by The Maritime Executive

Egypt’s state-owned energy company EGAS (Egyptian Natural Gas Holding Company) reports that plans are moving forward for the development of an LNG bunkering hub to be developed at the Suez Canal. Working with partners Kanfer Shipping headquartered in Norway and Leth Suez Transit are working to develop the strategic hub and to have the bunkering infrastructure in operation by 2025 at the latest.

The companies reported they are expanding on an initial Memorandum of Understanding signed in February 2022 to explore bunkering operations in the Mediterranean, Suez, and the Red Sea from a hub in Egypt. The companies have agreed to form a joint venture which will charter a bunker vessel from Kanfer and manage operations from Egypt. The LNG would come from EGAS or other sources in Egypt.

The companies point to the location of the Suez Canal as to making their operation a strategic asset to the industry. They point out that more than 20,000 ships are transiting the Suez Canal each year and the ships have to wait at the northern and southern terminus while the daily convoys are formed. 

While vessels are waiting to transit the Suez Canal, the group says the time can be used to increase efficiency by bunkering. They said the service would be available at both Port Said and the Suez Port and could be offered at other important Egyptian ports on the Mediterranean.

According to DNV, there are currently 38 LNG bunker vessels in operation with 18 additional orders and still others under consideration. LNG bunker is today offered in France, Spain, and Gibraltar, with Fratelli Cosulich planning to launch operations in Italy in 2023 and 2024. Similarly, there are discussions for LNG bunkering based in Portugal, but currently, there are no LNG operations regularly planned for the Southern Mediterranean and Egypt.

The partners point to the record orderbook for LNG vessels. Citing data from DNV, they said there are currently 304 LNG-fueled ships in operation. However, that number is expected to rise rapidly with 511 dual-fuel ships on order with the intent to operate them with LNG. Himalaya Shipping, with 12 Newcastlemax LNG-fueled bulkers on order, for example, welcomed the news saying the strategic location would help the company transition its dry bulk shipping to LNG.

“One of the key advantages of Egypt as an LNG bunkering location is that Egypt has natural gas resources and liquefaction facilities, which put them in a unique and competitive position towards the key LNG bunkering hubs of the world,” the partners said in discussing their plans. They said LNG can be sourced from two existing terminals and an FSRU stationed in Egypt. They believe this will make their operation price competitive.

Leth and Kanfer plan to seek an additional joint venture partner that has experience with bunkering or a commodity trader that can play an active part in developing the business model.