Report: LNG Compelling Solution for Major VLCC Route

SEA\LNG has released a study that indicates LNG fuel is a compelling investment solution for very large crude carriers (VLCCs) on the Arabian Gulf to China trade route. 

The independent study, conducted by Opsiana, demonstrates benefits of LNG as a marine fuel for a newbuild 300,000dwt VLCC on the route, in comparison with other alternatives currently available and scalable to the shipping industry across three fuel pricing scenarios.

The route was chosen because it is the major energy trade corridor from the Middle East to China.

The business case compares the relative investment performance of four propulsion alternatives: a conventional VLCC sailing with very low sulfur fuel oil; a scrubber-equipped VLCC sailing mostly with heavy fuel oil; and two LNG powered VLCCs, one with a high-pressure two-stoke engine, the other a low-pressure two-stroke engine. 

The study clearly indicates that LNG as a marine fuel delivers a strong return on investment on a net present value (NPV) basis over a conservative 10-year horizon. The analysis is bolstered by compelling paybacks from three to five years, says Peter Keller, Chairman, SEA\LNG.

A higher investment return was achieved without including the significant additional benefits and branding value gained by choosing LNG as a more environmentally friendly marine fuel.

While the results of this study are based on a set of fuel forecast assumptions, through the “Reader’s Choice” modelling, provision has also been made for each reader to apply their personal crystal ball on future prices. Impacts of other CAPEX values whose premiums may change as a result of differences across three principal categories - market, technology, physical – can also be incorporated. 

The report is available here.