Shell, Carnival Sign Deal for LNG Bunkering

A rendering of a new LNG-fueled cruise ship for Costa (courtesy Carnival)

By MarEx 2016-10-03 21:37:48

Royal Dutch Shell and Carnival Corporation have signed a landmark bunkering agreement for the provision of LNG for cruise ships. 

Shell is now the world's largest player in LNG production and trading, following its acquisition of market leader BG Group earlier this year. Under the new agreement, the oil major will supply fuel for the first fully LNG-powered cruise ships in the world, one for AIDA and one for Costa Cruises (both brands belong to Carnival). The vessels will use Shell's refueling infrastructure in Mediterranean and Northern European ports. 

The new framework agreement allows individual Carnival brands to negotiate LNG bunkering contracts with Shell as vessels are delivered, leaving room for expansion as even more LNG-fuelled cruise ships are delivered. 

"We have been working closely with Carnival to get to this point in our commercial partnership," said Lauran Wetemans, Shell's General Manager Downstream LNG. "Working together from an early stage is critical in helping the transition to cleaner LNG cruising. This is a unique partnership that will contribute to a robust and reliable LNG fuel supply chain, along with opportunities for future growth."

Carnival now has seven fully LNG-fueled cruise ships on its order books, intended for four of its ten brands. Two will go to Carnival Cruise Line, one will go to P&O, one to AIDA and one to Costa; Carnival did not mention the branding for the final two ships. Deliveries are set to begin in 2019. 

Shell and Carnival already have a contract for provision of LNG to the AIDAprima, which uses the clean alternative fuel to generate electrical power while in port. 

Separately, Carnival began its use of LNG last year with the AIDAsol, which contracted for in-port power supplied by the LNG-fueled, barge-mounted generator unit Hummel.

Competitor MSC has also ordered LNG-powered cruise ships, but they will not be delivered until 2022 and 2026, after Carnival’s vessels. 

LNG contains no sulfur and emits considerably lower volumes of other air pollutants, making it a good candidate for vessel operators in Emissions Control Areas (ECAs) – and for operators wishing to get ahead of global sulfur content requirements which may take effect in 2020.