Challenging the Status Quo in a Rapidly Evolving Oil and Gas Sector
As predicted, the oil and gas sector has experienced profound change this year as it continues to come to terms with a changing landscape of demand and environmental regulations. Despite the challenges, the market is looking increasingly buoyant, with a sense of cautious optimism starting to take hold in many areas across the supply chain, including the maritime space.
This building confidence has led some companies to ramp up capital expenditure, setting the precedent for future spending plans. The U.S., Russia and Canada are expected to be the top spenders in terms of capex for planned and announced projects throughout the oil and gas value chain by 2025. China is also predicted to increase spending, particularly on the regasification front, with $23.4 billion to be spent on 22 upcoming regasification terminals.
We’ve continued to work closely with our partners over the course of the year to ensure that we turn this momentum into tangible results and long-term gains, challenging conventional wisdom and providing bespoke transfer solutions that are built to last. This year, we’ve been at the forefront of the rapidly evolving ship-to-ship (STS) transfer market, having launched our unique KLELINE STS solution earlier in the year. There’s a real need for greater safety and operability standards when it comes to this type of transfer, as highlighted in a recent investigation report by the UK P&I Club, and we truly believe that our solution - which is qualified to GMPHOM 2009 standard - will set a new industry benchmark.
The need for more stringent operability standards in oil and gas transfer is evident throughout the industry. Over the past 12 months, we’ve seen a rise in the number of operators upgrading their installations in accordance with API 17K specification - the highest standard applicable to a bonded marine hose - particularly in Europe and the U.S.
It’s also been a year of milestones for LNG, both small-scale and LNG as a marine fuel, with the future market looking increasingly promising. We’ve seen growing demand for LNG bunkering infrastructure projects, precipitated in part by a rising demand both low carbon and low sulfur fuel in the face of the impeding 2020 sulfur cap.
Interestingly, France’s Marseille Fos port has also announced that it is preparing to offer LNG bunkering services from the middle of next year – a decision that won’t have gone unnoticed by the major cruise lines following the court’s decision to fine a U.S. captain of a cruise ship €100,000 after he was found guilty of burning fuel with excessive sulfur levels.
LNG continues to be of growing interest in the booming cruise sector. This summer, the first ever fully LNG-powered cruise liner made its debut setting the tone for cleaner travel. Capable of bunkering large cruise ships with the 3,600 cubic meters of LNG they need to operate for 14 days without refuelling, Trelleborg Cryoline hoses are part of the solution toolkit which will enable LNG fueling without exorbitant costs for infrastructure.
Japan and Singapore have emerged as major players in LNG bunkering offerings, while Europe has maintained its reputation as the center of sophisticated port infrastructure. As a recent article in LNG World Shipping argued, “what European LNG terminals lack in volume throughputs, they more than make up for in cargo-handling sophistication.”
Looking ahead to the future, we’ll be keeping our eye on the UAE after a recent agreement for an LNG bunkering partnership was struck between ADNOC Logistics & Services and INPEX Corporation. The deal will likely lay the foundations for future projects in the area, as well other regions such as southeast Asia.
On the energy front, small-scale LNG is also picking up the pace, following a slight setback this year after the golden years of 2015-17. This is due to demand being stronger than expected in existing convention markets, particularly in China. The recent delivery of a new small-scale FSRU to Indonesia’s Jaya Samudra Karunia (JSK) Shipping marks a significant step towards the nation’s goal of establishing an LNG supply network. The number of FSRUs is expected to rise over the next few years, with multiple projects already planned in places such as Lebanon and Africa.
Demand for small-scale LNG market in also expected to grow in Europe, particularly in the Baltic region, where the adoption of LNG as a marine and road transport fuel has received great support from local governments. To meet this growing demand, Russia’s largest non-state natural gas producer Novatek will start producing LNG on the shore of the Baltic Sea in February next year.
Overall, the next year for oil and gas looks promising, but the diversity of ongoing and future projects will necessitate a far greater amount of flexibility when it comes to the transfer zone if we are to avoid a potential bottleneck. At Trelleborg, we continue to provide the largest selection of floating oil hoses on the market today, with a broad range of specialization available. We work from the beginning of each project to ensure that we understand the environment in which a product will function, that we select the right tool for the job, and work to maximize performance and lifecycle throughout the product’s working life.
Vincent Lagarrigue is Director, Trelleborg Oil and Marine.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.