Norway-based small-scale player Kanfer Shipping has signed a deal with Egypt’s EGAS to charter one LNG bunkering vessel to a new joint venture which aims to provide bunkering services in the Suez Canal.
According to a joint statement, EGAS, Kanfer, and Leth Suez Transit (LETH) signed a memorandum of understanding on February 3 with the purpose of establishing LNG bunkering services in Egypt Mediterranean, the Suez Canal and the Red Sea.
The partners have agreed to collaborate and establish a JV that would charter Kanfer’s LNG bunkering ship and manage its daily operation in Egypt, the statement said.
Kanfer revealed in May last year it had contracted Chinese shipyard Taizhou Wuzhou Shipbuilding to build two 6,000-cbm bunkering and distribution vessels and deliver them by the second half of 2023. The firm also holds an option for two additional vessels.
In January, the firm said it was still in talks to find work for these ships.
Himalaya Shipping backing the JV
Egypt is a strategic location for international shipping and would be an important location for LNG bunkering calls between Europe and Asia, the partners said.
It is also important to make “environmentally-friendly fuel” available for the maritime industry in inner Mediterranean and in the heart of the Middle East.
According to the statement, Tor Olav Trøim’s Himalaya Shipping is backing the formation of the LNG bunkering JV.
Himalaya has ordered twelve 208,000-dwt LNG dual-fuel bulk carriers at China’s New Times Shipbuilding in Jiangsu.
“Himalaya Shipping, with its 12 dual fuel Newastlemaxes under constructions, is pleased to see such an initiative to establish an LNG bunkering hub in the Suez Canal,” Herman Billung, CEO of Himalaya said in the statement.
“To make LNG available in strategic important areas is imperative for our company in our efforts to meet our target to transport dry bulk commodities with lower emissions at a competitive price for our customers,” Billung said.
Key LNG bunkering hub
More than 20,000 ships are transiting the Suez Canal annually and all ships have waiting time before the daily convoy commence.
Vessels can use time time efficiently to replenish bunkers in either Port Said or Suez. There are also important ports along the Egyptian Mediterranean coast where ships would need LNG bunkering, the statement said.
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, it said.
There are three sources for LNG in Egypt namely Damietta, Idku terminal, and the FSRU stationed in Ain Sokhna.
“The key LNG hubs of the world must import the LNG to their terminals which adds considerable cost to the end-users. We are confident that the J/V can provide competitive prices towards the key ports and hubs such as Singapore and ARA,” managing partner in Kanfer, Stig Hagen, said in the statement.
“We believe that this will attract shipowners and influence their decision-making on where they will replenish LNG,” he said.
EGAS has initiated the establishment of the JV with the right “value-adding” partners.
Besides chartering the ship, this entity would also purchase LNG from EGAS, or other sources, and trade the volumes to shipowners and the maritime industry, the statement said.
EGAS has made it clear that “they are able to allocate a substantial volume of LNG to this growing segment in order to make the shipping industry, Suez Canal and Egypt greener,” it said.
According to the statement, LETH and Kanfer are now primarily seeking JV partners that have experience with bunkering and/or commodity trading and can take an active part in creating a business model for this “high potential and attractive project” in Egypt.
“The parties have in mind creating a fast-track solution and have an ambition to have the bunkering infrastructure in operation by latest 2025,” the statement said.