The LNG as fuel sector for both vessels and vehicles will rise five-fold in the next three decades due to stricter environmental regulations and targets to curb air pollution, according to the head of the Gas Exporting Countries Forum (GECF).
Yury Sentyurin is the Secretary General of GECF, a Doha-based organisation that gathers the world’s leading gas and LNG exporting countries. Together, the coalition represents 71% of the world’s proven gas reserves, 44% of its marketed production, 53% of pipeline, and 57% of LNG exports across the globe.
Speaking to LNG Prime during an interview this week, Senturyin said that the prospects of natural gas in maritime and land-based transportation sector looks “promising”.
“Our analysis shows that global gas demand in this sector will rise at a robust pace of 5.3% per annum, from 72 bcm to over 360 bcm by 2050. More than 70% of this growth will come in the form of LNG, related to the use of gas as a shipping fuel and in heavy-good vehicles,” he said.
As per marine transport, Sentyurin said GECF considers LNG as a fuel of choice for new vessels and retrofitting existing ones thanks to its compliance with the future requirements for the major types of emissions.
LNG does not produce particulate matters and, compared to oil-based fuels, can reduce substantially carbon dioxide (CO2) and nitrogen oxide (NOx) emissions. Furthermore, LNG contains virtually no sulphur oxides (SOx).
In this context, a new emission standard on 0.5% sulphur limit, implemented by the International Maritime Organisation (IMO), will give fresh impetus to LNG bunker demand to shift from heavy fuel oil, he said.
LNG demand in marine transport to accelerate post-2025
“According to our projections, LNG demand in marine transport will rise to over 90 bcm in 2050, when this fuel will provide 33% of the global bunker fuel market compared to a marginal share of 3% at present with 11 bcm consumed mostly as LNG boil-off gas,” Sentyurin said.
Nevertheless, demand would accelerate post-2025, because in the mid-term LNG propulsion would face strong competition from low-sulphur oil products as well as installation of scrubbers.
Moreover, the lack of refuelling infrastructure in ports across the world hinders the widespread adoption of LNG as fuel.
There is only a small number of ports that provide LNG bunkering fuel, but the infrastructure is unlikely to remain a serious constraint given the significant market potential, Sentyurin said.
“In the long-term, stricter environmental regulations, such as the existing 0.1% limit on sulphur content within the mandated emission control areas (ECAs), as well as local restrictions applying for open-loop scrubbers; particularly due to concerns about the disposal of sulphur-rich wash water and other waste products, will lead to more conversions and new builds, utilising LNG engines,” Sentyurin said.
As a result, Sentyurin said the move to LNG would be quite gradual with demand centres to be concentrated in North America, mainly the U.S., Asia Pacific, particularly in China, South Korea, Singapore, and a number of European countries.
Vehicles sector has the best potential
Natural gas usage as a fuel for vehicles has even more potential for growth, according to Sentyurin.
Nowadays, NGV markets are developing in dozens of countries, including China, Iran, India, Argentina, Brazil, Thailand, Pakistan, Bangladesh, Italy, Germany, Russia, South Korea, and the U.S.
With the growing concern for accelerating the transition to low-carbon transport systems, the role of methane will increase, implying expanded interest in this fuel to meet policy priorities.
“We assume a robust growth in gas demand in road transport from 62 bcm in 2019 to about 265 bcm by 2050, including both CNG and LNG,” Sentyurin said.
Around 80% of incremental gas consumption will originate in Asia Pacific, North America and Europe.
Particularly, China and India will demonstrate an increase of more than 70 bcm over the outlook period. European countries will add nearly 30 bcm, while the NGV market in the US represents another major source of growth with an additional 32-34 bcm, Sentyurin said.
“Nevertheless, given that EV penetration into all vehicle classes is underway, they are considered to be a more realistic option for the passenger, public transport and light-commercial vehicles segments, while the potential of NGVs will be much higher in the heavy-good vehicle segment, where costs of transport are more vital,” Sentyurin said.
Moreover, environmental regulations will get stricter, propelling additional fuel replacement in oil-based products.
Accordingly, Sentyurin said the majority of incremental gas demand in the road transport would come from LNG-powered trucks thanks to their high annual mileage.