LNG is ecologicalfuel of the future

12 February 2013
According to the European Commission, the most promising alternative fuel for sea transportation is liquefied natural gas. This is one of the key conclusions from “Clean Power for Transport” Package presented on 24 January 2013 by the Directorate-General for the Mobility and Transport.
The environmental advantage of LNG results from lower greenhouse gas emission.

In “Clean Power for Transport”, a document accompanying the Package, the European Commission considered advantages of LNG both in environmental and economic context.

The environmental advantage of LNG results from lower greenhouse gas emission. Since December 2012, new regulations concerning sea transport fuels within the European Union are in force. The Directive passed in October 2012 by the European Parliament sets ten-fold lower limits of sulphur content in ship fuel (which may not exceed 0,1%, currently 1%) for all vessels within the territorial waters of Member States, i.e. the Baltic Sea, the North Sea and the English Channel. New regulations will be effective from 2015 which shall result in elimination of currently most popular ship fuel – heavy oil (mazout).

Another argument in favour of more extensive use of LNG is economy. The "Clean Power for Transport" Package presents a comparison of various types of marine fuels. In mid-2012 the approximate price of LNG was around 300-410 euro, whereas the price of diesel fuel was approximately 480 euro, and diesel fuel with low sulphur content – about 780 euro. Therefore, it is expected that in the long run companies will be replacing at least part of their fleet with LNG-propelled vessels.

Polskie LNG – acting as an investor and from 2014 onwards as an entity in charge of Świnoujście LNG Terminal operations – will certainly benefit from the changes imposed by the EU Commission. In consequence of the new EU law, the demand for refuelling the LNG-powered ships shall increase. The Polish terminal, potentially the biggest in the Baltic Sea, may become a major reloading hub.

The European Commission’s standpoint has been further confirmed by the findings from market research (so-called Market Screening), conducted by Polskie LNG in late 2012 and in the beginning of 2013. Its main objective was to provide reliable information on the potential market demand for additional services that may be offered by Polskie LNG in Świnoujście LNG Terminal. Preliminary results of the Market Screening (the official findings will be known in late February) indicate substantial market demand for expansion of Świnoujście LNG Terminal, particularly the increased regasification capacity and the provision of additional services. These services would mainly consist in reloading LNG onto road cisterns and rail tankers, LNG bunkering, LNG reloading LNG to smaller vessels and terminal storage services in 2015 – 2029 period.

The interest in reloading services was expressed primarily by gas trading companies and operators of LNG facilities, both existing ones as well as the installations being currently under construction as well as planned ones. Świnoujście LNG Terminal may be used for supplying other LNG facilities located in the Baltic Sea region. In such a case, satellite terminals’ operators – Polskie LNG’s customers – could use the liquefied natural gas delivered to Świnoujscie for supplying satellite terminals.

The timely provision of LNG reloading services into smaller vessels and bunkering services by Świnoujscie Terminal may be a great opportunity for Poland to become the most important participant in the LNG market in the entire Baltic Sea region, and may have a positive impact on the development of Świnoujscie Port and the companies operating in gas market.

The Package presented by the European Commission confirms the fact that natural gas is an environmentally friendly and promising fuel. The Commission intends to initiate a number of promotional campaigns aimed at stimulating the development of LNG infrastructure, mainly in maritime but also in land transport. Further development of LNG refuelling system in all major EU ports under the trans-European core network was also considered. Moreover, according to the EU Commission, the development of fixed and mobile refueling stations and the expansion of LNG refuelling system for lorries is worthwhile. The Commission is proposing that LNG refuelling stations be installed every 400 km along the trans-European transport (TEN-T) core network by 2020.