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More owners may opt for methanol next year

The update to an international safety code applying to ships running on methanol as a low-flashpoint fuel is expected to come next year. Experts say this will resolve uncertainty over investments in methanol-fuelled ships

Some shipowners are keen on methanol-fuelling systems but they are waiting until there is official confirmation, possibly next year, that there will be a new set of safety guidelines devised to support the widesread uptake of this new marine fuel

THE use of methanol on ships is set to expand in the event that that International Maritime Organization takes the step of fully endorsing its safe use as a marine fuel.

This was the view of methanol advocates attending a recent vessel-naming ceremony in South Korea who hope 2020 will see the unveiling of a blueprint by the IMO that facilitates the uptake of methanol fuel.

The event, hosted at the Hyundai Mipo Dockyard, witnessed the christening of two 49,000-dwt tankers co-owned by Swedish-owned Marinvest and Waterfront Shipping, Mari Couva and Mari Kokako.

The two tankers have secured long-term charters with Methanex, the world’s largest methanol producer.

Advocacy group the Methanol Institute’s chief operating officer, Chris Chatterton, told Lloyd’s List that several shipowners have expressed an interest in investing in methanol-fuelled vessels.

These include the owners of product tankers, dry bulkers and boxships, although most are waiting on a regulatory update before committing any investments.

Current guidelines

The operations of such vessels are currently subject to the International Maritime Organization’s safety code for ships using gases or other low-flashpoint fuels, commonly cited as IGF.

Mr Chatterton pointed out that the IGF guidelines are skewed towards low-flashpoint fuels that vaporise at room temperature, mainly liquefied natural gas.

Responding to the evolving marine fuel market, the IMO has drafted interim guidelines for the use of methanol and ethanol, which are expected to be confirmed in 2020.

Prior to the regulatory update, shipowners investing in methanol-fuelled newbuilds have resorted to seeking exemptions from IGF.

The IMO code as it stands today, does not fully account for a salient difference that drives up the capital expenditure of using LNG over methanol.

Unlike methanol, a liquid at room temperature, LNG needs to be chilled and stored at negative 162 degree Celsius in cryogenic tanks.

Thus far, market estimates for an LNG fuelling system generally range upwards from tens of millions in US dollars.

Dutch heavylift specialist, Heerema Marine Contractors, for one, has spent about $100 m on the LFS for Sleipnir, the world’s largest semi-submersible crane vessel.

Marinvest’s chief executive, Patrik Mossberg said that the methanol-fuelling systems for Mari Couva and Mari Kokako cost just millions more.

Other shipowners holding similar views may have looked to cost savings from opting to fuel their ships with methanol instead of LNG.

Still, marine use of methanol has not picked up dramatically faster compared to LNG. Instead, the pathway methanol has taken seems to mirror that of LNG.

Owners of LNG carriers are among the first to adopt LNG as marine fuel. The same trend is repeated in the methanol market — the first cargo ships to burn this alternative fuel are designated to transport methanol.

It goes beyond saying that crew familiarity with the fuel would ease its use in daily ship operations. At the same time, the likelihood is also greater for methanol carriers to ply routes on which the fuel can be made available for marine use.

The Methanol Institute’s data showed that this new marine fuel is stored or available at 97 terminals of 151 ports surveyed to date.

By the close of this year however, just 11 ocean-going cargo ships — all of which are methanol tankers — will run on the new marine fuel.

That works out to less than one-tenth of over 120 LNG-fuelled ocean-going cargo ships already in operation as of Aug 21, according to DNV GL Alternative Fuel Insight platform.

Some shipowners have expressed interest in retrofitting ships on their operating fleet with methanol-fuelling systems.

But experts said that the retrofit option may only be cost effective for ships equipped with electronic engines.

While Swedish shipowner Marinvest appears to have few qualms forking cash for newbuild tankers with methanol dual fuel engines, it has yet to make any calls on retrofitting remaining vessels on its fleet.

That said, burning of methanol, as with LNG, emits almost zero sulphur.

Marine demand for these two fuels has thus far been backed by the IMO’s regulatory cap limiting sulphur in marine fuels to 0.5% from Jan 1, 2020.

But the use of methanol and LNG derived from fossil sources to replace heavy fuel oil will not deliver a halving of carbon dioxide from ship emissions as targeted by the IMO for 2050.

Methanol proponents have argued however, that future supplies derived from bio-sources can help international shipping meet the IMO 2050 CO2 target. LNG can likewise, be sourced from biomass.

Still, such bio-sourced fuels will have to gain confidence on the CO2 front from the shipping community and maritime regulators.

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