SEA\LNG has released an independent study showing that LNG is a compelling investment solution for very large crude carriers (VLCC) on the Arabian Gulf to China trade route.
Conducted by independent simulation and analytics expert Opsiana, the study demonstrates clear benefits of LNG as a marine fuel for a newbuild 300,000 DWT VLCC on the Arabian Gulf to China trade route, in comparison to other alternatives currently available to the shipping industry.
The study compares the performance of four propulsion alternatives: a conventional VLCC sailing with very low sulfur fuel oil, a scrubber-equipped VLCC sailing mostly with heavy fuel oil, and two LNG powered VLCCs – one with a high-pressure two-stroke engine, the other a low-pressure two-stroke engine.
Specifically, the results for the 300K DWT VLCC show that LNG fuel employing DF engines indicate that the NPV savings versus compliant fuel would range from USD 6.1 million to USD 15.1 million across the fuel scenarios.
LNG fuel delivers less value than scrubbers in both the business as usual (BAU) and Stranded Fuels forecasts resulting in a negative savings of (USD 6.4M) to (USD 12.7M).
According to it, LNG as a marine fuel delivers a strong return on investment on a net present value (NPV) basis over a conservative ten-year horizon, as well as paybacks from three to five years.
Peter Keller, chairman, SEA\LNG, said: “This is the third in a series of investment studies commissioned to support ship owners and operators in decision-making at this crucial time. In addition to the positive results of studies undertaken by Opsiana for the liner and PCTC segments, this study underlines the compelling investment case for VLCCs.”
The Arabian Gulf to China route was chosen because it is the major energy trade corridor from the Middle East to China.
The study also highlights compelling returns on an NPV basis, diminishing CAPEX hurdle for LNG engines, competitive energy costs, higher environmental performance, and a financially effective component for complying with the IMO 2020 sulfur cap.
It is worth noting that the best possible data was available to Opsiana through SEA\LNG members which contributed with timely background information and data from across the LNG value chain to ensure a high level of creditability in the study and results.