Study on the Completion of an EU Framework on LNG-Fuelled Ships and Its Relevant Fuel Provision Infrastructure Lot 3 Analysis Of
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Study on the Completion of an EU Framework on LNG-fuelled Ships and its Relevant Fuel Provision Infrastructure Lot 3 Analysis of the LNG market development in the EU CE Delft TNO European Commission Analysis of the LNG market development in the EU EUROPEAN COMMISSION Directorate-General for Mobility and Transport Directorate MOVE D — Logistics, Maritime and Land Transport and Passenger Unit D.1 — Maritime Transport and Logistics European Commission B-1049 Brussels December 2015; revised November 2017 / 1 European Commission Analysis of the LNG market development in the EU Study on the Completion of an EU Framework on LNG-fuelled Ships and its Relevant Fuel Provision Infrastructure Lot 3 Analysis of the LNG market development in the EU Jasper Faber (CE Delft) Dagmar Nelissen (CE Delft) Saliha Ahdour (CE Delft) Jorrit Harmsen (TNO) Silvia Toma (TNO) Layla Lebesque (TNO) December 2015; revised November 2017 / 2 European Commission Analysis of the LNG market development in the EU Abstract This study analyses the development of the LNG market in the EU by providing a qualitative analysis of the most important drivers and barriers with respect to the use of LNG as a ship fuel; by quantitatively analysing the economic feasibility of the use of LNG in ten ports; and by developing scenarios for the uptake of LNG from 2020 to 2030. The qualitative analysis shows that amongst the main drivers of demand for LNG are environmental regulations and the price difference between LNG and other fuels. The main barriers are uncertainty about the availability of LNG in ports, about technical standards, and about the second hand-price of LNG ships. The case studies show that in most cases LNG is an attractive option from the ship-owner perspective if the fuel price difference is larger than today, as is the case in many projections for 2020-2030. With a smaller price difference between LNG and petroleum fuels, most cost-benefit analyses have a negative outcome. The future market scenarios indicate that there will be between 2,500 and 4,000 LNG ships in the EU, using 1-5 million tonnes of LNG in the year 2030. Extrait Cette étude est une analyse du développement du marché GNL dans l'UE avec une analyse qualitative des principaux facteurs stimulant et limitant l'utilisation de GNL comme carburant pour navires, avec une analyse quantitative de la faisabilité économique de l'utilisation de GNL dans dix ports et un développement de scénarios pour la consommation de GNL de 2020 à 2030. L'analyse qualitative montre que les réglementations environnementales ainsi que la différence du prix entre GNL et les autres carburants sont les facteurs essentiels stimulant la demande de GNL. Les principales barrières sont l'incertitude concernant la disponibilité de GNL dans les ports, les normes techniques et le prix d'occasion de navires GNL. Les études de cas montrent que, dans la plupart des cas, GNL est une option attrayante du point de vue du propriétaire du navire si la différence entre le prix du carburant est supérieure à celle aujourd'hui, ce qui est le cas dans un grand nombre de projections pour 2020 - 2030. Si la différence de prix entre GNL et les carburants dérivés du pétrole est inférieure, la plupart des analyses prix-bénéfice produisent un résultat négatif. Les scénarios du marché dans le futur indiquent la présence de 2500 à 4000 navires GNL dans l'UE qui consommeront 1–5 millions de tonnes de GNL en 2030. December 2015; revised November 2017 / 3 European Commission Analysis of the LNG market development in the EU Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): 00 800 6 7 8 9 10 11 (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE The information and views set out in this report are those of the author and do not necessarily reflect the official opinion of the Commission. The Commission does not guarantee the accuracy of the data included in the report. Neither the Commission nor any person acting on the Commission’s behalf may be held responsible for the use which may be made of the information contained therein. More information on the European Union is available on the Internet (http://www.europa.eu). Luxembourg: Publications Office of the European Union, 2015 © European Union, 2015 December 2015; revised November 2017 / 4 European Commission Analysis of the LNG market development in the EU PRINTED ON ELEMENTAL CHLORINE-FREE BLEACHED PAPER (ECF) PRINTED ON TOTALLY CHLORINE-FREE BLEACHED PAPER (TCF) PRINTED ON RECYCLED PAPER PRINTED ON PROCESS CHLORINE-FREE RECYCLED PAPER (PCF) December 2015; revised November 2017 / 5 European Commission Analysis of the LNG market development in the EU Contents Glossary ........................................................................................................... 9 Executive summary ..........................................................................................10 1. Introduction .........................................................................................21 1.1. Background to the study ........................................................................21 1.2. Aim of the study ...................................................................................21 1.3. Methodology and sources .......................................................................22 1.4. Outline of this report .............................................................................26 2. The LNG bunkering market ....................................................................27 2.1. Introduction .........................................................................................27 2.2. The natural gas and the LNG market .......................................................27 2.2.1. Natural gas pricing mechanisms .............................................................28 2.2.2. Factors determing the EU LNG import price ..............................................29 2.2.3. Historical LNG import prices ...................................................................33 2.2.4. LNG import price projections ..................................................................35 2.3. Bunkering market for LNG as fuel for shipping ..........................................37 2.3.1. Main drivers and barriers in the LNG bunkering market .............................38 2.3.2. Bunker prices .......................................................................................49 3. Price and cost-structure of LNG for end-users ...........................................55 3.1. Price structure LNG bunkering ................................................................55 3.1.1. Investment costs of LNG bunkering terminals per bunkering method ..........57 3.1.2. Distance to LNG terminal .......................................................................62 3.2. Cost-structure of LNG ships and of alternative ships sailing in the SECA ......63 3.3. Overview costs per type of vessel ...........................................................66 3.3.1. Total costs of SECA compliance as a function of LNG prices (new builds) .....66 3.3.2. End-user costs for different ship types .....................................................69 3.4. Conclusion ...........................................................................................70 4. LNG cases ............................................................................................72 4.1. Introduction .........................................................................................72 4.2. Selection of cases .................................................................................73 4.2.1. Introduction .........................................................................................73 4.2.2. Selection of ship types ..........................................................................73 4.2.3. Selection of ports ..................................................................................76 4.2.4. Selection of relevant time scope .............................................................80 4.2.5. Final selection of cases ..........................................................................80 December 2015; revised November 2017 / 6 European Commission Analysis of the LNG market development in the EU 4.3. Case description ...................................................................................80 4.3.1. State of play and planned development at the ports ..................................80 4.3.2. State of play and planned development within the ship segments ...............83 4.3.3. Fueling infrastructure ............................................................................86 4.3.4. Main results per port .............................................................................87 5. Cost-benefit analysis .............................................................................99 5.1. Introduction .........................................................................................99 5.2. Design of CBA ......................................................................................99 5.2.1. Baseline and alternative scenarios ..........................................................99 5.2.2. Financial CBA ..................................................................................... 101 5.2.3. Social CBA ......................................................................................... 104