5 January 2022 (Lloyd's List) - LIQUEFIED natural gas continues to be the alternative fuel of choice for most shipowners with 81% of newbuilding contracts placed last year, for ships capable of non-conventional fuel propulsion, being of this fuel type. Excluding LNG tankers, which utilise boil-off gas, a total of 222 LNG-fuel capable ships were ordered in 2022, while 104 ships able to use LNG as a fuel were delivered into the global trading fleet, according to analysis by classification society DNV. “A diverse portfolio of LNG-fuelled ships was delivered in 2022, with large crude oil tankers in the lead and container ships in second place,” said Martin Wold, principal consultant at DNV’s maritime advisory business. “Far from all are operating fully on LNG fuel, but there are geographical pockets where LNG is still competitively priced and being bunkered regularly. The underlying growth for LNG fuel is nevertheless very strong and the market will likely return with a boom at some point, with bunkered volumes expected to triple within a very short time span.” High pricing levels for natural gas are expected to continue to delay the widespread adoption of LNG as fuel in the marine industry. However, from a long-term perspective, current long lead times for newbuildings should align well for when global LNG ship fuel prices reduce to more comparable levels to conventional fuel types. Prices for LNG as a ship fuel are understood to have risen by more than 130% since prevailing levels in 2021, to around $1,800 per tonne at Rotterdam. This recently prompted Norwegian ferry operator Fjord Line to make the decision to convert a pair of 30,000 gt ro-pax ships from LNG-only propulsion to dual-fuel LNG/marine gas oil machinery. “The energy crisis, caused by the Russian invasion of Ukraine, has led to extraordinary volatility and significant price increases in LNG — and the price increases have been far higher than for traditional and less sustainable energy sources at sea,” Fjord Line said in a statement. Containerships continue to dominate the orderbook for alternative-fuel ships, according to data tracked by Lloyd’s List, with non-operating boxship ownerSeaspanleading in the Top 10 shipowners list of alternative fuel ships, in terms of gross tonnage, on order. Exceptions to this vessel type, in terms of the Top 10 owners orderbook, include Eastern Pacific Shipping which has 12 large car and truck carriers, and eight newcastle-max bulk carriers, all capable of LNG propulsion, on order. The newbulding orderbook for the vehicle carrier sector has the largest concentration of alternative-fuelled ships. Of the 109 ships in the pure car and truck carrier orderbook, 108 of these will be capable of using non-conventional fuels with a handful of these having the potential to operate on ammonia or methanol. Methanol was the second-most popular alternative fuel choice, with 35 ships ordered during 2022, bringing the total orderbook for methanol fuel ships up to 82 vessels, according to DNV. The majority of methanol-fuelled ships contracted last year were containerships with orders confirmed by CMA CGM, COSCO, Maersk and MPC Container Ships. Orders for methanol dual-fuel vessels are expected to increase this year since, compared with LNG, methanol ship propulsion systems are cheaper and easier both for the yard to fit, in particular on smaller ships, and for ship owners to operate. “Methanol really established itself as an alternative to LNG (in 2022) and engine makers report about record high interest for methanol-capable engines,” said Mr Wold. “Concerns around sourcing and the scalability of green methanol in the short-to-medium term will remain the main slowing factor. Whereas the main competition will be between conventional fuels, LNG and methanol in 2023, we expect to see a further positive trend for the ordering of hydrogen-fuelled ships.” Hydrogen fuel has already begun to make an appearance in the orderbook for non-conventional fuelled ships. “Perhaps surprisingly a total of 18 ships capable of running on hydrogen fuel were ordered, ranging from small crew transfer vessels for the offshore wind industry which are built to operate fully on hydrogen, to large cruise vessels installing hydrogen-powered fuel cells that cover a smaller portion of the energy demand on board,” he said. He added that he expected 2023 to turn out similarly to 2022 in terms of newbuilding orders for alternative fuels. “The orders will likely materialise across somewhat different ship types and sizes compared to last year, moving with the newbuilding market in general.”