LPG bunkering gains traction among rising global demand: WLPGA CEO

LPG offers a viable solution to accelerating energy transition in various sectors including transportation, with the fuel already gaining traction as a marine fuel as shipping expedites its decarbonization journey, World LPG Association CEO and Managing Director James Rockall told S&P Global Commodity Insights.

"LPG is already a popular alternative fuel for road transportation worldwide ... last year the number of new LPG vehicles exceeded the number of new electric vehicles," Rockall said in an interview on the sidelines of the World Gas Conference in Daegu, South Korea.

But the need to curb environmental emissions has also been propelling its use in the shipping sector, Rockall said, adding that LPG bunkering infrastructure was already available at over a thousand ports worldwide.

Currently, there were about 120 LPG dual-fuel VLGCs on order and eventually all very large LPG/liquefied ammonia gas carriers, or VLGCs, will likely come to burn LPG as a marine fuel, Rockall, said.

Companies such as BW LPG and Japan's NYK were among those making strides in using LPG as a marine fuel. In its Q1 earnings presentation in May, BW LPG said it had already completed its 15-vessel LPG dual-fuel LPG propulsion retrofitting program ahead of schedule and within the budget.

In April, Japan's NYK announced the order of its third LPG dual-fuel very large LPG/liquefied ammonia gas carrier, with the ship scheduled for delivery in 2024.

When LPG is used as a fuel, exhaust gas from the ordered VLGC will contain at least 95% less sulfur oxide and 20% less CO2 compared to NYK's conventional VLGCs using heavy oil-fired engines, NYK said, noting LPG's many environmental benefits as a bunker fuel.

Containerships are another promising shipping segment for LPG bunkering, with about 30% of such ships estimated to be LPG-dual fuel within this decade or so, Rockall said.

In addition, LPG can also be used for fishing boats, passenger ferries, with LPG outboard engines being a strong marine propulsion solution to protect lakes and rivers, he said.

Rising LPG consumption

In addition to catering to transportation, demand for LPG also continues to rise globally in the domestic and residential sectors, particularly for use in cooking in Asia and Africa, Rockall said.

That comes as countries are increasingly committing to achieve net zero and recognize that the "quickest way to decarbonize is through gas," Rockall said.

When it comes to using LPG, affordability can be sometimes an issue. But that is being dealt with, and many countries such as India and Indonesia are offering subsidies to promote its use as a cooking fuel, he said.

China presents another big opportunity for LPG use, albeit not on the chemicals side but for cooking, he said. Many people cook on coal, which is widely available but has a "massive impact on quality and health," Rockall said, adding that LPG consumption could grow in such countries, particularly as it was difficult to achieve a large penetration of pipelines in rural areas.

Meanwhile, in Europe, the political desire to move away from Russian natural gas could increase LPG demand as the West continues to ration gas amid limited supply.

However, if you want to replace all Russian gas with LPG in Europe, that will soak up a massive portion of the total global demand and not leave much for its use in other sectors, Rockall said, adding there was a need to develop other products as well to achieve energy security and energy transition globally.