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'Conversion-ready' boxships pay well for shipowners in low-carbon future: study

Highlights

Ship conversion to methanol fuel to cost $21 million-$24 million

LNG-fueled ships can run on ammonia via simple retrofits

Container sector consumes more marine fuels than others

  • Author
  • Max Lin
  • Editor
  • Marieke Alsguth
  • Commodity
  • LNG Oil Petrochemicals Shipping

Shipowners can potentially save money by building "conversion-ready" containerships that can run on low-carbon fuels via simple retrofits, a study published by Maersk Mc-Kinney Møller Center for Zero Carbon Shipping found.

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With the ongoing uncertainty over which marine fuels will emerge in a low-carbon future, a growing number of shipping firms have been exploring new vessel designs that can provide more flexibility.

Such vessels will have space allocated for future installations of bunkering systems for new fuels. While their initial costs are higher than conventional vessels, shipowners could eventually have lower capital expenditures if low-carbon conversions are required, according to the study published Sept. 28.

"Although preparing for the transition to alternative fuels requires additional upfront investment, preparation can pay off in the long term with intelligent ship design and careful planning of conversion timelines," the study said.

Researchers at the Danish institution used a 15,000-TEU boxship – a typical workhorse in container trade – as the reference vessel.

Such a ship is assumed to cost $150 million when running on fuel oil and $174 million when on LNG.

Converting such an oil-fueled ship, without any "conversion-ready" design, to run on methanol full-range would cost $24 million, according to the study. This would fall to $21 million at the highest preparation level when newbuilding design and retrofit expenses are taken into account.

The savings would amount to $1.5 million for the conversion of an oil-fueled ship to be powered by ammonia.

LNG advantage

The researchers said LNG-fueled ships are almost by default ready to be converted to run on ammonia. Such conversion costs for a 15,000-TEU ship amount to $26.1 million.

"Although the existing tanks will need to be prepared for ammonia, many other structures, and systems necessary for ammonia are already in place: double walled piping is already routed, a fuel preparation room is established, and vent mast is already constructed," the report said.

"Although conversion from LNG to methanol is also a possibility, we have not included it in this study as market trends indicate that there is not much interest in this route, and it makes more sense to convert from LNG to ammonia as they are both gaseous fuels," the researchers said.

The Maersk Mc-Kinney Møller Center collaborated with ABS, Maersk, MAN Energy Solutions, Mitsui & Co., Mitsubishi Heavy Industries, NYK Line, TotalEnergies, and Seaspan on this study.

Observers said container ship owners could have the greatest potential in decarbonization. According to S&P Global Commodity Insights' estimates, containerships consume more marine fuels than other sectors, with total consumption reaching 59 million mt last year. The sector's bunker demand could amount to 64 million mt by 2030 before falling to 61 million by the start of 2050.