China's Guangdong to build LNG bunkering stations in inland waterways

China's Guangdong province plans to begin construction of six LNG bunkering stations for inland river waterways before the end of 2021, and complete construction of another eight LNG bunkering stations for the main navigation channels on arterial waterways, including two coastal stations, by 2022, the Guangdong Development and Reform Commission said Nov. 9.

The purpose of the plan is to accelerate setting up of LNG bunkering stations, ensure LNG bunker supply, promote clean energy in inland waterways and help meet the country's carbon peak and carbon neutrality targets, according to GDRC.

The province will consider adding more LNG bunkering stations in other locations based on demand, GDRC said, adding that Guangdong will promote the creation of an LNG bunkering hub across a network of stations.

GDRC said among the arterial waterways that will be prioritized for LNG bunkering stations are the waterway from Bei River in the north to the Pearl River Delta, from Xi River to the estuary of the Pearl River, and waterways within the extensive Pearl River Delta itself, which is also the hub for economic, manufacturing and shipping activity in the industrialized Guangdong province.

The province will speed up the construction of LNG bunkering stations to meet the refueling needs of LNG-powered vessels and encourage more switching to gas as a marine fuel, according to GDRC.

According to commitments by some energy companies, the LNG bunker price will be capped at 70% of the most expensive zero-vapor gasoil set by the government in the same period, GDRC said.

LNG-fueled ships

The building of LNG bunkering stations follows moves to boost LNG-powered shipping in the province.

Guangdong introduced subsidies worth Yuan 550 million ($86 million) for ship owners to convert existing vessels or vessels under construction that are registered in the province to LNG from July 1, 2021 to Dec. 31, 2022, according to a notice by Guangdong Transportation Department on Oct. 11.

Cargo ships on inland waterways less than 15 years old and with tonnage not less than 400 dwt, are qualified for the fuel-switching subsidy, the notice said.

These ships, with engine power ranging from less than 300kW to more than 1,500kW, can get a subsidy of Yuan 900,000-Yuan 3.8 million/ship. But the number of ships that can receive subsidies is limited to 300, the notice said.

Meanwhile, state-owned shipbuilder CSSC's Guangzhou branch and Guangzhou Port signed a contract for converting eight inland transport vessels to LNG power on Oct. 14, the first batch of conversions for inland vessels in Guangdong, CSSC said on its official WeChat platform on the day.

Prior to that, CNOOC, CSSC and provincial government-owned Guangdong Province Navigation Group had signed an agreement for the construction and fuel supply of 50 LNG-powered river vessels in March, and scheduled to be delivered by March 2022.

CSSC said it had delivered the first batch of two LNG-powered vessels on Nov. 2, and that it planned to deliver 13 more by the end of 2021.

Guangdong signed an initial agreement with CSSC and state-owned oil and gas major CNOOC on May 29, 2020, under which it plans to complete the conversion of 1,500 vessels to LNG power and the construction of 19 LNG bunkering stations, which is expected to create LNG bunker demand of 400,000 mt/year as well as reduce oil product demand by 390,000 mt/year, according to CNOOC.

With the launch of more and more LNG-power vessels, Guangdong's demand for LNG is expected to grow. Guangdong's natural gas consumption was estimated at nearly 29 Bcm in 2020, making it the second-largest natural gas consuming province after Jiangsu.