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Methanol advances as alternative bunker fuel with barge-to-ship operation

Highlights

Operation takes place at Rotterdam Port

Methanol market dynamics seen changing

Methanex Corporation subsidiary Waterfront Shipping carried out barge-to-ship bunkering of methanol in collaboration with the Port of Rotterdam on May 11, highlighting the ease with which bunkering could occur for methanol powered vessels.

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The bunkering operation was seen as a world's first for alternative methanol fuel.

The Takaroa Sun, a long-term chartered vessel owned by NYK Bulkship (Asia), part of Waterfronts shipping's methanol powered fleet completed the operation with the Vopak Terminal Botlek of Royal Vopak with MTS Evidence -- a TankMatch bunker barge.

"Waterfront Shipping has been operating methanol-fuelled ships for over five years now, accumulating over 100,000 combined operating hours -- and has been bunkering methanol for its methanol dual-fuelled vessels via cargo shore pipelines near Methanex's production facilities," President of Waterfront Shipping Paul Hexter said in a company statement.

"When appropriate safety measures are followed, we know that methanol is safe to ship, store, handle and bunker using procedures similar to conventional fuels. Today's methanol bunkering demonstration is another step in helping the shipping industry with its journey to reduce emissions," he said.

Methanol has recently gained traction as a leading alternative to traditional fossil fuels. Numerous fuel options are currently being considered to reduce reliance on fossil fuels in the shipping industry.

However, it is unlikely that a single alternative fuel will provide the solution, market sources said. Hydrogen, LNG and ammonia, among others, are all considered as future fuels but drawbacks remain evident for all options, they added.

"LNG is not really reducing CO2 footprint which is really critical to the industry," a Germany-based trader said May 14.

Changes in methanol market dynamics

With methanol emerging a strong contender as both an alternative and renewable fuel -- biomethanol -- in the bunker industry, sources pointed to a potential change in dynamics in the market.

Currently, around a third of European methanol demand originates from the chemical industry with downstream products such as formaldehyde, acetic acid and MTBE all drawing on methanol supplies. The addition of methanol fuel for the bunker market is likely to add further strain to an already tight market, market sources said.

To accommodate for the current price volatility in the global methanol market, a separated market may emerge solely for methanol bunkering purposes, they added.

Currently, the International Methanol Producers and Consumers Association require a very pure quality of methanol. However, different specifications are required in the bunkering industry compared to the chemical sector, sources said.

"The purity of methanol for a bunker fuel is less than that required for the chemical industry," the Germany-based trader said. "So, there is a potential for a separate methanol market solely for bunkering," he added.

Methanol-powered ships consume about 10,000 mt/year on average, market sources said. Methanex's Waterfront Shipping recently ordered eight methanol-fueled ships to be delivered between 2021 and 2023, potentially increasing global demand for the product.