Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list

Feature: LPG bunkering - debate intensifies, but ground reality not so near

Agriculture | Grains | Energy | Thermal Coal | LNG | Natural Gas | Oil | Crude Oil | LPG | Refined Products | Petrochemicals | Shipping | Tankers

Market Movers Asia, Jun 24-28: Trump, Xi to meet at G20 summit; US to announce additional sanctions on Iran

Shipping | Marine Fuels

Platts Bunkerworld

Oil | Refined Products | Fuel Oil | Shipping | Dry Freight | Marine Fuels | Tankers

Mediterranean Bunker Fuel Conference, 8th Annual

Oil | Refined Products

Descenso interanual de la producción de las refinerías de Brasil en mayo

Feature: LPG bunkering - debate intensifies, but ground reality not so near


The dramatic change in policies that the global bunkering industry is preparing to embrace amid rising environmental concerns is increasingly expanding the scope of debate on whether LPG can play a bigger role as a shipping fuel in the years to come.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

As attention turns to an array of alternative fuels -- heavy-sulfur fuel oil with scrubbers, distillates, blended fuels and LNG -- to comply with the International Maritime Organization's 0.5% global sulfur cap regulation, LPG is likely to gain acceptance.

But industry officials and analysts say that the move towards embracing LPG as a marine fuel is expected to be at a snail's pace to begin with.

"In light of the 2020 IMO mandate, LPG bunkering is getting some attention as it stands as a likely alternative to LNG. Although LPG bunkering is relatively easier and economical to set up compared to LNG, the push remains limited so far," said Sri Paravaikkarasu, head of oil, East of Suez, at Facts Global Energy.

The International Maritime Organization's Marine Environment Protection Committee met in early-July, reiterating its commitment to kick-start the global sulfur-cap rule from January 1, 2020.

LPG, a mixture of propane and butane in liquid form and primarily used for domestic purposes such as household cooking, not only eliminates most sulfur emissions but also results in a lower release of greenhouse gases compared to oil-based fuels because of its lower carbon-to-hydrogen ratio.

It also tackles the issue of NOx emission, reducing it by 10%-20%, compared to heavy fuel oil, for two-stroke diesel engines, and by a larger amount when used in four-stroke Otto-cycle engines, a DNV GL position paper said.

LPG use also helps avoid particulate matter and black carbon emissions. The expected acceleration in LPG production, particularly in the US, would also prompt the industry to contemplate its use as a marine fuel, some sources said.

In June, Japan's top LPG supplier Astomos Energy Corp. signed a memorandum of understanding with Norwegian Statoil to jointly consider the launch of LPG bunkering by 2020.

Under the agreement, Astomos and Statoil will jointly consider technologies, including those for LPG-fueled vessels, as well as preparing sites for LPG bunkering in Europe, Statoil said in a statement at the time.

Astomos Energy said in March that it is also aiming to team up with Japanese importers to explore other opportunities for LPG bunkering. The Japan LP Gas Association and the LP Gas Center are also working on generating LPG demand for bunkering, as well as talking to the Ministry of Economy, Trade and Industry, among others.


Market participants and analysts are of the view that LPG bunkering will have to overcome many hurdles before being embraced widely.

However, the spatial distribution of LPG storage facilities would favor LPG over LNG as a fuel over the longer term, sources said.

Looking at possible supply points for LNG and LPG bunkering globally, there are about 300 locations for refrigerated LNG bunkering, while there are more than 1,000 import and secondary terminals for pressurized LPG, according to an earlier statement by Astomos.

But the question that remains is, if these points could build the requisite infrastructure and become available for LPG bunkering.

"LPG bunkering -- technically speaking, it's the way to go because it's not just the sulfur issue but also the carbon issue that needs to be addressed," said Nevyn Nah, oil products analyst at Energy Aspects. "But infrastructure is still the biggest bottleneck and there are still a lot of questions around storage, loading and unloading facilities."

Paravaikkarasu added: "The uncertainty regarding pricing, infrastructure and availability still seems a barrier for ship-owners to seriously consider this as a concrete alternative to deal with the change in bunker fuel sulfur mandate."

A joint study, conducted by DNV GL-MAN last year for an LR1 product tanker, found out that on a cost-basis, LPG is at least as attractive as LNG, in that it has shorter payback periods and lower investment costs and is less sensitive to fuel-price scenarios.

In a high-price scenario, which assumed the price of Brent crude oil at $100-$110/barrel, the study said that both LNG and LPG had a 5-10 year payback period, depending on the speed of the vessel and the area where it is used.

And in a low-price scenario, based on a Brent oil price of about $50/b, the payback time for LNG would be more than 13 years, whereas LPG would have a payback time of around 6.5 years, it added.

"Split incentives" acts as an impediment to the widespread adoption of LPG bunkering, Hendrik W. Brinks, principal researcher at DNV GL, said in a statement mailed to S&P Global Platts. "In many cases, the fuel is paid by the charterer. It is the reduced fuel costs that pay the investment back. When this reduced fuel costs [operating costs] are not returned to the ship-owner, the investment will not directly be paid back."

LPG as a fuel would also be most suited for newbuilding since the incremental investment costs will be lower, he said.

Safety issues and standards for the use of LPG also need to be addressed before it becomes more acceptable by the shipping industry, some sources said.

--Surabhi Sahu,
--Sambit Mohanty,
--Edited by Arnab Banerjee,