LNG Bunkering Market to Witness High Growth Owing to Stringent Emission Norms

 

The LNG bunkering market comprises liquefied natural gas (LNG) that is specifically produced for use as fuel for ships and containers. LNG is a cleaner alternative fuel to bunker oil and marine diesel oil and helps reduce emissions including sulfur oxides (SOx), nitrogen oxides (NOx) and particulate matters. It has the advantages of being cost effective, more environment friendly and readily available. With increasing global trade and seaborne freight, the demand from shipping industry for cleaner fuel is growing rapidly.

The Global LNG bunkering market is estimated to be valued at US$ 806.2 Mn in 2024 and is expected to exhibit a CAGR of 36% over the forecast period 2024 to 2031.

Key Takeaways

Key players operating in the LNG bunkering market are Royal Dutch Shell Plc., Skangas, ENN Energy, Korea Gas Corporation, Prima LNG, Harvey Gulf International Marine LLC, Bomin Linde LNG GmbH & Co KG, Fjord Line, Crowley Maritime Corporation, and Polskie LNG. The companies are investing in building infrastructure for LNG bunkering and promoting its usage among ship owners and ports.

The key opportunities in the market include rapid expansion of LNG-fuelled vessels fleet driven by strict emission norms, growing prominence of Dual-Fuel Engine Vessels (DFEVs), and IMO's push for green alternative marine fuels. Between 2018 to 2023, the LNG-fuelled vessels orderbook has increased significantly which will drive its bunkering demand going forward.

Globally, the LNG bunkering market is witnessing expansion led by countries including United States, Germany, China, Australia, and Norway. The European countries are also promoting use of LNG as marine fuel under its emission reduction policies. The region has seen rapid growth of LNG bunkering terminals and vessels capable of refuelling at sea.

Market Drivers

The growing demand from global shipping industry for a cleaner and economical alternative to conventional bunker fuels is a key driver. The sector needs viable solutions for cutting emissions and complying with stringent environmental regulations. LNG emerges as an attractive green option meeting both criteria. The International Maritime Organization (IMO)'s regulations for reducing sulfur content in fuel is another major factor propelling the adoption of LNG as bunker fuel across international shipping routes.

Market Restraint

Lack of widespread LNG bunkering infrastructure remains a major challenge restricting the large scale adoption of the fuel. There are limited number of bunkering terminals globally, especially in emerging markets. This constrains the operational flexibility of sea-borne vessels reliant on LNG. Large capital investments required for setting up new terminals and trains also deters many potential bunker suppliers from entering the business. Overcoming infrastructure gaps needs collaborative efforts from government agencies and industry players.

Segment Analysis

The shipment segment accounts for the largest share of the LNG bunkering market currently as LNG is predominantly used for fueling seagoing vessels that transport LNG across long distances. This is because LNG offers significantly lower emissions and improved fuel efficiency compared to heavy fuel oil used currently as marine fuel. While this segment dominates currently due to established infrastructure and fleet for long distance seaborne trade of LNG, the ferries segment is expected to emerge as the fastest growing segment during the forecast period. This is attributed to growing focus on using cleaner fuels for powering short-distance ferry services across regions to meet stringent environmental norms.

Regional Analysis

Europe dominates the global LNG bunkering market currently with countries like Norway and Sweden among the leading markets. This is due to the established bunkering infrastructure and an increasing ferry fleet retrofitted to use LNG for fuel in countries of Northern Europe. Asia Pacific region is expected to grow the fastest during the forecast period owing to rising emphasis on developing LNG bunkering terminals and networks to supply gas-powered vessels in countries like China, Japan and South Korea. Stringent emission norms by International Maritime Organization (IMO) for reducing air and marine pollution are also driving increased adoption of LNG as a marine fuel across busy ports of Asia Pacific.