KOGAS and five other shipping, trading, and logistics firms signed an agreement on setting up a liquefied natural gas (LNG) bunkering joint venture. Under the agreement, KOGAS, Busan Port Authority, POSCO International, S-Oil, Daewoo Logistics, and Hyundai Glovis will set up the joint venture by October and the firm will be in charge of importing, storing and supplying LNG for vessels.
Korea Gas Corp. (KOGAS) is betting big on its LNG bunkering business, as tighter maritime regulations force shippers to rely more on vessels propelled by natural gas, the state-run gas distributor said Wednesday.
Through the joint venture, KOGAS seeks to sell 1.36 million tons of LNG for vessels by 2030, which will result in 1 trillion won ($837.5 million) of sales. The company expects this will be equal to cutting 8,315 tons of sulfur oxides (SOx) and 2,557 tons of fine dust emissions.
KOGAS plans to secure three bunkering vessels for the venture, as well as a ship-loading facility at its LNG base in Dangjin, South Chungcheong Province.
KOGAS has completed four LNG ship-loading facilities at its LNG base in Tongyeong, South Gyeongsang Province, and built the SM JEJU LNG2 bunkering tanker that sails between Jeju Island and Tongyeong.
KOGAS said it is betting on the LNG bunkering business in the wake of strengthened maritime regulations. From this year, the International Maritime Organization (IMO) has mandated a maximum sulfur content of 0.5 percent in vessel fuels globally, down from 3.5 percent. European and North American countries are enforcing tighter rules of 0.1 percent in emission-control sea areas near their coasts.
KOGAS said the LNG bunkering business will likely suffer difficulties in finding demand in the early stage of the new IMO regulations. But as big-name companies join efforts for the joint venture, it will be able to hedge risks and secure early demand.
LNG bunkering is regarded as an eco-friendly way of fueling vessels. Compared to conventional vessel fuels, LNG fuel can cut SOx by up to 100 percent, nitrogen oxide emissions by up to 80 percent and CO2 emissions by 20 percent, KOGAS said. Due to this, LNG bunkering is anticipated to account for up to 30 percent of the global vessel fueling market by 2030.