SEA-LNG argues LNG far cheaper than ammonia or methanol

June 17, 2023 - SEA-LNG LNG bunker industry body SEA-LNG has argued LNG and its green alternatives will be a much cheaper pathway for shipping than using methanol or ammonia, according to Ship & Bunker.

The organisation has published new research on its website this week looking at the costs of various alternative fuels forecasted out to 2050.

"Assuming an average fuel burn for the typical 14k TEU newbuild container vessel of 146 tonnes of VLSFO equivalent per day, a methanol-powered vessel would require a 14% green fuel blend to comply with FuelEU Maritime in 2025 at a fuel cost of almost USD55m per year, assuming the use of biomethanol," the organisation said in an emailed statement.

"An ammonia powered vessel, if such a thing existed, would require a 33% green fuel blend to comply and face a fuel bill of about USD80m per year if using e-ammonia. "LNG by contrast would require no blending with a fuel bill of just over USD20m per year."

As the basis of the costs in its report the organisation has used the long-term average fossil LNG price of $9/GJ, $21/GJ for grey methanol and $23/GJ for grey ammonia, before applying multiples to these figures to estimate the costs of their biomass-derived or synthetic replacements.

Supporters of the other alternative fuels may argue that using these long-term averages gives an unfair advantage to LNG by playing down the record prices seen last year, as well as not taking into account that methanol and ammonia are in their infancies as fuels and could be expected to see lower prices as production is ramped up.

"The implications are clear, green shipping fuels are clearly going to be very expensive and ship owners, operators and charterers are only likely to buy them if required to do so by regulators, such as the IMO and EU, or by customers seeking to meet their own voluntary decarbonisation targets," SEA-LNG said in the statement. "The decisions by customers and ultimately consumers will be difficult as they will need to balance competitive costs with ESG demands and regulatory requirements."