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Demand for natural gas is higher than ever. It is cheaper and more environmentally sound than other fossil fuels. With growth rates in excess of ten percent per year, the global market for LNG is expanding at a particularly dynamic pace. Linde’s technical expertise covers the entire value chain here, from liquefaction through storage to delivery to the end consumer.
The company adapts its LNG business model to local market requirements. The recently opened LNG terminal in Nynäshamn in the east of Sweden, for example, primarily fuels local industries and public transport and taxi fleets, while in the UK, Linde mainly supplies LNG to heavy goods vehicles and fleet operators such as Eddie Stobart. In Asia, Linde is working on the development of smaller and mid-size LNG plants capable of efficiently extracting natural gas reserves that are not connected to pipeline networks. In this region, LNG is increasingly being used in industry and power plants as a replacement for diesel. In the US, sizeable shale gas reserves are providing a further boost to the country’s LNG market.
The shipping industry is a particularly promising market for LNG, especially in the North Sea and Baltic Sea. These waters are designated Emission Control Areas (ECAs), and as such will be subject to new environmental regulations from 2015 on. The new rules state that the proportion of sulphur in marine fuel in northern Europe must not exceed 0.1 percent. To meet this tringent threshold, shipping companies will have to turn to cleaner alternatives such as LNG. And the first pioneering ships are already making waves. Powered by LNG from Linde, the Viking Grace ferry, for example, has been running from Stockholm (Sweden) to Turku (Finland) since January 2013.
Linde took steps early on to meet rising demand for LNG in ECAs, founding a Hamburg-based joint venture with marine fuel specialist Bomin back in August 2012. The new company aims to speed the transition to this low-carbon fuel by building an enabling infrastructure comprising smaller LNG terminals in ports such as Hamburg and Bremerhaven. At the port of Hamburg, Mahinde Abeynaike, Managing Director of Bomin Linde LNG GmbH, and Olof Källgren, Head of Clean Energy Merchant LNG, Linde Gases Division, explained the challenges involved in building an effective LNG infrastructure across Europe’s ports.
[Abeynaike] Our joint venture is primarily about logistics – in other words, storing LNG at ports and transporting it by ship. Linde is an experienced specialist in this area and Bomin – as a leading provider of marine fuels – has the requisite marine industry contacts and space for setting up the needed LNG infrastructure.
[Källgren] This partnership is the perfect fit for us as it gives us direct access to potential LNG customers and enables us to cover the complete value chain. In fact, we were already looking at ports in northern Europe that were of interest to us as a result of the new environmental regulations but together we will be a much stronger entity, with the ability to offer a complete supply solution.
[Abeynaike] We are now faced with the classic “chicken and egg” dilemma. The shipping companies have to react to the new emission thresholds. But before they invest in ships with LNG engines, they want to be sure that an extensive infrastructure is already in place.
[Källgren]Which is why we are looking to build a supply network in ports such as Bremen and Hamburg. We want to give ship owners the assurance they need to equip their ships with LNG engines. This is not something that will happen overnight. The transition will take time, but we are already seeing the first signs of success. in place.
[Abeynaike] We will initially be focusing on pilot projects, showing our partners that we are committed in the long term. Sustainability is a must. This new technology means that shipping companies have to choose a model to power their ships for the next 30 to 40 years.
[Källgren] We also have to factor in different regional regulations governing LNG storage and fuelling. We need a well-structured, international legislative framework here.
[Abeynaike]We have a long road ahead of us. In the end, however, we are confident that LNG will emerge as the technology of choice – it is a superior solution from both an ecological and a financial perspective.
[Källgren]I agree completely. We have already seen that oil and gas prices will no longer be so closely tied to each other in the future, specifically not in North America and Europe. And when you actually come here to Hamburg and see just how big the potential market is, you can’t help but feel optimistic.
[Abeynaike]I saw a container ship today with a huge cloud of black smoke coming out of its smokestack. With LNG that would change. LNG will help protect the environment and raise the air quality for people in harbour cities like Hamburg.