LNG-burning vessels well positioned ahead of 2025
Vessels outfitted with dual-fuel LNG-burning engines are poised to have the lowest marine fuel expense heading into 2025 when the EU will tighten its marine EU emissions trading system (ETS) regulations and add a new regulation, "FuelEU", from 1 January 2025.
Considering both regulations, at current price levels, fossil LNG (also known as grey LNG) will be priced the cheapest compared with conventional marine fuels and other commonly considered alternative fuels such as biodiesel and methanol.
The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels.
The FuelEU GHG intensity maximum is set at 85.69 grams of CO2-equivalent per MJ (gCO2e/MJ) from 2030 to 2034, dropping to 77.94 gCO2e/MJ in 2035. Vessel pools exceeding the FuelEU's limits will be fined €2,400/t ($2,675/t) ofvery low-sulphur fuel oil (VLFSO) energy equivalent. GHG emissions from grey LNG vary depending on the type of marine engine used to burn the LNG, but ranges from about 76.3-92.3 gCO2e/MJ, according to non-governmental environmental lobby group Transport & Environment. This makes a number of LNG-burning, ocean-going vessels compliant with FuelEU regulation through 2034.
The EU's ETS for marine shipping commenced this year and requires that ship operators pay for 40pc of their GHG generated on voyages within, in and out of the EU. Next year, the EU ETS emissions limit will increase to 70pc. Even with the added 70pc CO2 emissions cost, US Gulf coast grey LNG was assessed at $639/t VLSFOe, compared with the second cheapest VLSFO at $689/t, B30 biodiesel at $922/t and grey methanol at $931/t VLSFOe average from 1-18 September (see chart).
"In 2025, we expect [US natural gas] prices to rise as [US] LNG exports increase while domestic consumption and production remain relatively flat for much of the year," says the US Energy Information Administration. "We forecast the Henry Hub price to average around $2.20/million British thermal units (mmBtu) in 2024 and $3.10/mmBtu in 2025."
Provided that prices of biodiesel and methanol remain relatively flat, the projected EIA US 2025 LNG price gains would not affect LNG's price ranking, keeping it the cheapest alternative marine fuel option for ship owners traveling between the US Gulf coast and Europe.
LNG for bunkering global consumption from vessels 5,000 gross tonnes and over reached 12.9mn t in 2023, according to the International Maritime Organization (IMO), up from 11mn t in 2022 and 12.6mn t in 2021. The maritime port authority of Singapore reported 111,000t of LNG bunker sales and the port authorities of Rotterdam and Antwerp reported 319,000t in 2023 from all size vessels.
Among vessels 5,000 gross tonnes and over, LNG carriers accounted for 89pc of LNG bunker demand globally, followed by container ships at 3.6pc, according to the IMO. The large gap between LNG global and LNG Singapore, Rotterdam, and Antwerp bunker demand, is likely the result of most of the demand taking place at the biggest LNG export locations where LNG carriers call, such as the US Gulf coast, Qatar, Australia, Russia and Malaysia.
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LNG glut coming and may catch many by surprise: Orsted
LNG glut coming and may catch many by surprise: Orsted
London, 25 September (Argus) — There will be an oversupply of LNG on the global market in the coming years, which may contribute further to "the decade of turmoil", Danish utility Orsted senior vice-president Rune Sonne Bundgaard-Jorgensen told Argus . "The [energy] crisis is absolutely not over. To me, an energy crisis is one of uncertainty and volatility," Bundgaard-Jorgensen said on the sidelines of the Energy Trading Week conference in London. "We are going to see an LNG glut which we all in this [conference] room see is coming but the rest of the world does not necessarily. That is going to catch a lot of people by surprise," he said, adding that "surprises are never good when it comes to energy". According to Bundgaard-Jorgensen, "we are going to see an ongoing decade of turmoil. Who knows where the war in the Middle East with the latest attacks on Hezbollah and Israel is going to take us," he said. Among other concerns, he mentioned "uncertainties in the Far East, around the South China Sea". "So, though the current energy crisis of decoupling from Russian pipe gas is over, the continued crisis of where we are going to get sustainable, long-term energy from is far from over," Bundgaard-Jorgensen said. Commenting on Orsted's long-term gas plans, Bundgaard-Jorgensen stressed that Orsted is "constantly evaluating" its gas portfolio. He refused to say whether Orsted is negotiating another long-term deal with Norwegian state-controlled Equinor after their previous contract expired in April. Orsted entered an agreement with Equinor at the end of 2022, after Russian state-controlled Gazprom halted deliveries to the firm from June 2022 following Orsted's refusal to pay for its supply in roubles . "We are quite happy that we are out of our long-term contract with Gazprom," Bundgaard-Jorgensen said. "As a company we believe in decarbonisation — but I also need to believe in a resilient portfolio. So, we are constantly looking to optimise. Gas is not a strategic core of Orsted but it is a very important tool of securing our portfolio," he said. Bundgaard-Jorgensen refused to comment on whether the firm is planning to appeal a decision made by the Danish Supply Authority in July that the tariff levied by Orsted on the Tyra-Nybro pipeline to Denmark from 2011 to October 2012 was too high. The authority reduced the tariff in the period by almost 30pc to 7.20 Danish kroner/m³ from DKr10/m³. By Alexandra Vladimirova Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US trucking index at 18-month high in August: ATA
US trucking index at 18-month high in August: ATA
Houston, 25 September (Argus) — US trucking freight volumes rose in August to the highest level since February 2023, the American Trucking Association (ATA) said. The ATA's seasonally adjusted Truck Tonnage Index (TTI) rose in August by 1.8pc from a month earlier and by 0.7pc from a year earlier. The index has increased on a monthly and yearly basis only twice in the past 18 months, last doing so in May 2024 . August's "robust gain" indicates freight levels are rebounding from a bottom, according to ATA economist Bob Costello. The TTI's month-to-month movement so far this year also shows the freight market is "at an inflection point," Costello said. The US trucking industry contracted in 2023 and initially got off to a slow start this year. Last week, the Federal Reserve cut its target lending rates for the first time in four years , suggesting the worst inflationary pressures may be over. The TTI is calculated monthly using a survey of ATA membership to estimate seasonally-adjusted trends in the value of US truck freight. Trucking comprises roughly three-quarters of tonnage carried by all modes of transportation in the US, and so can serve as an indicator of the health of the transportation sector and the economy at large. By Gordon Pollock Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Vertex Energy files for bankruptcy, seeks sale
Vertex Energy files for bankruptcy, seeks sale
Houston, 25 September (Argus) — Specialty refiner Vertex Energy has filed for chapter 11 bankruptcy in a US court following a failed foray into renewable fuels production at its 88,000 b/d Mobile, Alabama, refinery. Vertex has entered into a restructuring support agreement with its lenders and secured $80mn of new funding to finance its day-to-day business operations, the company said late Tuesday. The refiner is also considering a "more value-maximizing sale transaction" and expects to confirm its chapter 11 bankruptcy plan by the end of the year, according to the 24 September press release. Vertex announced in May this year that it would "pause" renewable diesel production at its Alabama refinery and return the unit to producing fossil fuel products. The company later said it would use a third quarter turnaround to return the Alabama plant's converted hydrocracking unit to processing fossil fuel feedstocks and be back online in the fourth quarter. Vertex also operates a re-refinery near New Orleans, Louisiana, that produces low-sulfur vacuum gas oil (VGO) and multiple used motor oil (UMO) processing plants and collection facilities along the Gulf coast. Refiners have faced mixed fortunes in recent years with their investments in renewable fuels after a glut of new supply flooded markets and depressed renewable credit prices. US independent refiner Delek announced in August that it is temporarily idling three biodiesel plants in Texas, Arkansas and Mississippi as it explores alternative uses for the sites. Chevron said earlier this year it was indefinitely closing two biodiesel plants in Wisconsin and Iowa due to market conditions. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU crushing up in August on rapeseed, US soy harvest
EU crushing up in August on rapeseed, US soy harvest
London, 25 September (Argus) — EU and UK mills crushed more soybeans and rapeseed in August compared with the previous month and a year earlier, as inclement weather caused earlier harvests this year in Europe, increasing EU supplies. But total refined oil production levels were unchanged on the month. Fewer sunflower seeds (SFS) were crushed in August than in July, as high SFS prices lowered margins for crushers. Total oilseed crush levels increased on the month by 7pc to 3.5mn t in August, led by greater volumes of crushed soybeans and rapeseed, which increased by 6pc and 13pc, respectively. The UK and EU imported 135,000t less oilseeds on the month in August as the European harvest began, resulting in about 1.35mn t of imports in total. Production of semi-refined oil — typically used in the biodiesel sector — increased by 7pc on the month. But fully-refined oil — typically for the food sector — fell by 4pc, leaving total refined oil production virtually unchanged on the month. Rapeseed crushing rose by 13pc on the month in August and by 5pc on the year, as Ukraine, the UK and the EU began harvesting their 2024-25 harvests 3-4 weeks earlier than usual, given the crop's earlier flowering and ripening with unfavourable weather conditions. Soybean crushing continued to increase in August. But the share of soybeans in total oilseed imports has fallen — from 78.5pc in July to 71pc in August. The EU and the UK imported 200,000 fewer tonnes of soybeans in August than in July — or about 960,500t of soybeans in total. SFS crushing fell by 14pc in August to 0.4mn t on high SFS prices and limited stocks in the EU and Ukraine, as new-crop SFS arrivals — for the 2024-25 marketing year — do not start before this month. Nevertheless, SFS crushing increased by 17pc across the first seven months of this year on the back of greater EU crushing capacity. The strongest seed crushing growth expected by the USDA is in Romania, Bulgaria and Hungary, and to a lesser extent in Germany and Italy. By Madeleine Jenkins EU + UK crushing volumes mn t Aug-24 Jul-24 m-o-m change Aug-23 y-o-y change Jan-Aug 24 Jan-Aug 23 y-o-y change Soybean 1.21 1.14 6% 1.15 5% 9.5 9.6 -1% Sunflower seed 0.39 0.45 -14% 0.37 5% 4.0 3.4 17% Rapeseed 1.88 1.67 13% 1.72 9% 13.3 12.6 5% Semi-refined 0.35 0.33 7% 0.34 3% 2.7 2.6 5% Fully-refined 0.60 0.62 -4% 0.57 4% 4.9 4.5 8% Total Total oilseed 3.48 3.25 7% 3.24 7% 26.8 25.6 5% Total refined 0.95 0.95 0% 0.91 4% 7.5 7.0 7% Fediol Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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