Lack of infrastructure to hamper VLAC development

Development of a very large ammonia carrier (VLAC) market could be delayed by a lack of terminal infrastructure to allow discharge of 40,000-60,000t cargoes, said Steem1960 ammonia shipbroker Lisa Maria Assmann at the Argus Clean Ammonia conference in Tokyo.

Around 40 VLACs are scheduled to hit the water between 2026 and 2028, when an uptake in clean ammonia trade is likely to be pushed by public tenders from South Korea and Japan.

"VLACs cannot discharge these large volumes using the existing infrastructure," Assmann said. "We have storages that are much smaller than that, terminals with draft issues, LOA (length overall) issues. With all these problems, I do not see these large volumes being discharged in a speedy manner in the short-term, not before 2035-40 at least."

In the larger segment of gas carriers, the very large gas carriers (VLGCs) built between 2009 and 2022 cannot carry ammonia cargoes, according to the shipbroker. These vessels were built when there were no expectations of carrying ammonia at such volumes, and the capability was not included to save costs at that time.

"By 2030 we may have about 150 VLGCs available to carry ammonia, either at 86pc or 95pc capacity, but that is still a discussion for the future because we still do not have the infrastructure in place for the discharge," Asmann said.

Ship-to-ship transfers from larger to smaller vessels could be a solution in the medium term, Assmann said, but she pondered that even then there are regulation issues that would hamper its widespread use.

By Yohanna Pinheiro