LNG may soon overtake oil as main ship fuel

[LONDON] Natural gas has started to challenge oil as the dominant transport fuel with companies building gas-powered ships and installing networks of service stations on water and land. The expectation of cheaper gas and tighter environmental regulation have created demand for a cleaner alternative to the oil-based fuels that have so far dominated the transport world.

Although European and Asian liquefied natural gas (LNG) prices are currently high, trading at almost US$20 per million British thermal unit (mmBtu) in Asia and around US$10 per mmBtu in Europe because of booming demand, analysts expect prices to drop substantially later this decade when new production rises.

Germany, Singapore and the Netherlands are among the countries investing in natural gas transport hubs while companies including Royal Dutch Shell, Gazprom and Total are also developing LNG fuel infrastructure. Germany is making its first move into LNG for transport after Bomin Linde LNG signed a deal in January to supply ferry firm AG EMS and it is now building two LNG bunker terminals in Hamburg and Bremerhaven, due to start operations in 2015.