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Total to co-charter Pavilion Energy's first LNG bunker vessel

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From left to right: Patrick Pouyanné, chairman and CEO of Total, and Mohd Hassan Marican, chairman of Pavilion Energy, at the signing of the agreement to jointly develop an LNG bunker supply chain in the port of Singapore .

THE marine fuels arm of France’s Total has agreed to co-charter, on a long-term basis, the first liquefied natural gas (LNG) bunker vessel to be commissioned by the gas division of Temasek-backed Pavilion Energy.

The two parties on Tuesday signed a heads of agreement on the sidelines of the World Gas Conference 2018 in Washington.

The agreement covers the shared long-term charter of a vessel to be built for ship-to-ship transfer of LNG as marine fuel. This vessel, to be commissioned by Pavilion Gas by 2020, is one of first two to be built from scratch for LNG bunkering operations in Singapore. 

The use of LNG as marine fuel is one option open for shipping lines to meet the requirements of new regulations on ship emissions.  The International Maritime Organization (IMO) in October 2016, confirmed the imposition of a 0.5 per cent global cap on sulphur content in marine fuels from 2020.  Burning of LNG produces zero sulphur dioxides, and this cleaner burning fossil fuel has emerged as a legitimate alternative for bunkering purposes.

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Patrick Pouyanné, chairman and CEO of Total, said: "The development of infrastructure is one of the key drivers for the take-off of LNG as a marine fuel. For the past few months, Total has been very active in that direction. The agreement signed with Pavilion Energy marks a new step in our commitment to provide our customers with fuels that are more environmentally friendly, particularly in Singapore which is the leading bunkering hub in the world.”

Hassan Marican, chairman of Pavilion Energy, said: “Pavilion Energy is pleased to work with Total on establishing a robust LNG bunker supply chain in Singapore. Our partnership sets the stage for making LNG bunker readily and reliably available for the market. Together, we mark a decisive step forward in leading the change towards cleaner and more responsible solutions with LNG bunkering in the region.”

Pavilion has won a co-funding grant of S$3 million from the Maritime and Port Authority of Singapore (MPA) to build this vessel.  MPA has awarded another S$3 million grant to FueLNG, a joint venture between Shell Eastern Petroleum and Keppel Offshore & Marine.  Pavilion is one of two MPA-licensed LNG bunker suppliers.   

Total has already signed LNG bunker supply contracts with Marseilles-based container shipping giant, CMA CGM and Brittany Ferries.  The Business Times understands that for now, these contracts are intended to be fulfilled out of key ports in Europe.  Total has also chartered in a vessel from Japanese shipping line Mitsui OSK Lines to support its LNG bunkering operations there.