France's Total and Singapore's Pavilion Energy, through their subsidiaries Total Marine Fuels Global Solutions and Pavilion Gas, have signed an agreement to develop the LNG bunker supply chain further in the port of Singapore, the two companies said in a joint statement Tuesday.
The agreement between the companies covers the shared long-term time charter of a new generation LNG bunker vessel to be commissioned by Pavilion Gas by 2020. It also includes an LNG supply arrangement between the two companies enabling Total to deliver LNG bunker to its customers, the statement said.
The development comes after the companies concluded a memorandum of understanding in April 2017 to promote LNG bunkering in Singapore, the world's largest bunkering port, and signals the increased acceptance and commitment by customers and supplier toward LNG as a bunker fuel ahead of the International Maritime Organization's global sulfur limit rule for marine fuels.
The IMO will cap sulfur in marine fuels at 0.5% worldwide from January 1, 2020, from 3.5% currently. This applies outside designated emission control areas where the limit is already 0.1%.
LNG essentially eliminates both sulfur oxides and particulate matter emissions and reduces nitrogen oxides by up to 90%. It also helps tackle greenhouse gas emissions.
The progress is also important for Singapore, which has been at the helm of the initiative to promote LNG bunkering. The city state is also one of the world's most important LNG trading hubs.
A focus group, which was first formed in 2014 by the Maritime and Port Authority of Singapore, Antwerp Port Authority, Port of Rotterdam and Port of Zeebrugge, now consists of 11 ports and maritime administrations across Asia, Europe and North America.
In April 2017, Singapore also launched its first technical reference -- TR56 -- for LNG bunkering, which is aimed at providing a safe and efficient framework for conducting LNG bunkering operations in Singapore.
With LNG being readily available in Singapore, more vessels can choose LNG as a cleaner fuel of choice at the port of Singapore.
Ample LNG supply, thanks to burgeoning production from the US and Australia, means that fundamentals will not restrict its availability for bunkering. However, some sources have often cited lack of adequate LNG infrastructure and harmonization of standards and procedures as impediments to its widespread adoption globally, ahead of the IMO 2020 rule.
"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," Patrick Pouyanne, chairman and CEO of Total said in the statement.
This comes as Total Marine Fuels Global Solutions continues to develop the LNG bunker market.
The first milestones of its strategy were set in Europe, with the signature of LNG bunker supply contracts for Brittany Ferries and CMA CGM, as well as the long-term chartered bunker vessel with Mitsui O.S.K. Lines that will be positioned in northern Europe.
Pavilion Gas, for its part, has also been working toward the development of Singapore as an LNG hub.
In October 2016, Pavilion Gas was appointed as one of two importers to supply LNG to Singapore by the Energy Market Authority.
In January 2016, Pavilion Gas was awarded the LNG bunker supplier license to supply LNG bunker to vessels in the Port of Singapore.
In May 2017, the company carried out the first LNG bunkering truck-to-ship supply demonstration in Southeast Asia.
Last year, Pavilion Gas was also awarded a contract by PSA Marine for the supply of LNG bunker fuel from 2019.
Pavilion Energy looks forward to collaborate with partners to further develop the LNG bunker supply chain internationally, making it readily and reliably available for vessels worldwide, the company said separately.
