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Oslo, 6 August: According to DNV’s summer students, LNG could easily become the most feasible means of fuel in short sea shipping. The students’ report was presented today in front of an audience of 200 people – including shipowners, representatives from the supply industry and Norwegian authorities.

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Front row: Katja Thonäng, Tiril Thomassen, Ellen Ueland, Andreas Løken, Torstein Skår, Kristine Hovland. Back row: Jørgen Trømborg, Harald Gundersen, Eivind K. Buer Johansen, Eyamba Ita. Photo: Anders Hammargren

Ten master’s students from Norway, Sweden and Nigeria, chosen among 150 applicants, have worked on this year’s summer project assignment – “LNG in short-sea shipping”– for the past six weeks. The scope of the project was to set up a fictitious ship owning company operating ships fuelled on liquefied natural gas (LNG) in the Nordic region. The students, who study technology and economics, have investigated challenges and opportunities of operating vessels on LNG.

During the six weeks the students have investigated the preferable trade and ship type for LNG operations, made specification to ship design and provided a viable fuel logistics solution. They have proven this to be safe, environmentally friendly and economically profitable.

Results
The market analysis conducted by the students showed that four oil tankers of Aframax size shipping crude oil were the most promising options when taking market attractiveness, technical feasibility, economic advantage and environmental impact into account. The most relevant ports within the trade were identified, and Primorsk, Mongstad and Teesport stood out as exporters while Rotterdam stood out as importer. While the major advantages of LNG as fuel are superior environmental performance and a lower price, the weaknesses are the immature LNG market as well as the limited distribution infrastructure. However, the students identified and presented a realistic approach to deal with these weaknesses.

Among other things the students suggested that, in order to make LNG available at a competitive price, large volumes of LNG are bought on the global market and then distributed to an onshore storage facility near Rotterdam. Bunkering of other vessels is then provided by a refuelling barge.

DNV CEO Henrik O. Madsen says “I was very impressed to see what the students presented here today. At times I have found it difficult to understand why the shipping industry has not switched to LNG – given the great commercial and environmental advantages. Today, with their presentation the students have provided ship owners with a blueprint, showing us all that it is 100% realistic to overcome the challenges with regard to LNG as fuel.”

Date: 06 August 2010

Background

The Nordic region is a highly trafficked shipping area that includes the Baltic Sea, southern parts of the North Sea and the English Channel. Due to upcoming emission regulations, particularly Emission Control Areas (ECAs), the shipping industry is facing major compliance challenges. In order to continue operation in the region, shipowners will need to make significant changes to their business by modifying their existing fleet or renewing their fleet so that cleaner propulsion technology is installed.

DNV has taken a leading role in making LNG propulsion safe and viable for vessels operating on LNG fuel. The first rules were developed by DNV and are likely to be implemented into IMO’s new rules for LNG propulsion by 2012. It is DNV’s intention to continue to be the primary mover concerning the technical safety of vessels operating with LNG propulsion; moreover DNV intends to remain a preferred partner for advisory and operational matters.

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