LNG’s Baltic future discussed in Estonia
The LNG in Baltic Seaports Project, an LNG industry group with a membership comprising eleven Baltic seaports from nations such as Estonia, Sweden, Finland, Denmark, Sweden, Lithuania and Germany, recently held a stakeholders platform seminar at Estonia's Port of Tallinn.
The project is looking to introduce an LNG grid system in the Baltic region, a move motivated by the forthcoming 2015 MARPOL Tier III Sulphur Emission Control Area (ECA).
This ECA requires fuel to be limited to 0.1 per cent sulphur at the beginning of next year in the Baltic region, as well as the North Sea and the English Channel. This will be followed by a nitrogen-restricting ECA in 2016 for upcoming newbuildings.
At the seminar, speakers and presenters focused on the progress made towards a full LNG network, as well as the hurdles that still lie ahead. Several stakeholders pointed out that the creation of an LNG bunkering network was a politically motivated decision, with the economic impact not fully considered.
Indeed, for LNG to truly succeed, politics must partner with industry, perhaps in the form of public-private partnership agreements to develop infrastructure, research and development, and financing.
Lolan Eriksson of Finland's Ministry of Transport and Communications said LNG presented an opportunity to "create growth and well-being in a region of 80-90 million people."
Bogdan Oldakowski, Secretary-General of the Baltic Ports Organisation, was less optimistic. The ECAs will cause route cancellations, as well as see a shift from sea to land transport and a loss of competitiveness for the Baltic Sea Region, he said.
Though critical of the forthcoming IMO legislation, the Baltic Ports Organisation was still taking a proactive approach, acknowledging LNG's ability to create new logistics markets.
Gunnar Helmen of LNG supplier Skangass noted the development of small-scale LNG bunkering in the Baltic, with LNG's price fast decreasing. "LNG terminals of all sizes will supply customers in industry, homes, ships and land transport," he said.
Meanwhile, Lithuania's Klaipeda Naftgas, an oil terminal operator, announced it was on the final lap of its LNG terminal project, and the Managing Director of Bominflot Estonia, Anatoli Belov, said the decreasing price of LNG in comparison to low-sulphur marine fuel would give LNG another global boost.
Ultimately, as Stig Hagen, Director of Norway's Kanfer Shipping stated, it's all about pricing.
"LNG will be used, but not now," he said. "A combination of industry and shipping is a must. The more companies using LNG, the clearer the cost advantages become. It is not like the oil bunker business."
The subject of subsidies also arose, as the EU will play a big role in promoting capital-intensive LNG technology on environmental grounds. But how much should public funding play in market economy? According to Shelly Forrester, of the European Commission's Innovation and Networks Executive Agency (INEA), a minor one.
Nevertheless, the EU has earmarked billions to be spent in the future on cleaner transport, energy and telecoms under its new Connecting Europe Facility program.
Right now, Europe has surprisingly little LNG. Most must be imported to Rotterdam or Zeebrugge from non-European suppliers. Vice President of the EU, Estonian Siim Kallas, summed up the situation as "taking small concrete steps".
"It is more complicated than we thought," he said. "The commission actively supports LNG, but it's a chicken-and-egg problem. However, we'll have a LNG network by 2025 – much later than I wanted. LNG is the future though."
Mr Oldakowski of the Baltic Ports Organisation agreed. "LNG is coming slowly – but it is coming."
John Pagni
Image Source: Wikisiky/Wikimedia
