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DNV GL says it has conducted a market study on the future LNG bunker market in the Iberian Peninsula as part of a plan to drive the development of an EU-wide network of LNG refuelling points.

The study was carried out on behalf of the six-year CORE LNGas hive project, which aims to provide an investment plan for LNG fuelling in Spain and Portugal. The EUR 33 million project is coordinated by Enagas, and co-funded by the European Commission.

In the study, DNV GL has forecasted the potential future demand for LNG as a ship fuel and the required future infrastructure for the areas around Spain and Portugal, covering the Mediterranean, Atlantic and Gibraltar Strait peripherical regions.

The results of DNV GL's analyses have now contributed to the CORE LNGas Hive project's recommendations for the development of the LNG supply chain infrastructure, involving more than 40 ports in the project area.

Fernando Impuesto, CORE LNGas hive project coordinator from Enagas, said: "The consortium partners selected DNV GL to execute the demand studies of the project based on the fact that DNV GL has been at the forefront of the development of LNG as a ship fuel. DNV GL's network and market knowledge have added to a successful outcome. Through this market study we now have a strong decision basis to prepare the supply side on the Iberian Peninsula in meeting future demand for LNG bunkering at competitive conditions."

Results of the study

In interviews conducted by DNVL, the key motivation for shifting to LNG is said to have changed from being encouraged by the lower price of LNG - which compensated for the additional costs associated with installing LNG fuel equipment - towards compliance with emissions regulations.

DNV GL says the study has revealed a "huge potential for LNG" as a bunker fuel that will utilize the current spare capacity of existing LNG import terminals. The consolidated quantitative results show that by 2030 up to 2 million cubic metres per year (cbm/y) of LNG is to be bunkered by ships (with Algeciras, Las Palmas and Barcelona as the most important ports), and, by 2050, approximately 8 million cbm/y of LNG.

On the logistical side, the market study concludes that existing LNG terminals will need to develop breakbulk capacity to allow for loading LNG to small carriers and LNG bunker vessels. In most ports, DNV GL says the development of local intermediate storage capacity will need to be synchronized with increasing LNG demand by larger vessels.

Besides bunker stations and local storage facilities, small carriers for delivering batches of LNG to ports over sea will play an important role in the future, DNV GL says.

However, in order to realize the predicted LNG supply chain in 2030, DNV GL advises that about EUR 1 billion of capital expenditure (capex) investment will be needed, and EUR 3.7 billion by 2050.

Liv Hovem, Senior Vice President, DNV GL - Oil & Gas, remarked: "DNV GL's market study has clearly shown the major potential LNG has as a fuel in the region. We hope that the conclusions from our study will help ship owners, natural gas suppliers, bunker companies, port authorities and LNG terminal operators gain the confidence they need to move forward with LNG as a fuel for a more sustainable shipping industry."