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LNG on the rise

11 May 2022

When it comes to alternative fuels there´s a lot of buzz about hydrogen and ammonia, but it is LNG powered vessels that are being built. During the spring, 121 orders for new LNG vessels were placed worldwide, which is an increase compared with the same period last year.

“Our latest AFI figures can reveal that April saw the strongest month of growth ever for LNG fuel newbuild contracting,” reported DNV principal consultant Martin Christian Wold in a social media post last week.

“Despite everything, 2022 is off to a strong start with orders well ahead of the record year 2021”, he continued.

In April, 51 shipbuldning contracts were signed, and during the first four months of the year a total of 121 orders were placed for LNG-powered vessels at shipyards around the world, according to figures from DNV's Alternative Fuels Insight (AFI). Last year, a total of 240 orders were placed.

April's order boom means that the global fleet of LNG-powered vessels that are either in operation or under construction is approaching 800 vessels - of these, 286 are in operation and 489 ordered. In addition, there are another 221 vessels that are LNG-ready, which means those for built with technology that enables a future conversion to LNG.

Today, less than one percent of the world's ships run on alternative fuels. If you look at the hype and the buzz about hydrogen and ammonia, it is easy to believe that within the next few years there will be significantly more ships running on alternative fuels. And there will. But the vessels will not be powered by hydrogen or ammonia - these technologies are still in their infancy and take years to develop for greater operation. LNG vessels, on the other hand, have been up and rolling for a long time and actually have the advantage of being able to switch to fossil-free biogas. The majority of all vessels that run on alternative fuels are LNG vessels.

However, DNV predicts that order bookings will not keep the same rapid pace for the rest of the year. Higher fuel and vessel prices mean that shipping companies are hesitant and that bunkering capacity may be insufficient to service all vessels

"As the situation is on the market, it is easy to understand the fuel suppliers' hesitation in increasing their efforts and contracting more tonnage," commented Martin Christian Wold.

“Last month’s orders alone for LNG-fuelled ships added about half a million tonnes of LNG demand. Should this trend continue at the same pace, we could reach the 1000-vessel mark by the end of this year. However, although we expect growth to continue, it is likely to be more modest for the rest of the year.”

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