Maritime market update: LNG propulsion versus the alternatives

Risavika LNG has gained 2.1 % week on week, reaching 26.37 EUR/MWh for April. European gas prices for front month are supported by low levels of inventories, which will start injection season next month, while there is still uncertainty about weather and supply conditions in April.

Benchmark oil prices continued to rise as OPEC+ agreed not to increase their production in April. Therefore, oil products also gained despite inventories build. Fuel oil 3.5 has gained 6.9 % and closed at 386.04 USD/t for front month contracts, low sulfur oil (MFO 0.5) has gained 4.9 % and closed at 493.6 USD/t, and marine gasoil (MGO 0.1) has increased by 3.3 % week on week and closed at 538.89 USD/t.

Shipowners are investing in alternative, non-oil-based fuels that offer a longer-term solution to meet future stricter regulations from the International Maritime Organization (IMO). These alternative fuels, such as LNG, methanol, LPG, biofuel, ammonia, hydrogen and electricity, still amount to a mere 3.7% the world’s shipping fleet by tonnage. LNG is the most popular by a considerable margin, accounting for 3.5% of total ships in service and 26.6% of orders, according to International Gas Union (IGU), while the alternatives are yet to be proven commercially viable. There are 128 ports worldwide now o offering LNG bunkering services, compared to 60 five years ago and 12 a decade ago. Further 70 ports will have bunkering facilities within the next three years.

Front Month Price index
LNG Risavika*	LBG blend Risavika**	FO 3.5 FOB Rdam	MFO 0.5 FOB Rdam	MGO 0.1 FOB ARA	ULSD FOB ARA	Unit
26.37	29.37	27.68	33.89	37.00	39.35	EUR/MWh
446.64	497.46	386.04	493.60	538.89	548.89	USD/t

LNG Risavika - LNG FOB Risavika

LBG Risavika 10 % - 10 % blend of Liquified Biogas

FO 3.5 FOB Rdam – European 3.5% Fuel Oil Barges FOB Rdam (Platts) Futures Quotes

MFO 0.5 FOB Rdam - European FOB Rdam Marine Fuel 0.5% Barges (Platts) Futures Quotes

MGO 0.1 FOB ARA - Gasoil 0.1% Barges FOB ARA (Platts) Futures Quotes

ULSD FOB ARA - European Diesel 10 ppm Barges FOB ARA (Platts) Futures Quotes

Source: CME Group, Gasum, IGU

*An estimate for LNG FOB Risavika

** An estimate for 10 % LBG blend FOB Risavika