TOTE: LNG Bunkers Are the Answer to Oil Price Volatility

TOTE: LNG Bunkers Are the Answer to Oil Price Volatility

The ongoing volatility of oil prices may be one of the reasons why shipowners continue to see a value in liquefied natural gas (LNG) as a marine fuel, despite the fact that plunging crude prices have so far eroded much of the cost benefits of switching to LNG, Bloomberg reports. 

According to U.S.-based TOTE Inc. Executive Vice-President Peter Keller, LNG is a good alternative to crude given its “abundance of supply and the relatively stable prices.”

“Oil has tumbled to 40 bucks and may be back up to 85 or 90 a year from now,” he said  

“You can’t run a business with a long-term horizon with that kind of volatility.”

TOTE launched the world’s first two LNG-powered containerships earlier this year, while worldwide there are reportedly about 70 ships running on LNG, with that number forecasted to possibly pass 1000 by 2020.

Along with prices, a desire to curb emissions is also reportedly on many shipowner’s minds. 

“We’re seeing greater diversity in LNG pricing mechanisms,” said Jason Feer, head of business intelligence at U.S.-based Poten & Partners.

“People want to see some diversity in shipping fuel, and in the short- to mid-term, there’s likely to be quite a bit of LNG available at competitive prices.” 

Earlier this year, the China Classification Society (CCS) also commented that any negative effect of cheap crude prices on LNG would likely be short term.

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