IMO 2020 Comes into Effect Starting Next January

South Korean shipbuilders are focusing on environmentally friendly vessels, including LNG-fueled ships.

South Korean shipbuilders are focusing on strengthening their competitiveness in environmentally friendly vessels, including LNG-fueled ships, as the International Maritime Organization (IMO) 2020 fuel regulation comes into effect in January next year. As LNG fuel-powered vessels are expected to account for more than 60 percent of the global new shipbuilding orders by 2025, domestic dockyards are seeking to secure technical competitiveness ahead of their rivals in China and Japan.

The South Korean government is planning to place orders for a total of 140 LNG fueled ships over the next six years from 2020 to 2025 after wrapping up pilot projects this year, according to the Ministry of Trade, Industry and Energy (MOTIE) and shipbuilding industry sources on Sept. 2. This is part of its plans to convert government and private vessels into LNG-fueled ships. Accordingly, the ministry has set aside 2.80 billion (US$2.31 million) and 8.50 billion won (US$7.01 million), respectively, for building two LNG-fueled towing ships and conversion of outward-bounders to eco-friendly ships.

The government has rolled up its sleeves to replace existing vessels with LNG fuel-powered vessels because these ships are the shipbuilding industry’s new growth engine. Under the new IMO regulations, vessels are required to lower sulphur content in their fuel from 3.5 percent to 0.5 percent by Jan. 1, 2020.
 

Ship owners have two immediate options to comply with IMO 2020 regulations for their existing fleet: switch to high-priced low sulphur fuel oil (LSFO), or fit a scrubber, an air pollution control device that removes harmful materials from gases. However, an increasing number of countries are prohibiting even a scrubber. Cases in point are Singapore and China. So, more and more ship owners are forecast to invest in ships fueled by LNG.


South Korean shipbuilding firms, including Hyundai Heavy Industries Co. and Samsung Heavy Industries Co., are fully ready for the change.

Hyundai Samho Heavy Industries Co. successfully delivered a 114,000-ton very large crude-oil carrier (VLCC), the world’s first LNG-fueled vessel, to Russia's shipping company Sovcomflot in July last year. Hyundai Mipo Dockyard Co. clinched an order for two 20,000-ton ro-ro vessels worth 163 billion won (US$134.43 million) from a European shipping company in July this year. The firm will start building the ships in August 2020 and deliver them in November 2021. These are the first ro-ro vessels built in South Korea that will be equipped with a dual fueling engine. Hyundai Heavy Industries Group won orders for a total of 26 LNG-fueled ships worth US$2.10 billion (2.55 trillion won).

Samsung Heavy Industries also received a 751.30 billion won (US$619.63 million) order for 10 LNG-powered vessels on Aug. 19 this year. The company has been applying various forms and materials to LNG-fueled tanks and engines since 2012 to secure competitiveness. S-FuGaS, a LNG fuel supply system, is the outcome of research and development by the shipbuilder. The new system vaporizes liquefied LNG at minus 163 degrees Celsius and supplies it to a ship's main engine or generator.

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