LNG-powered Ship Market Expanding with Scrubber Ban

With the implementation of new IMO regulations around the corner with regard to the sulfur content of ship fuel, an increasing number of countries are prohibiting the port entry of ships equipped with scrubbers. Under the circumstances, South Korean shipbuilders are expected to win a number of new orders for LNG-powered vessels.

Malaysia recently announced that it would prohibit the installation of open loop scrubbers in the case of ships navigating within 12 nautical miles off its coast. An open loop scrubber is characterized by conducting water washing on exhaust gas and discharging the resultant wastewater to the sea. In contrast, closed loop scrubbers are designed to circulate wastewater in ships without discharging it to the sea.
 

Scrubber installation is inexpensive and can be carried out quickly and, as such, many shippers have preferred it as a way of avoiding environmental regulations. A scrubber-equipped ship can use bunker-C oil, which is a cheap fuel, although its cargo space decreases along with fuel efficiency.

These days, however, more and more governments are prohibiting the navigation of scrubber-equipped ships due to the pollutants discharged from such ships to the sea. For example, China and Ireland already prohibited the use of open loop scrubbers in their coastal areas and Singapore and the United Arab Emirates are going to prohibit the use of open loop scrubbers in ports from January next year. No scrubber can be used in Norway and Germany, Belgium and California are preparing to follow suit.
 

This trend has led to more orders for LNG-powered ships. Samsung Heavy Industries signed a 751.3 billion won contract in August this year to supply an Oceanian shipper with 10 LNG-powered crude oil carriers. The ships will be equipped with the S-Fugas fuel supply system developed by Samsung Heavy Industries so that sulfur oxide, nitrogen oxide and carbon dioxide emissions can be reduced by 99 percent, 85 percent and 25 percent as compared with ships using diesel oil, respectively.

According to the Korea Trade-Investment Promotion Agency, LNG-powered ships are expected to account for 60.3 percent of the total new shipbuilding contracts in 2025 and the ratio is expected to be equivalent to US$108.5 billion. South Korean shipbuilders are currently leading the LNG-powered ship market as well as the LNG carrier market. This year, a total of 140 orders have been placed for LNG carriers and South Korean shipbuilders have won 102 out of the total.