Shell will charter ten new Very Large Crude Carriers powered by liquefied natural gas as the energy giant seeks to reduce carbon emissions from its crude oil tanker fleet.
Long-term charter agreements were signed with Advantage Tankers, which will charter out four of the vessels, with AET and International Seaways chartering out three each.
All ten ships will be built by DSME in South Korea with deliveries beginning in 2022. The charters will cover seven years.
Shell says the charters comes as it continues to significantly invest in LNG for its long-term charter fleet with 14 dual-fuel LNG ships in service by the end of 2021. These ten vessels in particular will be feature main engines and a ship design to offer the lowest possible methane slip and highest fuel efficiency, with on average 20% less fuel consumption compared to other “eco” VLCC vessels on the water, according to Shell.
Shell says the order is also expected to bring the total global dual fuel LNG fleet to 475, putting the global fleet on track to double by 2023 as predicted in Shell’s 2021 LNG Outlook.
Although not carbon-free, LNG is viewed as a key transitioning fuel as the shipping industry looks to reduce its greenhouse gas emissions by half by 2050 in alignment with International Maritime Organization targets.
“Today and for the foreseeable future, LNG is the choice for new builds to ensure we are not adding heavier emitters into the global fleet while we work hard at developing zero-emissions fuels,” said Grahaeme Henderson, Global Head of Shell Shipping & Maritime. “This significant commitment will see Shell hit a new milestone for our fleet decarbonisation with an average of 50% of our crude tankers on time charter powered by dual-fuel LNG engines once in service. There is real urgency to tackle emissions from this sector and adopting LNG while developing zero-emissions fuels options, will make a significant difference to cumulative emissions.”
In recent years, Shell has been working to rapidly make LNG available on global trading routes at major ports in Europe, Asia and North America to meet demand as more and more tankers, bulk carriers, and containerships continue to opt for dual-fuel LNG power. By 2023, Shell expects marine LNG demand to reach around 3.6 million tonnes with 45 bunker vessels expected to be in service.
“We are pleased to support Shell’s leadership in significantly reducing the carbon footprint of the maritime sector and are excited to partner with them on this critical objective,” said Lois K. Zabrocky, International Seaways’ President and CEO.
“Advantage Tankers is very happy and proud to be part of this exciting project together with Shell,” commented Tugrul Tokgoz, CEO of Advantage Tankers. “LNG has the benefit of being an abundant and low-cost fuel source and importantly produces 30% less carbon emissions than alternative conventional fuel used today.”
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