Pipeline Magazine speaks to Philip Olivier, CEO of ENGIE Global LNG, exclusively about what the future holds for gas and LNG and the efforts by the French firm to find new outlets
What further advances can we expect from ENGIE in the next 5 years in delivering LNG as a marine fuel? And in your opinion, how important is LNG bunkering to the industry?
ENGIE, together with Mitsubishi Corporation and NYK Line launched in September 2016 Gas4Sea, a new brand to market jointly LNG as a marine fuel around the world. ENGIE Zeebrugge, the world’s first purpose built liquefied natural gas bunkering vessel (LBV) arrived in April 2017 in Zeebrugge, to supply LNG as a marine fuel to ships in Northern Europe. Since then, it is performing regular ship-to-ship bunkering services in the Belgium port. The next step will consist in adapting ENGIE Zeebrugge business model to other parts of the world, as we are discussing with interested counterparts to develop new markets outside Europe especially in Asia and America. A sign of the growing need of LNG bunkering and the success of our Gas4Sea brand, is the signature of a new deal with Statoil, to supply four dual fuel vessels expected to come into service in early 2020 in Rotterdam.
Today’s global bunker demand is estimated to be about 300 million metric tons of LNG equivalent. LNG bunkering development that depends on emissions regulations, should benefit from the enforcement of a sulphur cap globally starting in 2020. Consequently, to meet the environmental restrictions, shipping companies could use LNG instead of HFO, as SOx and NOx emissions are significantly lower. As such, ENGIE expects that LNG bunkering will have a 10 percent market share of global bunker demand by 2030. This shows the importance of these new LNG usages for our industry, as it will increase demand, which is always a good perspective in an oversupplied market.
In the long-term, what role can gas play in delivering cleaner, more efficient and cost-effective fuel to both established and emerging customers?
Environmental concerns and energy transition are at the heart of international debates both in developed and developing countries. Developed countries are more concerned by climate changes caused by carbon emissions, which is a long-term phenomena; while air quality and pollution generated by nanoparticles and SOx/NOx emissions, is a critical short-term issue for many developing countries. To cope with demand fluctuations (seasonality of energy needs that can vary as much as four times between summer and winter) and renewables intermittency, the energy system will need a component providing agility and robustness. As natural gas is the cleanest and most efficient fuel to complete renewable energies intermittency, it can play this role. In this framework, LNG provides more flexibility than pipeline gas to manage demand fluctuations. It can (i) easily meet decentralisation needs, (ii) respond to temporary demand increase (FSRUs, etc), and is a source of gas supply diversification. Energy transition can’t be achieved without strong regulatory measures that accelerates coal-to-gas and oil-to-gas switching for power production. Many countries have already implemented carbon pricing, through Emission Trading Systems or carbon taxes. Broadening and reinforcing these schemes is key.
In your opinion, how are companies advocating the increased use and need for gas and LNG?
Gas and LNG advocacy levers depend on market cycles. In a sellers’ market, where gas/LNG are scarce, the industry needs to guarantee to customers the access to the molecule and thus invest upstream (Exploration & Production and liquefaction), as it was the case at the beginning of this decade. In a buyers’ market like today, developing new downstream markets and new gas/LNG usages becomes the priority.
ENGIE’s recent partnership with AES to market LNG in the Caribbean and Central America and the launching of Gas4Sea brand are good illustrations of our efforts to find new outlets. Anyhow, the best way to advocate gas and LNG is to always find solutions to answer customers’ needs and build trustful and sustainable relationships.
Can you tell us a bit more about the importance of the partnership with AES and how it will benefit LNG supply to the Caribbean?
ENGIE’s long-term partnership with AES is a three-step build-up. The binding Memorandum of Understanding signed in March 2016 was the first step. Under this agreement, ENGIE will supply up to 0.4 mtpa LNG from 2018 on a 10-year period at Costa Norte LNG terminal in Panama. In December 2016, a 12-year agreement was signed, to jointly market 0.7 mtpa of LNG in the Caribbean. This year, in May, the LNG partnership has been extended to Central America.
This partnership constitutes a real opportunity to share skills and know-hows to foster the development of natural gas in the Caribbean and Central America. It also underlines ENGIE’s willingness to build progressive, sustainable and truthful relationships. This new partnership is an opportunity to trigger oil-to-gas switching, as the Caribbean and Central America rely heavily on oil for power generation (respectively 64 percent and 34 percent of the generation mix in 2014).