London-headquartered Newport Shipping is stepping up plans to roll out a comprehensive, project- based LNG fuel retrofit solution to shipowners across all vessel types. The company believes that retrofitting vessels to run on LNG is the optimum way to meet IMO environmental emission targets coming up in 2030 and 2050 and that, as a result, the need for a one-stop provider of specialist technical and financial solutions will increase.
Launched earlier this year, Newport Shipping’s turnkey retrofit solution encompasses equipment procurement, full-scope design work, on-site project execution at shipyard and post-delivery financing. Lianghui Xia, managing director at Newport Shipping, says: “We believe accelerating the scale of LNG retrofits is the most important way forward if the industry is to meet the zero-emission goal set by IMO. Without targeting the existing fleet for retrofits it simply won’t be sufficient to move the needle, so there is huge potential for LNG retrofits if the industry agrees on this point and moves in a coordinated fashion.”
One of the main challenges identified by Newport is the cost factor as retrofitting vessels to run on LNG is an expensive process with a potentially lengthy payback period. Xia adds: “Shipowners alone cannot take on the cost of retrofits. They will need support from other stakeholders, such as charterers, energy producers and distributors. The solution has to be industry wide, bringing in all stakeholders in the supply chain. It is not realistic to expect shipowners to pay for everything.”
What is needed, Xia argues, is a consensus that LNG is the best fuel option for the industry to achieve carbon neutrality. He suggests: “If the market agrees that LNG is the answer then costs will come down quite sharply.”
When considering the need to accelerate the uptake of LNG retrofits, Newport believes it can contribute through the provision of a long-term payment scheme.
“Our financial product eases the pain a little and helps owners to better manage the cash flow element of these projects,” he says. “In addition to providing turnkey technical solutions, we offer a five to seven-year payment plan without fixed vessel mortgage collateral.”
Cost is not the only obstacle in ramping up the scale of LNG retrofits. There are some technical challenges as well, including the loss of cargo space on some vessel types. Xia reveals: “We are currently working on an enhanced LNG retrofit solution for the container shipping sector, which is more compact and cost-efficient than conventional solutions available on the market. We will be launching this exciting innovation in the near future.” The company also highlights the need to develop LNG bunkering infrastructure, allowing for easier and more reliable access to LNG as a marine fuel.
Newport is in the process of teaming up with a number of engineering companies, equipment suppliers and shipyards to offer competitive retrofit options to owners around the world. The company has recently announced, for example, that it will be working with LGM Engineering, which specialises in marine LNG fuel gas supply systems and cargo handling systems for gas carriers and LNG bunkering ships.
The company is also working with its existing network of shipyards in China, Turkey, Oman, South Korea, Singapore and Indonesia, providing a flexible range of locations to carry out retrofit work according to trade routes. The company plans to expand this network geographically still further over the coming months, for instance to include the USA, and may also add yards with specialist LNG experience to support its retrofit programmes.
Its LNG retrofit programme has only fairly recently been launched, but Newport says it has already generated a lot of interest within the market. Xia concludes: “We hope to get to the planning, design development and procurement phase for our first LNG retrofits within the next 12 months. Naturally there is some hesitancy amongst shipowners given the uncertainties of the market right bow, but we believe that our financial solutions and access to technical expertise will overcome such concerns.”