Spanish energy company Enagas has won over €20m ($23m) in funding from the European Union to build and supply two LNG bunker vessel (LNGBV) newbuildings as it grows its natural gas value chain.
Fearnley LNG Advisors, which has worked closely with Enagas small-scale LNG arm Scale Gas on both projects, told TradeWinds that the company has been awarded €9.2m for a 5,000-cbm vessel that will be based in Barcelona.
The LNGBV will be constructed in Spain — a first for this type and size of vessel for the country’s shipyards — and be used to bunker cruiseships when it goes into operation in 2022. Enagas operates an LNG receiving terminal in Barcelona that will supply the vessel.
The Fearnley LNG team said there is a long-term charter in place with a major supplier, without naming the charterer.
Carnival Corp has bunkered its first LNG-fuelled vessels in Barcelona under supply contracts with Shell.
A final investment decision on this first LNGBV newbuilding for Scale Gas is described as “imminent”.
In a second tranche of funding Scale Gas has netted €11.3m to build a 12,500-cbm LNGBV that will operate out of Algeciras.
This vessel will also be used to bunker ships in the Strait of Gibraltar and Tangier region, loading LNG out of Enagas’ Huelva terminal.
Fearnley LNG estimates the demand for LNG as bunkers in the Algeciras region will amount to at least 1.8 Bcm, or 800,000 tonnes per year, by 2030.
There is firm interest in place for 50% of the capacity of this larger LNGBV leaving room for other partners to take up interest in the bunkering unit, Fearnley LNG said.
An FID on this project is expected this year with the vessel scheduled to be in operation by 2023.
The funding for both of the LNGBV projects is awarded from the EU’s Connecting Europe Facility grant scheme, which supports transport infrastructure, connectivity and the switch to greener fuels for transport.
Scale Gas was set up by Enagas in 2017 to invest in small-scale LNG infrastructure and has wider ambitions to expand its business outside Spain.
Enagas, which has some 50 years’ experience in LNG, regards the company and LNG bunkering as a natural extension of its value chain.
The gas network operator believes this latest EU funding is a clear mandate for LNG and gas to be used as a transition fuel in the marine sector.
The company also sees the support of the EU to its activities is very significant
Fearnley LNG said that over the last nine months it has been meeting with LNG suppliers as potential charterers and capacity holders in the LNGBVs and likely shipowner bunkering customers. It has also been advising on the newbuilding design for the Algeciras vessel and on commercial negotiations with various counterparties.
The LNG advisory arm of Norwegian broking house Fearnleys, which also worked with Dutch company Titan LNG, said it is engaged on “numerous other LNG bunkering projects in NW Europe, North America and Asia”.
