Shipowners wanting to grow or renew their fleets have been puzzling over newbuilding fuelling choices that will ensure ships meet the IMO’s 2030 and 2050 emissions targets and avoid vessels becoming stranded assets.

MAN Energy Solutions senior vice president Bjarne Foldager, who is head of the two-stroke business unit for the Danish engine manufacturer, is aware of owners’ hesitancy, but said shipping has to make significant changes to reduce its greenhouse gas emissions.

“There is a growing pressure that we need to do something,” he told TradeWinds. “I don’t think we have the silver bullet, but I think we have a good understanding of what we need to do here and now.”

Foldager, a former long-serving employee at AP Moller-Maersk, believes modular engine construction is the answer.

Huge interest

“We don’t know exactly which fuel will be the one in 2050,” he said. “But the way we are constructing and designing our engines today is we will make sure they are modular to the extent that if they cannot burn the fuel from the outset, then we will be able to retrofit the engine to cater for the future needs.”

Foldager said MAN Energy Solutions has seen “huge interest" in retrofitting, with the company sending out a raft of preliminary offers — the bulk for switches to LNG fuelling.

He pointed to completed and ongoing projects, including Nakilat’s 267,376-cbm Q-Max Rasheeda (built 2010), which was converted from burning heavy fuel oil to gas; Hapag-Lloyd’s retrofit of its 15,000-teu containership Sajir (built 2014) to use LNG as fuel; and BW LPG’s project to retrofit 12 of its VLGCs to run on LPG.

But the switch for the Rasheeda and the construction and installation of an integrated membrane-type bunker tank on the Sajir cost tens of millions of dollars.

So is retrofitting economic?

“Absolutely, or they [owners] would not do it,” Foldager replied. “The whole energy transition will only happen if it is business viable.”

Acceptable payback period

He conceded that there has to be an acceptable payback period, or a fuelling retrofit job will become a demonstration project and will not be viable. The larger the ship and more fuel burnt, the bigger the benefit is likely to be, he said.

Also, the aim is to carry out the retrofit during a ­vessel’s first five-year dry-docking. In contrast, retrofitting may not be worthwhile for a 15-year-old bulker with a remaining lifetime of five to 10 years.

On the technical side, Foldager said the engine is not the largest or most expensive part of a retrofit.

The engine frame, base, cylinders and pistons remain in place, while other components such as the piston rings and injection systems will need to be changed. A two-stroke diesel engine prepares a ship for flexibility from an engine perspective, he added.

However, the cost and siting of bunker tanks and fuel gas systems can be more complex and expensive.

Foldager gave the example of a bulker newbuilding: if the owner is contemplating a switch to using LNG in five years, it should think about strength­ening the deck to support future bunker tanks.

But it is commercially that he envisages the greater challenges.

He said the price of a main engine ranks as a single-digit percentage of the cost of the fuel a vessel will consume over its lifetime.

Greater alignment

MAN Energy Solutions sees a need for greater alignment from all participants along the value chain, from fuel production to bunkering, and he revealed that it is working on several new partnerships.

The company has seen a drop in retrofit enquiries during the Covid-19 pandemic, with some projects paused and the lockdown measures creating practical barriers.

“People have other priorities and are waiting to see where the oil price is going,” he said. “If we stay at historically low oil prices, then the payback time will be ­negative for retrofits.

Energy transition

“In the longer term, we expect oil price recovery and even a case where we will see energy transition gain speed.”

He was coy about discussing MAN Energy Solutions’ share of the two-stroke engine market. However, he admitted there is “head-on competition” for every project out there.

His message to owners looking at their next newbuildings: “Make sure you maintain your flexibility to switch to other fuels in five to 10 years from now. Don’t exclude any future options. It is not ‘one size fits all’.”