Demand for methanol as a marine fuel is expected to be over 6 million tonnes per annum from the mid-to-late 2020s, according to Dutch fuel supplier and hydrogen product producer OCI Global.
Announcing its second quarter results today, OCI — which claims to be the world’s largest supplier of green methanol — said methanol is continuing to gain “significant traction” with over 200 vessels comprising existing ships, newbuildings and retrofits expected to be on the water over the next five years.
“Other than new-build orders, we are seeing methanol dual-fuel retrofit projects being announced which will lead to further incremental demand,” the company said.
OCI Global chief executive Ahmed El-Hoshy said: “Methanol as a shipping fuel is kicking off now, with the first methanol-fueled container vessel delivered last month, which we estimate will create more than 6 million tons incremental methanol demand over the next three to five years.”
The company has supplied green methanol to AP Moller-Maersk 2,100-teu feedership newbuilding Maersk Solstice in Ulsan, South Korea and Singapore on its maiden voyage to its naming ceremony in Copenhagen. The ship will also be refuelled in Egypt and Rotterdam.
Bunker brokers have told TradeWinds Maersk is paying $2,500 per tonne for the green methanol supply for this voyage.
Speaking about the voyage of Maersk Solstice OCI said: “It provides proof-of-concept for green methanol as a safe, efficient, commercially-ready fuel for global shipping, establishing it as the low-carbon fuel catalysing the decarbonisation of the shipping industry.”
On 28 July OCI announced it had signed a deal to supply green methanol to feeder ship operator X-Press Feeders’ newbuildings in the Port of Rotterdam from 2024.
El-Hoshy described OCI as “excited about the opportunity for our methanol business”, despite the price declines during the second quarter and a delay in demand recovery due to the continued weak macro environment.
But OCI said in its results statement: “There are limited new methanol greenfield supply additions in the medium term, which should result in tightening methanol markets when end markets recover and demand from the maritime sector accelerates.”
OCI reported a net loss of $7m for the second quarter of 2023, a turnaround on a net profit of $528m in the same period a year earlier.
Revenue also plummeted, down at $1.4bn from $2.9bn in the same quarter of 2022.
The company said its total own-produced methanol sales volumes increased by 9% in the second quarter of 2023 but it flagged up lower selling prices and realised gas hedging losses of $27m.
OCI said its green methanol supply business HyFuels contributed positively to the results of its methanol Europe segment.
This fuels business contributed $10m to adjusted EBITDA during the second quarter and $31m in the first half of 2023, the company said.
It said this partly offset the costs related to temporary shutdown of its methanol facility in the Netherlands which has been closed since June 2021 due to the high gas price environment.
