Rolf Fiskerstrand, Director General of Fiskerstrand Verft AS: “New fuel regulations could diminish the freight shipping industry”

Shipping industry is entering a new energy era. Rolf Fiskerstrand, Director General of Fiskerstrand Verft AS, which built the world's first dedicated LNG bunkering vessel, tells IAA PortNews about advantages and costs related to construction and using of LNG fuelled ships and LNG bunkering vessels.

- Mr. Fiskerstrand, you have done a lot to promote the idea on the use of LNG as marine fuel, first in Norway and then worldwide. Could you, please, tell more about it?

- The Norwegian Shipbuilders organization started approx 12-14 years ago to work with the Norwegian Government and the politicians in the Norwegian Parlament to obtain the support for development and building of a new type of Norwegian ferries based on LNG gas fuel. A Norwegian LNG fuelled ferry prototype was already built in 2000, but the need of further development was quite clear. I was chairman of the board in our shipbuilder organization in this period and spent a lot of time to work politically. We gradually succeeded to convince our politicians that the use of gas as fuel for ships was a winner both for the environment and the shipbuilding industry and they supported the technology development and building of five large gas ferries for operation on the south west coast of Norway. The new ferries were put in operation in 2006/2007 and have been a great success. In the mean time, between the ferries, two PSV offshore support vessels was built and put in operation in 2003. It was very important to achieve the strong support from the Norwegian Government and I believe that the good political focus on the environmental issues was the key to success. 

Approx 50 LNG fuelled ships are now in operation world wide and there are also 53 confirmed LNG fuelled newbuildings for delivery in the coming years. Our ship design company Multi Maritime AS have designed 9 of the LNG fuelled ships now in operation and we are currently building four new LNG fuelled ships based on their design. The new ships will be delivered from our shipyard Fiskerstrand Verft AS in 2014 and 2015. 

- What are the economic advantages of the transition to LNG from shipowners’ position?

- The building costs for a LNG fuelled ship is 10 - 20% more expensive to build (depending type of ship) and besides, it is needed more space onboard for the LNG equipment (gas tank etc). 

However, the advantages are many: 
- approx 30% lower bunker price (Norway) 
- approx 20% reduced maintenance cots on the engines etc 
- reduced lub. oil cots 
- substantial reduction of SOx, NOx, particulates, CO2 and methane 

LNG fuelled vessels meets IMO TIER III requirements.

- What are the prospects of LNG fuelled ships in shipbuilding?

- Global shipbuilding in general is a far too vast area to tackle in a short memo. I will therefore focus on the prospects for LNG driven ships: 
Of the 50 ships that are powered by LNG at the end of 2013, 48 were Norwegian. Since then we have seen a large increase in the number of orders, and we see the drive for LNG power in almost all types of ships. It is estimated that the world fleet of LNG-powered ships will increase to approximately 100 by the end of 2014. For instance has Puerto Rico ordered two LNG-powered container-vessels to be delivered in 2017, being built in the US. These are the first LNG-powered vessels of this type.

While Norway until now has been the country with the most new-buildings powered by LNG, the rest of the world is now catching up fast. Surveys of international shipping constantly find that the usage of LNG-powered ships continues to increase. Major shipping carriers around the world have shifted some of their ship to LNG-power. The reasons for the change to LNG-power are obvious and as listed above i (2). LNG-powered ships are also more capable of fitting the new emissions standards being introduced. For example, the new ECA legislation (Emission Controlled Area) is planned for the Baltic Sea from 2016. These LNG fuelled vessels maintain a dramatic reduction in CO2 and other dangerous emissions, which are normally harmful to the environment and to people.

In the coming years, new fuel regulations could diminish the freight shipping industry, but the LNG-powered ships present an opportunity for carriers to survive any possible problems with regulations. In addition, LNG prices are lower when compared to other fuel sources.

- Your shipyard has built the world’s first bunkering tanker. Are the owners satisfied? Are there any problems with its operation?

- We delivered the world's first dedicated LNG bunkering vessel, LNGF Seagas, in March 2013 and the ship has been successfully operating in the Stockholm harbour since the start up. The bunkering vessel was converted from a ferry where hull and engine-/propulsion systems were kept from the original ferry being built in 1974. The designed of the conversion was performed by Multi Maritime AS.

- Have you ever assisted a foreign customer in obtaining Norwegian credits for construction or modernization of vessels? What mechanisms can be applied here? What about availability of such financing and how long does the paperwork take?

- Fiskerstrand Verft has on many occasions applied for and used the Norwegian export credit system for financing of vessels for foreign customers. Please see www.giek.no and www.eksportkreditt.no for more information. You may also contact Export Credit Norway direct to obtain more information about available financing programs.

Export Credit Norway offers competitive long-term financing to large and small companies in Norway and abroad for purchases of capital goods and services from Norwegian exporters. Ship financing for up to 80 % of the contract value is available for up to 12 years repayment period. Norwegian content must account for at least 30 % of the contract amount. Export Credit Norway offers CIRR-loans and market rates with competitive interest rates. 

All long term financing from Export Credit Norway must be supported with 100% guarantees. GIEK (Guarantee Institute owned by Norwegian state) offers financial guarantees in order to promote Norwegian exports and investments abroad. GIEK co-operates with banks, and do not compete with them. If the customers bank support a part of the guarantee, GIEK support the major part on pari passu participation with banks (security, pricing and other terms). Secured by 1st priority mortgage, Export Credit Norway and GIEK use standard application forms and usually it takes 3-6 weeks until the application can be answered. 

The Norwegian government export guarantee system can trace its roots back to the early 1920s. Loans and Guarantees are subject to OECD export credit rules. Main guarantee frame of NOK 135 billion. 

- The shipyard bearing your name is the oldest one in Norway. Could you, please, tell about this enterprise and about the Group in general.

 - Fiskerstrand Verft AS is a private family company and was established by my grandfather Peder E. Fiskerstrand in 1909 and is one of the two oldest shipyards in Norway that have been in continuously operation since the start. The Fiskerstrand Group consist of several companies including a ship design company and we perform ship repairs, maintenance, conversions and newbuilding of ships. We are located near by Ålesund on the west coast of Norway and are part of the Møre Maritime Cluster in the county of Møre og Romsdal. This cluster is a world leading maritime cluster and comprises 18 shipowners, 14 ship design companies, 14 ship yards and 172 equipment suppliers. 22.500 skillful employees produce a yearly turnover of approx 6.8 billion EUROS (2013).

The primary newbuilding segment is car and passenger vessels, fishing vessels and specialized vessels including supply-/service vessels for offshore wind parks.

We have been working with Russian shipowners for the last 15 years and approx 250 Russian vessels have at our yard for repairs, maintenance and conversion since 1999.

We have currently contract for building of four LNG fuelled vessels, two ferries and two very advanced fish feed carriers.

Interviewed by Elena Snitko

Rolf Fiskerstrand will give a detailed report on the subject at the VII All Russian Forum “Current State and Prospects for Development of Russian Bunker Services Market” which is to be held on June 19-20, 2014 in Saint-Petersburg. For more information please call 380-43-88 or read  >>>>