LNG becomes cheaper than VLSFO
In issue 623 of the Sea-Intelligence Sunday Spotlight analysed developments in prices for Liquid Natural Gas (LNG) as a maritime fuel.
The IMO2020 regulations necessitated the need to reduce sulphur emissions; the choice was between Very Low Sulphur Fuel Oil (VLSFO), LNG, or scrubbers.
With the start of Russian operation in Ukraine, LNG prices spiked to extreme levels. Now, LNG prices are getting to a point, where it is cheaper than VLSFO. LNG should be compared to (VLSFO) prices, as LNG is a fuel which, like VLSFO, adheres to the IMO2020 low-sulphur regulation, without the vessel having to install a scrubber.
In the first half of July 2023, this price discount in Rotterdam was on average 34 USD/ton. The extreme LNG price spike in 2021-2022 “drowns out” the more recent developments. To get a better view at those, Figure 1 shows the price difference between LNG and VLSFO in 2023. Even with the -34 USD/ton discount taken into account, it is evident that in this situation the usage of LNG is financially advantageous compared to VLSFO fuel.
