LNG related price rise looming

Viking Line'i Soome ja Rootsi vahet sõitev reisiparvlaev Viking Grace.

PHOTO: HANNU VALLAS / LEHTIKUVA

Soon, ship engines on Baltic Sea are expected to pollute less. Therefore, new ones need to be built, or expensive filters installed.

What would our reader do if, starting next year, he’d have to replace car engine, buy the latest catalytic converter or switch to fuel 20–30 percent dearer?

For ship-owners of Estonia, the perspective is a reality – they will either have to change engines for more environmentally-friendly one using LNG, get expensive filters, or else use super clean light heating oil (the price of which makes one lose sleep). The environmentalists have scored another victory and their demands are totally justified for in the Baltic Sea dead areas are spreading, ones without oxygen and thus lacking benthic fauna. That’s having an effect on our fish-eating habits, as the current species are replaced by others. Hence the harsher requirements imposed on vessels, come New Year.

Liquefied natural gas (LNG) is not quite what we have in our cylinders at home. Gas of that kind is cooled to minus 162o C, thus occupying mere six hundredth of the space needed by ordinary gas – an amount equalling the current naval diesel fuel can be carried on board. 

The first LNG-using and allegedly the environmental-friendliest in the world vessel, called Grace, was completed by Viking Line last year. For Grace, the engines were built by the Finnish firm Wärtsilä. According to the latter’s training centre specialist Lasse Nikkanen, LNG-engines are safer than the common ones. «The fuels currently used explode quite easily; but the gas explodes when its concentration in air exceeds a certain limit – to avoid the danger, there’s a whole lot of options.»

Over time, LNG as chilled gas warms up and pressure on containers increases; then, however, a part of the gas is let out at the top, taking the pressure down.

According to Mr Nikkanen, maintenance costs for Viking Grace are even lower than with ships running on the traditional heavy fuel oil. «It all depends on the price balance between LNG and fuel oil,» said Mr Nikkanen.

«As availability of LNG improves in ports, the prices will surely fall.» To the knowledge of Postimees, LNG is not currently available neither in Helsinki nor Tallinn; even so, it can be loaded unto vessels from tankers ordered for the occasion.

New technologies needed

Since July 2010, sulphur rate in exhaust gases were to drop from 1.5 percent to one; next year, the requirement will come down to 0.1 percent. In Europe, the norms concern the English Channel, North Sea and Baltic Sea. «To achieve such levels, new technologies are needed,» admitted Mr Nikkanen. «With traditional engines, we won’t achieve such emissions.»

According to Mr Nikkanen, there is a range of options to get the sulphur content under the desired limit; even so, none is overly cheap for ship companies. Firstly, the ships might be switched to use very clean fuel oil in place of the traditional heavy fuels; this will bring a painful price rise. «In fuels like these, sulphur content has been significantly lowered, but is costs a lot more,» said Mr Nikkanen. «Ship companies aren’t excited at all about the option.»

The second option is have filters installed, to catch the sulphur from the emissions. An engine maker, Wärtsilä of course likes engines using LNG and diesel alike while emitting next to no sulphur. «For us, engines like that is a business with perspective, as all ship companies are interested,» said Mr Nikkanen.

It remains unclear, sadly, why such a large part of ship-owners are delaying the LNG-engine switch till the very last moment. For owners of tankers, the sulphur-requirement is a nightmare – if not met, they will no longer be allowed in North or Baltic Sea ports.

According to Mr Nikkanen, engines on existing ships can be exchanged for new ones that comply with requirements –but it does take a couple of weeks. «For some time, the vessel will have to be in dry dock,» added Mr Nikkanen. «Almost everything will have to be replaced, but I think that LNG is the best solution.»

Tallink Group finance director Janek Stalmeister says they have not decided as yet what to do – install the filters of get new LNG engines.

«As at today, we haven’t decided regarding filters or LNG, so our only option is using low-sulphur fuels.» According to unconfirmed data leaked to Postimees, Tallink does intend to go for the LNG engines, reconstructing the vessels.

Viking Line press secretary Johanna Svahnström is happy about the new LNG-ship. «We are very satisfied with our Viking Grace, we are tanking it in Stockholm, five mornings a week,» said Ms Svahnström. «No problems whatsoever, so far.»

According to Ms Svahnström, it is difficult to say whether the ship’s daily fuel costs are bigger or smaller than the traditional ones; even so, one thing is clear: starting the new year, this will be the cheapest ship to run for the company.

«We do have six new ships which still require a decision regarding fuel,» said Ms Svahnström. «For starters, we will be using the lighter and cleaner fuels, which will however be a lot more expensive.» According to Viking Line calculations, the clean fuels will consume €15m–20m more that the current yearly fuel bill. For the company, this spells a 20–25 percent price rise.

Tough competition

In spite of the rising costs, Ms Svahnström says Viking Line isn’t about to raise ticket prices for the time being. «For that, the competition is too tough; it’s tough for the others as well, though» she said. Tallink chief Enn Pant told the Business Plan 2014 that the new requirements may lead to ship transport becoming 20–30 percent more expensive.

Mr Nikkanen says that the vessels opting for light fuels or filters must also use devices taking nitric oxide out of exhaust gas. With LNG, these devices aren’t needed. «The advantage of LNG/diesel engines is: on Baltic Sea, LNG can be used, but in regions with softer requirements, they can go on diesel,» said Mr Nikkanen.

To burn LNG, a ship corresponding to new requirements does still need diesel fuel; even so, up to one percent only. All told, LNG use cuts CO2 emissions by a quarter, nitric oxide and sulphur go down by up to 98 percent. 

«Entering the engine compartment of such a ship, you will notice all is uncommonly clean – people who have once worked on a LNG vessel will no longer want to work on a diesel ship,» said Mr Nikkanen.

Gulf of Finland Year

•    Within Gulf of Finland Year, Estonia, Finland, and Russia feature lots of events. A portable exhibition will be organised, presenting the gulf from aspects of nature, culture and the environment.

•    A visitor will get an idea what to do for the gulf. In May, parallel exhibitions will be opened in Estonian Museum of Natural History, Tartu Environmental Education Centre, and Pärnu and Narva bureaus of Environmental Board.  

•    Estonian Museum of Natural History will be offering educational voyages on sailing ship Hoppet and research vessel Salme to study maritime invertebrates; also, there will be lessons on ecology, the environmental situation, and larger animals.

•    Gulf of Finland is also the focus of this May, the traditional Nature Conservation Month; the animal of the year, elected by nature conservation activists, is ringed seal. 

•    Numerous other events revolve around the Gulf of Finland, like the summer-time cooperation with Tõnu Kaljuste and Nargenfestival. The second half of July features Tallinn Maritime Days, and family sea days in Kunda. Also this summer, the popular Nature Bus (Looduse Omnibuss) is launching a Nature Ship to take people on study trips close to coast and to islands. 

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