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Major cruise liners and the world’s biggest freight companies have ordered 125 new LNG-powered vessels and another 119 are already in operation, according to current figures from maritime consultancy DNV GL. That is partly because new regulations taking effect in 2020 will reduce the maximum amount of sulfur permitted in the oil used by ships from 3.5 to 0.5 percent.
LNG is gas that is supercooled until it turns into liquid. While LNG use as a shipping fuel is still too small to affect its prices, the projected uptake is supporting the outlook of companies like Royal Dutch Shell PLC that LNG demand will continue to grow.
The shipping industry currently consumes about 5 million barrels a day of oil, and most of the industry is expected to meet the new obligations by either switching to more expensive low-sulfur fuels or installing ”scrubbers” that clean sulfur out of exhaust fumes.
But the rule changes will make LNG a cost-competitive option for shipping fuel. Analysts say that just converting 5 percent of the global fleet to run on LNG would create a new market equivalent to the fifth-largest in the world, behind major consumers Japan, China, Korea and India.
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