LNG bunkering is growing in popularity as it has a far better emissions profile than traditional petroleum-based sources of marine fuel. The United Kingdom maritime waters have always been in the central scheme of things with increasing import and export activities, across the world. Approximately 90% of the United Kingdom’s visible trade is anticipated to move by sea. The United Kingdom LNG bunkering market is expected to grow at a CAGR of more than 2.1% over the forecast period. The bunker fuel supply and availability landscape changed when the IMO’s regulation capping the global fuel Sulphur limit at 0.50% was enforced from 1 January 2020, which in turn is likely to drive the LNG bunkering market in the United Kingdom. However, the lack of LNG bunkering infrastructure and the effect of COVID-19 are likely to have a negative impact on the demand for LNG bunkering activities in the country during the forecast period.
Key Highlights
- Ferries and OSV segment is expected to dominate in the United Kingdom LNG bunkering market over the forecast period.
- The reduced natural gas prices in 2019 had marked the beginning of expanding opportunities for LNG bunkering activities in the coming years.
- Growth in oil & gas activities is expected to drive the United States LNG bunkering market during the forecast period.
Key Market Trends
Ferries and OSV Segment to Dominate the Market
- The United Kingdom's government’s plan of increasing the country's share of global oil and gas production is expected to boost the market and the United Kingdom Continental Shelf (UKCS) region is expected to become one of the most active offshore regions for maritime transport.
- Indigenous oil and gas production contributed around EUR 24 billion to the United Kingdom’s GDP in 2018. The UK government forecasts that two-thirds of the country’s energy mix is expected to come from oil and gas by 2035.
- Additionally, various anticipated oil & gas decommissioning projects scheduled during the forecast period is likely to increase the demand for OSVs, which in turn is expected to drive the market.
- Since a major portion of the trade occurs through ships, and with the ship operators operating the LNG fueled engines, the demand for LNG bunkering fuels is expected to increase in the country during the forecast period.
Growth in Oil & Gas Activities to Drive the Market
- In order to implement a sustainable and environmentally friendly transport network, the government of the United Kingdom along with various oil and gas and shipping operators has promoted the use of LNG powered marine transport, which is likely to drive the LNG bunkering market in the oil & gas industry.
- The key factors driving the LNG bunkering market in the oil & gas industry are the increase in LNG demand to reduce carbon footprint in the shipping industry and demand for natural gas in the country. Furthermore, LNG is a better alternative fuel, and the government has been taking initiatives for LNG adaptation.
- The natural gas production in 2019 was about 39.6 billion cubic meters, providing around 14% production share to the region. The production of natural gas is expected to rise in the coming years owing to the reduced price of natural gas in the country.
- According to Baker Hughes, the offshore rig count was 4 in May 2020 which was higher than onshore rig count. Thus indicating the dominancy of offshore oil and gas activities in the country over onshore. This calls for demand for ships in oil and gas E&P related activities, which in turn, likely to boost the target market over the forecast period.
Competitive Landscape
The United Kingdom LNG bunkering market is consolidated. Some of the key players in the market include Flogas Britain Ltd, and Royal Dutch Shell PLC.
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