LNG for transportation predicted to 'absorb' some of global glut

02-Jun-2016

Demand for LNG as a transportation fuel could help relieve the global supply glut, a group of energy experts said.

The Sanford C. Bernstein & Co. LLC analysts expect transportation demand to make up about 24.4 million tonnes per annum by 2020, adding 7% to global demand under their base case. "This extra demand could help absorb some of the surplus LNG supply estimated, especially in 2018," they said in a May 27 note to clients.

Royal Dutch Shell plc, Bernstein said, is leading the international effort to use LNG in heavy-duty road transport, shipping and bunkering.

"Shell is laying the egg so the chicken can follow," the note said. "By helping create LNG bunkering, marine and transportation usage, Shell is securing market demand."

Bernstein analysts added that they see "a clear trend towards continuing investment in bunkering and fueling infrastructure at ports" through the first half of 2016.

Demand for bunker fuel has the biggest potential for ferries and inland barges in Europe, according to Bernstein, while potential for LNG in ground transportation "is greatest for heavy duty truck fleets, particularly in China."

Charlie Riedl, executive director of the Center for Liquefied Natural Gas, told S&P Global Market Intelligence in January that he also sees transportation fuel potential in the U.S. (by Allison Good, SNL free content)