Shippers and container lines are backing Hong Kong government plans to develop the city as a regional bunkering hub for next-generation ship fuels such as methanol and ammonia to retain existing business and lure back lost container volumes.
The initiative was laid out in the government’s action plan on maritime and port development published Dec. 20 and follows comments by port Chief Executive John Lee at recent industry forums, including the opening of Hong Kong Maritime Week in November.
“We will accelerate the promotion of green shipping and turn Hong Kong into a high-quality green fuel bunkering center to attract more ships to call (the) port for bunkering…and create additional opportunities for cargo handling,” the 80-page action plan read.
“This includes expediting the establishment of liquefied natural gas (LNG) bunkering facilities and staying ahead in other green fuel options like green methanol bunkering capacities,” the report added.
Speaking at the Maritime Week opening on Nov. 20, Lee said the government would soon “kick-start a feasibility study of providing green methanol bunkering for both local and ocean-going vessels.” The study is due to be completed next year and includes the supply of next-generation fuels from China.
Capt. Nittin Handa, director of regulatory affairs at the Hong Kong Shipowners Association, said developing green fuel bunkering “would definitely draw cargo to Hong Kong” because ships would likely have to refuel often.
That comes as Hong Kong is set to see container throughput fall to around 14 million TEUs this year, a 27-year low according to government data, amid waning transshipment volumes.
Highlighting the threat posed to Hong Kong by other ports, the action plan said carriers switched cargo to South China ports, including Shenzhen and Guangzhou during the pandemic, due to border crossing closures at the time. Other ports are also offering more attractive incentives to develop business. These include Nansha, which extended cash incentives of up to $3 million until the end of 2025 for each company moving to the port, while China is also easing cabotage rules, the action plan noted.
Commenting on the likelihood of Hong Kong being successful in keeping and luring back volumes, Simon Heaney, director of container research at maritime consultant Drewry, said it wouldn’t hurt Hong Kong to try to create a niche position to cater to new fuels.
“Whether that will be sufficient on its own to attract volumes I do not know, as it will have to be weighed against all the other factors that decided why carriers choose one port over another including cost, equity interests, etc.,” Heaney told the Journal of Commerce.
Eleanor Hadland, Drewry’s senior analyst for ports and terminals, thought the future pattern of bunkering hubs would remain similar to now, but noted they would have to offer a wider range of alternative fuels or risk undermining their competitive position.
“There will be some opportunities for new entrants, but only those with favorable geographic position and able to offer new fuels at lower cost such as bunkering services developed at an export port or close to fuel production facilities,” she said.
Carrier interest
Carriers, including Maersk and Orient Overseas Container Line (OOCL), are already looking at using greener fuels in Hong Kong.
Chimbusco, an affiliate of Cosco Shipping (International), confirmed it had supplied biofuel produced from used cooking oil and marine diesel to Maersk and “K” Line in the last few months. The Maersk consignment comprised the supply of 2,000 tons of biofuel to the 5,300-TEU GSL Kithira, which Maersk has chartered from Gold Star Line, on Nov. 22.
Handa said Chimbusco produces around 35,000 metric tons of biofuel per month, enough to supply around seven container ships.
OOCL has also been in talks with Hong Kong’s Drainage Services Department and gas utility Towngas over the supply of green methanol for its fleet of methanol-fueled container ships that are due for delivery from 2027.
OOCL identified using methane gas produced by sewage sludge from the drainage department’s central wastewater treatment plant as a methanol feedstock, but was left empty handed at discussions with department officials in September. “In the meeting, the department responded that there was no spare methane since the gas was utilized by the treatment works,” a department spokesperson told the Journal of Commerce.
OOCL then started talking to Towngas to procure methanol from the green methanol plant the utility owns in Inner Mongolia that uses scrap tires as the feedstock, although discussions were also unsuccessful.
“OOCL is not having ongoing talks with the parties mentioned at this moment,” an OOCL spokesperson told the Journal of Commerce. “However, OOCL continues to proactively explore the development of cleaner alternative fuel, especially green methanol, to achieve long-term decarbonization goals of the company and to create a greener future.”
The carrier did buy a consignment of cooking oil-derived biofuel from bunker supplier KPI OceanConnect that fueled an OOCL container ship in Singapore last month.
Time is a factor
Roberto Giannetta, chairman of the Hong Kong Liner Shipping Association, said Hong Kong could secure its position as a regional leader for east and southeast Asia in supplying greener fuels such as methanol, ammonia, biofuel, LNG and possibly hydrogen if it acted quickly enough.
“It’s widely accepted Hong Kong has missed the boat to ports like Singapore and Shenzhen when it comes to taking a leadership position in supplying LNG,” Giannetta said. “But it can be number one for the complete cocktail of alternative fuels if it acts swiftly.”
He indicated there was added urgency after Singapore’s Maritime and Port Authority in mid-December invited firms to express interest in supplying methanol from 2025.
An industry group called the Methanol Institute has identified about 10 ports in Asia, including Ningbo in China and Yeosu in South Korea, that have storage facilities suitable for green methanol.
Hong Kong lawmaker Frankie Yick Chi-ming, who was instrumental in setting up the industry task force that works with government officials to promote greener bunkering, said laws allowing LNG bunkering should be on the statute book in the second half of 2024.
“For methanol bunkering, it will take a little bit longer,” Yick told the Journal of Commerce.
Source:
Wallis, K. (2023, December 26). Hong Kong eyes status as Green Bunkering Hub to retain, Lure Container Volumes. Journal of Commerce. https://www.joc.com/article/hong-kong-eyes-status-green-bunkering-hub-retain-lure-container-volumes_20231226.html