Combined Reference Group and Steering Group meeting 17 June 2011 The LNG Infrastructure project for North Europe - bac

1. Combined Reference Group and Steering Group meeting 17 June 2011The LNG Infrastructure project for North Europe - background and goals Mogens Schrøder Bech Danish Maritime Authority

2. Outline The goal for the LNG infrastructure work The green challenge - and LNG as a part of the solution An infrastructure of filling stations and deployment in ships • The pilot project - in headlines • The infrastructure project - the main part Sum up

3. Goals for the LNG infrastructure project Identify and analyse critical enablers Recommendations on establishment of an LNG infrastructure • The LNG supply chain • ”Hard” on marine filling stations • ”Soft” on regulations, industry standards, etc. • Validated through the industrial project partners Relevant for central stakeholders • Shipowners, ports, LNG providers, equipment manufactures, industry organizations, countries, EU, IMO, etc. The business case as target – the LNG supply chain Innovations on LNG

4. The green challenge – short and long term! ECA provisions on fuel oil from 1 January 2015 in North European waters • From 1.0 to 0.1% sulphur • Operational costs for shipping • Competitiveness for shipping • Competitiveness for regions Green demands will increase in the future • A basic condition Shipping must be developed as the green alternative

5. LNG as a competitive fuel New fuels is needed Technology neutrality LNG is an obvious alternative • Transport, storage and distribution of natural gas • Focus on the LNG supply chain A facilitating LNG infrastructure is needed • ”Hard” on marine filling stations • ”Soft” on regulations, industry standards, etc. How can we create this infrastructure?

6. Do we have a Gordian LNG knot? Manufacturers can supply LNG engines, tank systems, etc. In order to invest, shipowners need access to a system of LNG bunkering facilities The LNG providers will invest only if there is a market No momentum until the infrastructure problem is solved • A broad infrastructure perspective is needed • The problem is biggest for international shipping Oil-based fuels, on the other hand • A supportive and competitive infrastructure • No major cash flow problems for the infrastructure

7. An infrastructure of filling stations and deployment in ships – the overall project AN EU TEN-T Motorways of the Sea project • LNG as fuel for international shipping • Total costs 26 mill. euro A pilot project – Fjord Line Danmark A/S • 9.0 mill. euro from TEN-T An LNG infrastructure project • 0.6 mill. euro from TEN-T A combined top down and bottom up approach

8. The full scale pilot project Supporting and developing a transport corridor • From the South Western part of Norway • … to the Northern part of Jutland • … and further to the Continent Ports • Hirtshals base port • Bergen, Stavanger, Kristianssand The project • Conversion of two new cruise ferries under construction for LNG • A full scale pilot project • Deployment in international (short sea) shipping • An extensive measuring programme • A maritime LNG infrastructure is needed!!

9. The LNG infrastructure project-Central enablers for the use of LNG as basis Safety Local municipalities and public awareness Technical possibilities for fuelling ship engines with LNG Fuelling of other means of transport than ships from ”maritime” LNG filling stations LNG filling station dimensions Economy as seen by a ship, a port and an LNG provider The LNG market The potential for LNG

10. Central enablers 1/5 Safety • A ship, a port and an LNG provider point of view • Regulations • Industry standards Local municipalities and public awareness • Land use and safety measures • From a specialized industry with large terminals to a more decentralized maritime industry

11. Central enablers 2/5 Technical possibilities for fuelling ship engines with LNG • New engines • Retrofitting Fuelling of other means of transport than ships and industry, etc. from ”maritime ” LNG filling stations • Economies of scale

12. Central enablers 3/5 LNG filling station dimensions The supply of LNG to the filling stations • Including the integration with the natural gas network Different layouts • From mobile – land as well as sea based to fixed stations • Scaling possibilities Legal, financial and operational models • Neutral access to the service Bunkering of different ship types • Volume, time and safety, etc. A map of strategic ports for LNG filling stations

13. Central enablers 4/5 Economy as seen by a ship, a port and an LNG provider • Economies of scale • Second-hand prices, new builds and retrofits • Pay-back periods • Internal return on investment • The relation between contracted volume and price The LNG market • Possible price developments of LNG compared to 0.1% sulphur fuel • Markets – spot, short-term, medium-term and long-term and expected developments

14. Central enablers 5/5 The potential for LNG in Northern Europe Starting points • Existing lines in the Baltic, the North Sea and the English Channel • Tramp shipping problematic • Ship characterization – age and size, etc. • Other modes of transport relevant for LNG filling stations in ports A two-track measurement of the potential • For partner countries and ports a detailed approach, and in particular for liner shipping • For other countries a general estimate Development of a framework for an operational methodology • Addressing the potential for the single port and/or port cluster

15. Partners States: Belgium, Denmark, Finland, Sweden and Norway Regional: Council of Nordic Ministers Ports: Port of Hirtshals (DK), Port of Zeebrugge (BE) and Szczecin and Swinoujscie Seaports Authority (PL) LNG terminals and gas distribution companies: Fluxys (BE), Gasum (FI), Gasunie (NL), Energinet.dk (DK), EnergigasSverige (SE), Gasnor (NO) and GazpromLNG (RUS) The Maritime Cluster: Germanischer Lloyd (DE), Bureau Veritas (DK), MAN Diesel and Turbo (DK), Lauritzen Kosan A/S (DK)

16. The time schedule An EU application submitted on 31 August 2010 In kind contributions an important element Adopted in December 2010 Consultancy work starts up on 9 May 2011 End 31 March 2012 – the infrastructure part End 31 March 2013 – the pilot project

17. Organization chart for the project

18. The LNG infrastructure goals – repeated Identify and analyse critical enablers Recommendations on establishment of an LNG infrastructure • The LNG supply chain • ”Hard” on marine filling stations • ”Soft” on regulations, industry standards, etc. • Validated through the industrial project partners Relevant for central stakeholders • Shipowners, ports, LNG providers, equipment manufactures, industry organizations, countries, EU, IMO, etc. The business case as target – the LNG supply chain Innovations on LNG

19. What will happen after the project has finished? The short answer • Depends on the recommendations! Likely developments • Missing regulations and standards will be worked out • Motorways of the Sea Calls from the EU will be positive on facilitating LNG investments • Investments in the private (and public) sector/ the business case as target • Innovations

20. Thank you for your attendance Further information on www.dma.dk North European LNG Infrastructure Project