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Small scale LNG: powering European initiatives to build greener fuel economy

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LNG Industry,

The demand for the European small scale LNG market is projected to grow from €1.9 billion in 2020 to €5.8 billion by 2030, while actuating at an estimated CAGR of 11.8% from 2020 to 2030.

Europe is likely to experience faster growth as compared to other regions in the global market owing to the mandate set by European Union on sulfur emissions. For instance, the sulfur emissions cap for marine fuel is set as 0.5% by the year 2020. Favourable prices of LNG along with growing demand from key sectors such as transportation and power generation, is projected to augment market demand over the forecast period. Also, various government regulations in light of environmental benefits of LNG have fostered the market growth in the region.

Small scale LNG includes the direct use of LNG in its liquid form. Conventional modes of regasification and subsequent introduction of LNG into the gas transmission grid for lesser production capacities have now become a part of small scale LNG. These small scale liquefaction plants possess a production capacity of less than 500 000 tpy, and vessels with a LNG storage capacity less than 30 000 m3. Small scale LNG plants are re-deployable and primarily designed for small gas field. Small scale LNG meets the growing demand from the shipping and trucking industries for fuels that are environment friendly as compared to oil and diesel.

Key findings from the report:

  • The European small scale LNG market is expected to reach €5.8 billion by 2030 at a CAGR of 11.8%
  • Based on application:
    • The road transport fuel segment is likely to be the largest segment of the European small scale LNG market in 2020
    • The marine fuel segment is expected to emerge as the fastest growing segment, over the forecast period
  • Based on off grid power generation:
    • Off-grid industrial segment is projected to hold the largest share of the European small scale LNG market in 2020
  • Based on supply mode:
    • Ship-to-ship segment is likely to dominate the market in 2020 and the trend is likely to continue over the forecast period.

Marine fuel segment: expected to experience the fastest growth during 2020 – 2030

The marine fuel segment is likely to propel at the fastest CAGR of 12.48% over the forecast period. A rise in bunkering operations has been observed for small scale ships, which suggests that the marine use of LNG is also becoming popular. Moreover, the regional fleet of LNG fuelled ships in operations are increasing, such as supply & service vessels, and passenger ships among others. LNG offers superior performance, while meeting the environmental requirements as compared to other fuels. Considering these factors, the demand for LNG as a maritime fuel across the region is expected to grow significantly.

Road transport fuel segment : likely to dominate the market by 2030

The road transport fuel segment is likely to dominate the market in 2020 with a value of €888.67 million owing to the increasing use of LNG as a cleaner road transport fuel in the region. Additionally, the volumes in truck loading have gone up by 8% as compared to last year, along with an increase in the number of LNG stations across Europe.

Off-grid power generation segment

Small scale LNG has emerged as an effective and reliable solution for off-grid power generation and supply. On account of its flexibility, small scale LNG has fuelled demand in areas which were previously unsuited to LNG as a fuel source, such as off-grid power generation in remote areas or islands. These include the use of small scale LNG in households as well as for industrial purposes. A key driver for demand in off-grid power generation application is the development of an efficient and sustainable logistics network so that end users in remote locations can be reached. In addition, the investment required to switch towards LNG power is relatively lower than for other applications such as trucking and bunkering and no major infrastructure is required.

Small scale LNG infrastructure

LNG refuelling stations are now appearing on major EU trunk lines. The key suppliers of small scale LNG in Europe include Skangas in Sweden; Gaz Natural Fenosa and Enagas in Spain; Gazprom in Russia; ENGIE in France; and Liquigas in Italy. Most of the European LNG import terminals already offer truck loading and the availability of loading bunkering ships is increasing as well. Regasification terminals in the region have adapted their services to market conditions, while offering flexibility as well as developing small scale LNG infrastructure. These small scale LNG infrastructure and services contribute towards increasing regional security of supply along with reducing EU emissions.

Europe – regional insight

Europe has witnessed significant development in small scale infrastructure in recent years. Countries such as France, Spain and the UK have multiple small scale LNG import terminals supplying LNG to industries, off-grid power generation units and truck refuelling stations via truck reloading operations. These terminals also supply LNG to the bunkering terminals for the purpose of providing LNG as a marine fuel for LNG fuelled ships. Major European countries plan to set up a bunkering network by the year 2020 for maritime operations. By the year 2025, these countries plan to have a bunkering network to serve inland waterways vessels as well. Germany, France, Spain and the UK, among other countries, are developing the ‘Blue Corridor’ network, which aims to establish LNG as an alternative fuel for medium and long-distance transport. This initiative is expected to propel the demand for LNG as a transport fuel segment over the next few years. Additionally, countries with islands are expected to adopt LNG as a fuel for off-grid power generation.

The report segments European small scale LNG market on the basis of application, infrastructure, and region.

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LNG import news LNG bunkering news UK LNG news