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Stena Line considers LNG ahead of sulphur directive

LNG Industry,

New sulphur emission rules coming into force in 2015 will have a significant economic impact on Stena Line.

The new sulphur directive for shipping traffic within the North European SECA area, which comes into force on 1 January 2015 has a significant economic impact on Stena Line's business.

Increased fuel costs

The new rules forced Stena Line to initiate a change programme in 2013, which is to produce an earnings improvement of 1 billion SEK. The reduction from two vessels to one on the Trelleborg-Sassnitz route is an example of these new measures; another is that the company is now being forced to increase freight prices as a direct result of increased fuel costs.

"From an economic perspective, this is one of the largest negative political decisions since tax-free was discontinued. We have a positive attitude to environmental improvement rules as long as they are the same for everyone and are implemented at a rate that we and our customers can handle - but this isn't the case with the new sulphur rules.

“Ultimately, the increasing fuel costs affect the North European export and import industry negatively because a significant share of transports are done by sea," explained Stena Line's CEO Carl-Johan Hagman.

For Stena Line, the changes mean increased fuel costs of 1 MSEK per day, or approximately 450 MSEK per year as a result of the more expensive low sulphur fuel.

"On the freight side, we thereby have to increase prices by around 15%. We want to be able to deliver the same quality and service and continue our efforts to offer environmentally effective transports. This means that we must charge our freight customers more to compensate for the increased costs," Hagman added.

Since 2005, Stena Line has worked to reduce its environmental impact within its Energy Saving Programme, which has successfully reduced vessel energy consumption by 2.5% every year. In parallel with the change to low-sulphur oils, Stena Line is running a number of projects to look at alternative fuels and different techniques for emission purification.

LNG options

"In early 2015 we will be starting a trial with methanol as a fuel on one of our ferries. At the same time we are investigating scrubber technologies and also looking at LNG as a fuel. Naturally, converting and rebuilding our ferries will both take time and cost a lot of money," Hagman concluded.

Adapted from press release by Katie Woodward

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