Bunker Fuel Market Report

Liquefied Natural Gas (LNG) is one of the segments of bunker fuel that can be considered the leading segment in the bunker fuel market. The demand for LNG is expected to rise in the near future due to its eco-friendly features. The reason why the global liquefied natural gas markets are expected to rise is due to the massive wave of new export capacity and rising Lackluster demand growth. According to the data of the Institute for Energy Economics and Financial Analysis, the global supply capacity for LNG by the end of 2028 is expected to rise to 666.5 metric tons per annum, which exceeds International Energy Agency (IEA) demand scenarios through 2050. Also, the demand for bunker fuel has been growing due to the rising oil and gas exploration activity. According to the data of Global Energy Monitor, 50 new projects have been announced by major companies, out of which 19 were discovered in 2023 and valued at 7.7 billion barrels of oil equivalent. This is about 35% lower than in 2022 when at least 12.6 billion barrels of oil equivalent from 31 discoveries were announced. Thus, oil and gas exploration activity is expected to boost the bunker fuel market.

The rising environmental awareness and increasing focus on fuel conservation with an aim to reduce the carbon footprint are expected to be the major reasons that will hinder the demand for bunker fuel. To reduce the carbon footprint, the shipping business industries have introduced alternatives such as HFO (heavy fuel oil), MDO (marine diesel oil), MGO (marine gas oil), MFO (marine fuel oil), and IFO (intermediate fuel oil), which are being rapidly adopted and are expected to cut down on fuel consumption. Also, the rising numbers regarding the complaints regarding the cost of fuel are limiting the market demand. The high bunker fuel prices sometimes may result in losses due to lower freight rates and longer journeys. The difference in cost between traditional bunker fuels and liquefied natural gas may discourage shipping companies from making environmentally friendly investments, thereby impeding the development of sustainable shipping practices.

In January 2022, Titan LNG secured the tender for the delivery of LNG in the Port of Marseille for Corsica Linea's new Ro-Pax LNG-fuelled ferry, A Galeotta. This partnership marked the significant expansion of Titan's operations into the Mediterranean, which enhanced the availability of LNG, bioLNG, and in the longer run hydrogen-derived LNG in the region. Titan started with Truck-to-Ship operations for a period of time until the Krios vessel - a 4,500 cbm LNG bunker vessel - arrived that was able to supply the wider Mediterranean region with LNG and bioLNG as marine fuel. In November 2022, Norwegian company Kanfer Shipping AS signed a partnership deal with Nimofast Brasil S.A. to establish small and medium-scale LNG shipping, small-scale floating storage units (FSU), and LNG bunkering solutions in Brazil from 2025 onwards. The contract enabled Nimofast to sell and deliver LNG of any volume via small and medium-scale LNG vessels at any location along the Brazilian coastline. The LNG vessels and LNG bunker ships were loaded via the permanently based FSU at the Nimofast LNG import and distribution terminal in the state of Paraná.

The demand for bunker fuel is expected to rise in the Asia-Pacific region due to the rising shipping industry. China is seen as a lucrative market due to the increasing number of ports. According to the report of the World Shipping Council, out of the top five biggest container ports in the world, four are present in China and all five in Asia Pacific. Shanghai, Ningbo-Zhoushan, Shenzhen, and Guangzhou Harbour are the top four ports of China where a total of 131.05 million twenty-foot equivalent unit material was transported in 2021. Thus, due to the rising shipping industry, the demand for bunker fuel is expected to rise rapidly in China. Also, the market is expected to boom in India due to the rising hydrocarbon resource development in offshore areas. Thus, due to rising business and the number of ports, it is expected to rise the demand for bunker fuel. Furthermore, the demand for bunker fuel has been seen rising in North America due to the rising number of ports. As per the data of the Office for Coastal Management, currently, the United States has more than 208 commercial ports handling at least 250,000 tons of material per year, which makes North America a promising market.