Australian resource company BHP has formally signed its first LNG supply deal for its Newcastlemax bulkers with Shell.
The five vessels will transport iron ore between Western Australia and China from 2022.
Shell has been awarded the contract to fuel the vessels, which BHP will charter from Eastern Pacific Shipping (EPS) for five-year terms.
Earlier, BHP Chief Commercial Officer, Vandita Pant had said, “LNG fuelled vessels are forecast to help BHP reduce CO2-e emissions by 30 per cent on a per voyage basis compared to a conventional fuelled voyage between Western Australia and China, and contribute to our 2030 goal to support 40 per cent emissions intensity reduction of BHP-chartered shipping of our products.”
Steve Hill, executive vice president, Shell Energy, added that the decarbonization of the shipping industry must begin today with LNG being the cleanest fuel currently available in meaningful volumes.
The contract is the result of a tender process that included potential suppliers across several geographies.
LNG bunkering – the process of fuelling ships with LNG – will take place through the first LNG bunker vessel in Singapore, FueLNG Bellina. The vessel is operated by FueLNG, a joint venture between Shell Eastern Petroleum and Keppel Offshore & Marine. The bunker vessel will be able to bunker fuel at a rate of 100-1,000 cubic meters per hour.
“The LNG bunkering contract will enable BHP to manage fuel supply risk, build LNG operational capability internally, and also help to strengthen the emerging LNG bunkering market in the region. This contract is expected to form up to 10 per cent of forecasted Asian LNG bunker demand in FY2023,” Pant said.