Embracing LNG? Maersk's first big $4.6bn orders are about to hit the ground running!
Nearly two months after the official announcement of a major change in the choice of alternative fuels, Maersk's first order for up to 22 LNG dual-fuelled containerships worth US$4.6 billion is about to land.
According to multiple sources within the shipbuilding industry, two-thirds of Maersk's order for the first batch of 32 LNG dual-fuel, 16,000 TEU class containerships has already been finalised with a shipbuilding yard. China's New Era Shipbuilding is the first shipyard to reach a substantial agreement with Maersk, and the two sides finalised their first orders at the end of September, before Golden Week, including a contract to build six 16,000 TEU-class containerships with options for six more ships. This week, South Korean shipyard Hanwha Ocean (Hanwha Ocean) is also preparing to sign an order with Maersk for 6+4 16,000TEU-class LNG dual-fuel containerships.
Some sources note that Hanwha Ocean has slots available for Maersk to build up to 16 ships.
On 10 October, Hanwha Ocean announced that it had received an order from a European shipowner, without specifically disclosing the identity of the customer. According to the shipyard's announcement, the six dual-fuel container ships, with a total price tag of 1.69 trillion won (about $1.25 billion) and a cost of about $208 million each, are expected to be delivered in 2028.
Previously, Trade Winds reported that Maersk paid around $200 million per unit for the ships built by New Era Shipbuilding, while Hanwha Offshore's single-vessel cost could be closer to $220 million.
Details on the capacity and exact configuration of the LNG bunkers to be installed on the vessels have not yet been revealed. The New Era Shipyard vessels are expected to be delivered in 2028, while Hanwha Ocean-built vessels will be delivered one after another from 2027 to 2028.
In addition, sources indicate that Maersk is in final discussions with China's Yangzijiang Shipyard on a contract for the construction of 10 dual-fuel container ships of similar specifications, and the relevant contract is expected to be signed soon.
News of Maersk's large charter of LNG dual-fuel vessels, including orders from a number of tonnage suppliers, was first reported in the industry in August this year. This included 19 vessels from Seaspan Corp, five from SFL Corp and six from Capital Maritime & Trading, which will eventually bring the total number of LNG dual-fuel vessels owned and chartered by Maersk to 62.
This series of operations has been widely interpreted as a gradual shift by Maersk away from its previously focussed methanol-fuelled strategy towards LNG. however, sources close to the company say that one of the core reasons for this shift is the lack of green methanol supply. Currently, most of Maersk's delivered methanol dual-fuel newbuildings can only run on grey methanol or conventional fuels, the latter of which has even higher carbon emissions than LNG.
However, in a recent statement, Maersk's Head of Energy Transformation, Morten Bo Christiansen, emphasised that the company is not switching completely to LNG or abandoning its methanol strategy, but rather aiming for a wider range of choices in the green fuel mix.
Morten Bo Christiansen emphasised, ‘We are not supporting fossil LNG or moving away from methanol. This is simply a strategic shift in our fuel mix aimed at expanding the use of green fuels.’
Morten Bo Christiansen's statement shows that Maersk remains cautious about LNG. He pointed out that fossil LNG fuels will ultimately not be able to solve the shipping industry's climate problems. The backdrop to this strategic shift in the company's approach is a reassessment of biomethane, or green methane, as the fuel of the future.
Morten Bo Christiansen reveals that biomethane has progressed beyond expectations in the last two years in terms of production at scale, and Maersk believes that biomethane will have an important place in the future green fuel mix. Biomethane is cheaper to produce, but its market price remains uncertain, and Maersk is looking to stimulate biomethane production through long-term purchase agreements similar to those in the methanol market.
Despite the entry of LNG into Maersk's fuel mix, methanol remains at the centre of the company's strategy, according to Morten Bo Christiansen, who says it remains Maersk's first choice to meet its science-based emissions reduction targets by 2030. He explains that Maersk's confidence in methanol is maintained because the supply of green methanol will be available at a relatively reasonable cost for the foreseeable future.
Maersk's recent delivery of several methanol dual-fuel vessels demonstrates the company's firm position in the methanol sector. Colleagues, the company has begun a pilot project for the conversion of methanol-powered vessels at Chinese shipyards. By retrofitting existing vessels with methanol, Maersk is gradually accumulating relevant cost and technical experience. This lays the groundwork for possible large-scale conversion programmes in the future, especially as the commercial prospects for methanol-powered conversions will be further enhanced by the possible introduction of an effective greenhouse gas framework by the International Maritime Organisation (IMO).
Ammonia, by contrast, is another promising fuel of the future, but its technological maturity is more uncertain, and Morten Bo Christiansen is wary of the engineering complexity of converting LNG ships to ammonia power, particularly in terms of pipeline and infrastructure development.
Another key factor influencing Maersk's bunkering strategy is the direction of international policy, with Morten Bo Christiansen making it clear that the IMO's regulatory framework for greenhouse gases in future negotiations will be decisive for the industry's transformation. If IMO can introduce strong policies, then the decarbonisation process in the industry will be greatly accelerated; otherwise, the industry's transformation path will face greater challenges.
In my opinion, from green methanol to LNG, biomethane, Maersk's energy strategy adjustment is not only a pragmatic choice to cope with the current market environment, but also its strategic layout for the future fuel pattern changes.
Behind this series of actions, Maersk is not only the technical aspects of fuel selection, but also the strategic consideration to deal with the global environmental protection pressure, fuel supply chain uncertainty and shipping cost game and other multiple factors. At present, the supply capacity of green methanol is obviously lagging behind, and the high production and transport costs worldwide cannot meet the demand for green fuel from large shipowners like Maersk. Under the background of increasingly stringent environmental protection regulation in the global shipping industry, Maersk's ‘combination strategy’ has an important demonstration effect, breaking the previous industry's single-fuel route thinking stereotypes, and providing other shipowners with more fuel choice paths.