Trading house Vitol Inc. is expanding its exposure to the LNG marine bunkering market as demand for cleaner fuels in the shipping sector reaches record levels.
Vitol has signed a seven-year deal with a three-year extension for a 20,000 cubic meter (cm) liquefied natural gas bunkering vessel from Avenir LNG. The charter is expected to start by the end of 2026, when the vessel is targeted to be delivered from a Chinese shipyard.
The independent commodity trader also has ordered a 12,500 cm bunkering vessel and one 20,000 cm bunkering vessel from the Nantong CIMC SinoPacific Offshore & Engineering Co. Ltd. shipyard in China. The vessels would be delivered in 4Q2026 and 3Q2027, respectively.
Vitol already has a substantial LNG trading foothold in the market, shipping more than 17 million metric tons (mmt) last year. It also has been investing in infrastructure to store and transfer LNG made from renewable natural gas, or bio-LNG, through its ViGo Bioenergy GmbH subsidiary.
“Shipowners worldwide are looking to reduce their emissions. We are delighted to strengthen our offering to them by investing in LNG and bioLNG bunkering, thereby increasing their options,” Vitol’s Pablo Galante Escobar, head of LNG and gas and power for Europe, the Middle East and Africa, said.
Demand for LNG bunker fuel is poised to grow. International regulators have tightened emissions standards, and the maritime industry has increasingly turned to LNG as a fuel source because of its lower emissions profile and cost competitiveness.
The growing number of dual-fuel vessels capable of using LNG hitting the water and under construction is expected to keep bunkering demand surging, according to Rystad Energy. The firm reported LNG bunkering grew by 62% year/year in 2023 to a record 165.9 MMcf. That growth was led by a leap in ship-to-ship fuel transfers.
Rystad’s Junlin Yu, senior analyst, said in a recent report that LNG bunkering sales in 2024 also are off to a strong start, with around 67 MMcf sold at the end of March.
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“This is close to the total volume sold in 2022, suggesting the potential for a significant increase by year-end,” Yu said. “If so, total LNG bunker sales could surpass” more than 247 MMcf by the end of the year, “highlighting the importance of LNG to maritime business and trade.”
Vitol, the world’s largest independent oil trader, also has been making major moves to expand its North American LNG portfolio. It plans to supplement its 1.4 mmty in offtake from Cheniere Energy Inc.’s Gulf Coast terminals with a tentative deal for volumes from Delfin LNG. It also has signed on to receive 0.8 mmty from LNG Canada through an agreement with Malaysia’s Petronas.
Vitol’s latest wave of deals have helped boost the trend of major U.S. natural gas producers partnering with trading houses to boost exposure to international markets.
Earlier in the year, EOG Resources Inc., which was the tenth-largest Lower 48 natural gas producer in NGI’s 1Q2024 tally of public exploration and production firms, signed a 10-year agreement with Vitol to supply the equivalent of 1.25 mmty in natural gas. Chesapeake Energy Corp., which ranked third, also has signed a tentative agreement with Vitol to sell up to 1 mmty in LNG.
