A year in review for methanol as marine fuel: 82 ships by 2028

2022 has been a stellar year for methanol as an alternative fuel for ships as owners look to solutions to decarbonize their fleets. Based on the data from DNV, there are currently a total of 82 methanol-powered ships in operation and on order.

The figure grew considerably from what we reported in August with 20 more orders added to the tally.

The skyrocketing demand has been attributed to the benefits methanol as a fuel choice brings to the table, including its density, which doesn’t affect the load capacity of ships, the fact that it is relatively safe to bunker, and that it has an attractive price. Finally, methanol is biodegradable which is another advantage in cases of fuel spills.

Grey methanol has been identified as a good solution, for now, nevertheless, in order to fully decarbonize, shipowners will have to switch to green methanol, the supply of which remains a major challenge.

Out of the total number of methanol-powered ships, the container shipping sector dominates the orderbook with 47 methanol-powered ships on order. Almost half of these have been ordered by industry major Maersk which has announced the construction start of a 16,000 TEU methanol-powered boxship.

Maersk has a total of 19 methanol-powered container carriers on order at Hyundai Heavy Industries and Hyundai Mipo Dockyard. These include six vessels with a nominal capacity of 17,000 TEU ordered last October, twelve 16,000 TEU boxships and one feeder ordered in 2021. 

COSCO Shipping Holdings upped the ante in October 2022 with the order for the construction of twelve 24,000 TEU methanol dual-fuel containerships worth $2.87 billion.

The construction contract was signed by the company’s subsidiaries Orient Overseas Container Line (OOCL) and Cosco Shipping Lines with Nantong Cosco Khi Ship Engineering (NACKS) and Dalian COSCO KHI Ship Engineering Co. (DACKS).

The delivery of the newbuilding containerships, each valued at $ 239.8 million, will be spread across 2026 and 2028.

Another notable name in the sector CMA CGM joined the bandwagon with an order for six 15,000 TEU dual-fuel methanol-powered containerships slated for delivery by the end of 2025.

Certain owners have invested in methanol-ready ships, including Ocean Yield which has purchased three 5,500 TEU methanol-ready newbuildings currently under construction at HJ Shipbuilding, Korea.

Another wave of orders is expected next year, as certain companies have revealed fleet renewal plans involving methanol.

HMM has reportedly invited tenders from four of its compatriot shipbuilders: Hyundai Heavy Industries (HHI), Samsung Heavy Industries (SHI), Daewoo Shipbuilding and Marine Engineering (DSME), and HJ Shipbuilding and Construction. The shipyards have been asked to provide their best prices for a batch of up to nine 8,000 TEU methanol-fuelled vessels slated for delivery between 2025 and 2026.

According to DNV’s Alternative Fuels Insight, oil and chemical tankers are following suit with 20 tankers in operation and five more on order.

Proman Stena Bulk, the joint venture between tanker company Stena Bulk and methanol producer Proman, has taken delivery of its four methanol-fuelled tankers this year, the latest one being Stena Prosperous. the company had a total of six vessels under construction at Guangzhou Shipyard International Co Ltd (GSI).

At the end of 2020, Waterfront Shipping, a subsidiary of Methanex, the world’s largest producer, and supplier of methanol, ordered an additional eight methanol-fuelled vessels to be delivered between 2021 and 2023. The delivery of these vessels will make 60 percent of the company’s 30-ship fleet powered by lower-emission, methanol dual-fuel technology.

Earlier this month, Canada’s Waterfront Shipping entered into a time-charter agreement with Trafigura for a methanol dual-fuel tanker. Under the agreement, Trafigura will operate the co-owned Waterfront Shipping and Clean Sea medium-range product tanker, Mari Innovator, as part of its global network of vessels used in clean products trading routes. 

The vessel was delivered to Waterfront in October 2021 as the fifth of eight methanol dual-fuel tankers ordered from the South Korean shipyard Hyundai Mipo Dockyard.

The bulk shipping sector has been less active when it comes to the adoption of alternative fuels, with the first steps taken to adopt LNG as a marine fuel. However, Hong Kong-based dry bulk shipping company Pacific Basin has selected green methanol as the best fuel for its first generation of zero-emission vessels. Nevertheless, the company is yet to come up with a detailed design for the ships and proceed with a concrete order.

There have been some breakthroughs with regard to smaller dry bulk vessels, marked by the recent delivery of the first in a series of six diesel-electric dry bulk vessels to Dutch short sea company Vertom Group. The vessel has been designedto allow for future cobversion to methanol-electric or hydrogen-electric propulsion.

Designs are being developed to fill the gap, however, it appears that the dry bulk sector might still be lagging behind its counterparts. Namely, a 85,000-ton methanol dual-fuel dry bulk carrier developed by Huangpu Wenchong Shipping, a subsidiary of China State Shipbuilding Corporation (CSSC), just received an AiP from the China Classification Society.

That being said, market reports indicate that miner giant Vale is readying an order for methanol-fuelled ore carriers. The company is reportedly collecting bids from shipowners for contracts of affreightment for the next generation of Guaibamax ships.

In July this year, the Brazilian mining company secured approval in principle from DNV for its design incorporating multi-fuel tanks on iron ore carriers, developed as a result of the project seeking to adopt alternative, lower-carbon fuels for shipping.

A preliminary study for ships of the Guaibamax category estimates that emissions reductions can range from 40% to 80% when powered by methanol and ammonia, or up to 23% in the case of LNG, Vale explained.

Data from Clarksons shows that some 93% of the newly ordered capacity in the car carrying sector will be LNG capable, and 23% ammonia/methanol ‘ready’ as owners seek fuel optionality.

These don’t include the recently announced  Letter of Intent (LoI) for the construction of up to six dual-fuel methanol-powered PCTCs signed by China Merchants Energy Shipping (CMES) with China Merchants Industry Holdings.

New Zealand’s logistics specialist Move Logistics Group is also working to procure a new methanol-ready roll-on, roll-off (RORO) vessel. This new-build vessel is expected to be available for use by November 2023.

There is one cruise ship on order that would run on methanol, one tug, and four offshore vessels, according to DNV’s data. Based on the delivery dates of all the vessels on order, the global fleet of methanol-powered vessels is expected to reach 82 by 2028.

At the moment, a notable project is underway that will see the conversion of tug to run on methanol. The tug is intended for the Port of Antwerp-Bruges and the project has been described as the first of its kind.

Following the installation and testing, the goal is to have the Hydrotug 1 fully operational in Antwerp in the first quarter of 2023.

Dutch shipbuilder Damen has set sights on the construction of methanol-powered tugs and the company wants to have methanol-powered vessels to be series production-ready in 2026. Furthermore, Turkish shipyard and tug operator company Uzmar Shipyard and Canadian naval architectural firm Robert Allan have teamed up on the design and construction of a new series of methanol-fuelled tugboats.

Finally, when it comes to methanol bunkering, Swedish companies Stena Oil, Stena Teknik and OljOla have entered into a joint venture agreement to build a bunker supply vessel designed to carry chemicals as per IMO Type II, including methanol and various biofuels.

The new building 2000 dwt oil- and chemical tanker is designed by Kuzey and is being built by GENKA Shipbuilding in Tuzla, Turkey.

Another bunkering vessel in the making in Asia. Namely, Singapore-based bunker supplier Global Energy Trading, and Stellar Ship Management Services have entered into an agreement for the construction of a methanol bunkering ship.

The vessel will be built by Sasaki Shipbuilding Co., based in Hiroshima, Japan, and it is scheduled to join GET’s fleet by the end of 2023, becoming the first Category A bunkering tanker for the carriage of biofuel and methanol in Singapore.