GLOBAL: TotalEnergies Marine Fuels looking to expand LNG bunkering and biofuel footprint

Nov 18, 2023

TotalEnergies Marine Fuels is exploring the possibility of setting up LNG bunkering on the US West Coast, the Vice President of TotalEnergies Marine Fuels, Louise Tricoire, tells Bunkerspot.

‘There is business coming in LA/Long Beach; there is a demand from our customers,’ Tricoire said, speaking on the sidelines of the recent LNG Bunkering & Future Fuel Global Summit 2023 in Amsterdam.

‘Besides, in TotalEnergies, we have a global LNG portfolio that can supply the molecules, including existing and future flows in North America.

‘That means that there is a demand from the customers and there is supply from TotalEnergies.

‘In terms of bunkering infrastructure, we will need an LNG bunker vessel. It's part of our development plan under consideration.’

Tricoire was appointed Vice President, TotalEnergies Marine Fuels, in September 2022, succeeding Jérôme Leprince-Ringuet. At the time, the wider energy industry – and particularly the gas sector – was experiencing severe volatility. Tricoire said the period underlined the importance of cross-sector collaboration. As previously reported, TotalEnergies signed two agreements covering the supply of around 600,000 tonnes of LNG a year for 10 years with CMA CGM, starting in 2020.

‘Volumes offtake continued in Rotterdam and in Marseille, which was really positive in this environment. I think we were less impacted than our peers if you look at all the volumes that we have analysed in the market – we performed pretty well.’

In April this year, TotalEnergies also announced the completion of the first LNG bunkering operation at the Port of Marseille Fos for MSC Cruises’ MSC World Europa. The operation marked the start of the LNG bunker supply contract between TotalEnergies and the Cruise Division of MSC Group that was announced in March 2021. Under the agreement, TotalEnergies will supply approximately 45,000 tonnes a year of LNG to MSC Cruises’ vessels at Marseille.

Amid high LNG prices last year, many operators of dual-fuel LNG vessels were opting to run on ‘conventional’ bunkers, such as very low sulphur fuel oil (VLSFO), but according to Tricoire, the LNG spot market is beginning to look like a more attractive option.

‘For the market, it is true there has not been a lot of LNG spot demand so far, but this is coming now that the price has come down.’

Another important focus for TotalEnergies Marine Fuels is marine biofuels. This year saw the start of its first biofuel term agreement in Singapore with Hapag-Lloyd. Does Tricoire detect a growing appetite for these kinds of bunkering contractual arrangements?

‘The demand is starting to grow in terms of longer-term contracts – for a quarter, for a semester or a year. We are being asked by customers to quote. There is, as well, competition growing in Singapore, as more players are coming into this field.’

There were 90 biofuel operations at the Port of Singapore in 2022 accounting for a total volume of 140,000 tonnes.

‘The volumes for the first quarter are already at the level of the volumes of the [whole of] last year. So, it's growing and the MPA [Maritime and Port Authority of Singapore] is really supportive of it.’

Tricoire continued: ‘The logistics and storage companies are willing as well to service this low carbon solution. We have partnered with JPUT [Jurong Port Universal Terminal]. They have invested in order to be able to manage bio-blends for the shipping industry. I see the whole industry embarking on this journey in Singapore.’

With interest in fixing longer-term supply agreements increasing, TotalEnergies Marine Fuels is working hard to identify more sources of biocomponents for maritime. However, securing these at scale is no small task, said Tricoire.

‘It is a challenge because TotalEnergies restricts the use of any product or residue coming from palm oil. It is a "no go" for us. While this may limit us in the sources we can sell to our customers, we are working with the biggest European companies that are often aligned with our vision for using non-palm oil alternative sources such as waste and residues that make up the biofuel.

‘Being in Singapore, we are studying various sourcing opportunities in China, Malaysia, Indonesia, and other neighbouring countries.

‘The European market is also attracting molecules, especially in the Netherlands, thanks to the [renewable fuel units] HBE tickets, which create some movements in the market.’

The demand signals for green methanol are also there, said Tricoire.

‘There have been announcements on methanol by CMA CGM, by Maersk. What we see in the orderbook is more than 100 vessels, so there is the demand, and we are engaging with our customers to secure the molecules, as that's a fact, there's going to be a need for them.

Identifying the much sought-after green molecules is also proving challenging.

‘That's the hardest part because we don't want to deliver grey methanol and the green methanol is not yet produced at scale. We do work with our internal colleagues which already produce grey methanol in Germany – they produce 700 KT [per year] – as well as renewable electricity worldwide. They know how to do it and they do have projects to produce green methanol – bio or e-methanol – in Europe and in the US, at scale. We are also looking at external parties that could supply green methanol to us.’

TotalEnergies Marine Fuels is talking to partners in Singapore and in Europe about trialling methanol bunkering in the near future. In the longer-term, shipping will be vying with other industries to procure future fuels and it remains to be seen exactly where it will be in the pecking order.

‘It is a big challenge because if you calculate the math, to build a new one million tonnes production facility of e-methanol including new green power and H2 production units…the order of magnitude is $10 billion. If I want to serve my customers from such a facility, somebody is going to have to pay for the CAPEX and the customer will have to commit. The producer will not engage in a $10 billion [investment] without de-risking it through its customers.’

Such cross-sector collaboration – as demonstrated by the cooperation between TotalEnergies, CMA CGM and Mitsui O.S.K. Lines - was instrumental in catalysing the LNG bunkering market. The scale of the capital expenditure investments required to produce the nascent H2-based future marine fuels, however, is of a different magnitude, said Tricoire, with collaboration even more crucial.