LNG BC Market development

Transcription

1 EUROPEAN COMMISSION DG MOVE SEVENTH FRAMEWORK PROGRAMME GC.SST GA No LNG BC Market development LNG Blue Corridors Project is supported by the European Commission under the Seventh Framework Programme (FP7). The sole responsibility for the content of this document lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the FP7 nor the European Commission is responsible for any use that may be made of the information contained therein. Deliverable No. 7.6 Deliverable Title Market development Dissemination level Public Written By Flavio Mariani (NGVA Europe) Checked by Nadege Leclercq (Westport) Approved by Javier Lebrato (IDIADA) Issue date April 2018

2 Executive Summary The global LNG market keeps showing a growth trend. The LNG consumption, as well as production rate is increasing at global level. At present there is a production overcapacity; this situation is anyway expected to reverse to the other way around in the short to mid-term, until new production plants planned and under construction come to completion, thus adding to total production capacity. The global LNG market in fact faces a production surplus of about 20%. Experts predict that this will last probably until the early twenties, because some new suppliers such as US and Australia will increase their production rate. The demand for LNG in mature markets such as Japan and South Korea is likely to stabilize, while Asia is expected to absorb an increasing part of production overcapacity. Especially expanding may be the demand from south Asian countries such as India, Pakistan and Bangladesh. The Association of Southeast Asian Nations (ASEAN) region is also expected to be an important market for LNG in the short term. The main features of the LNG core business market are: Global LNG trade in 2016: 278 Mt (+5% vs 2015) 618 Mm 3 Short term market of LNG in 2016: 73 Mt (28% of total LNG market) Global average LNG supply price: $5.52/MMBtu ( 35c /Kg 48 c /Sm 3 ) Global nominal liquefaction capability as of January 2017: 340 MTPA (Million tons per year) New liquefaction capability under construction as of January 2017: 115 MTPA (+35% by 2022) New liquefaction capability planned in January 2017: 879 MTPA Global nominal regasification capability as of January 2017: 795 MTPA Capability of FRSU (floating terminals) plants as of January 2017: 83 MTPA Global LNG vessels fleet as of January 2017: 439 ships (including FRSU) Share of LNG in the global NG offer in 2015: 10% The LNG BC Project has met its main targets. More than 150 trucks have been involved as actual Project partners, from 39 fleet operators, collecting operational data along their routes. The initial target was 100 trucks. 13 stations have been built in the Project, of which 12 are in the budget. The original target was 14. Some of the stations sold very well since the beginning. Some other increased sales over the project duration, with increasing trend to reach a reasonably good sale rate. The main Project figures as of October 2017 are: Total 13 stations (1 under construction, hence not in time to be financed by EC funds) Total 156 trucks Total 61 Partners: 22 Companies; 39 fleet operators; from 11 EU countries Total cumulative mileage of monitored LNG trucks: 31,639,938 km (early May 2018) Total number of fillings of Project LNG stations: about 111,000 Total amount of LNG sold by Project stations: 14,206,275 kg (early May 2018) Average sale rate: 128 kg/filling 3

3 New developments have been on the side of LNG trucks, with IVECO to put on market a second Euro VI LNG model, more powerful, i.e. the Stralis NP NP AS440S40T/P; engine: Cursor 9; with 400 HP power delivery and 1,700 Nm torque, and twin LNG tank for up to 1,500 km running range. This was followed in late 2017 by a third truck model, the Stralis NP 460, propelled by the the Cursor 13 engine, with power of 460 HP at 1,900 rpm, a torque of 2,000 Nm at 1,100 rpm, and a max running range up to 1,600 km. Also VOLVO and SCANIA are now offering new Euro VI LNG models on the market, which anyway were not launched in time to join the Project. VOLVO designed the FH LNG, and FM LNG trucks (on market in spring 2018); they are Euro VI-compliant. Power delivery and torque are respectively: 420 hp, with 2,100 Nm and 460 hp, 2,300 Nm. Fuel consumption is on a par with VOLVO s diesel engines, but 15-25% lower than for conventional gas engines. LNG is stored in tanks at 4-10 bar and -140 to -125 C. Range: 1,000 km. In 2015, SCANIA launched on the market the P 280 model, powered by a SCANIA Euro VI engine. In 2017, SCANIA presented the new LNG truck model, the G340 LA4x2MNA; it has two LNG tanks, with a total capacity of 300 kg (190 kg in main tank; plus 110 kg in optional tank), LNG is stored at 10 bar, -130 C. Its running range is 1,100 km; the average consumption is ~28 kg/100 km. Engine displacement is 9.3 litres; this 5 cylinders Natural gas engine is the OC Euro VI. When the LNG BC Project started in 2013 the LNG infrastructure in Europe was very poor, with just about stations. On average 20 to 30 new stations were built per year since then, with a significant acceleration in 2017, leading to a total at end 2017 of more than 120 public LNG stations in operation. In 2018, 10 new stations already opened between January and April, with many more under construction or planned to be built throughout the year. A number of additional projects have been announced, which are expected to lead to a total of over 400 LNG stations in operation by the end of Other projects financed by the EC (particularly under the CEF Connecting Europe Facility programme) and the enforcement of the DAFI (Directive of Alternative Fuels Infrastructure), as well as greater vehicle availability and market demand, contribute to stimulate the European automotive LNG sector in the race to fill its gap to the LNG market in other parts of the world, such as China where it has sky rocketed, and North America. LNG, like CNG, can be produced from a variety of renewable, scalable and very low carbon intensity energy sources, such as biomethane produced from organic waste and biomass through anaerobic digestion and gasification or synthetic methane produced converting carbon dioxide (CO2) into methane by using hydrogen produced from surplus green electricity. Renewable gas is fully compatible with the current natural gas mix, allowing any blend and unlimited use in the existing infrastructure and vehicles. Liquified biomethane as biofuel for HD vehicles is a very new business. At the beginning of the LNG Blue Corridors project, there were only a few pilot plants in Europe and globally. Its development continued slowly in the timeframe, essentially in Europe, with a few additional projects launched. Since 2016, the European industry has put a much stronger focus on bio-lng, with a number of new projects announced, to demonstrate the viability of the solution, start larger scale deployment of production facilities and availability of bio-lng for trucks. Even though there are still only few plants up and running producing bio-lng in Europe (and globally) today, significant new development is expected in the coming years, in a growing number of countries. In the next few years, once these projects and others will be completed, bio-lng as a fuel for LNG trucks is expected to be available in a significant number of European countries, including at least Sweden, Norway, the Netherlands, the UK, Italy, Germany, France, Slovakia and Denmark. This will mark 4

4 the achievement of another major milestone for the market and the environment, making almost GHG neutral operation really possible for long distance heavy duty trucks (or achieving WTW GHG emissions reduction by at least 80% compared with diesel, depending on the biomethane source). By 2030, it seems reasonable to expect that bio-lng will be produced in much larger volumes, not only from biomethane (anaerobic digestion), but also from power to gas and gasification processes, therefore offering great opportunities for GHG emissions reduction in heavy road haulage as well as economically affordable zero or low carbon heavy goods road transport in Europe. 5

5 Revision History and Statement Of Originality Revision History Rev Date Author Organization Description 01 Nov 2017 Flavio Mariani NGV Europe 02 April 2017 Nadege Leclercq Westport Review and additions to the report 03 April 2017 Javier Lebrato IDIADA Review general content Statement of originality: This deliverable contains original unpublished work except where clearly indicated otherwise. Acknowledgement of previously published material and of the work of others has been made through appropriate citation, quotation or both. 6

6 Contents Executive Summary... 3 Revision History and Statement Of Originality Introduction LNG Blue Corridors project LNG Global market features Global LNG market The future role of Natural gas.13 3 Targets and expectations of potential partners in The LNG Blue Corridors Project m.14 4 European LNG market at beginning of LNG BC Project (stations, trucks, estimated sales) Automotive LNG market Project stations.18 5 European LNG market at end of LNG BC Project (stations, trucks, estimated sales) Project stations Automotive LNG Global market Automotive LNG European market Bio-LNG renewable gas as fuel for LNG trucks.25 6 Trend of station cost during Project deployment Considerations about LNG retail price and NG price General Industrial price LNG fuel retail price at pump Taxation - excise exemption Bulk supply price Break-even prices and new production Asia's effect..42 7

7 8 Identification of efficient LNG European network and potential cost Network Size Location Connector harmonisation Vehicles General Vehicle models Trains Social cost benefit Market barriers/improvers Power delivery Running range Fuel price advantage Purchase price of LNG trucks Boil-off Traffic limitations Fuel quality GHG emissions LNG Nozzles and receptacles Refuelling pressure and temperature Separation distances Consumer information about LNG price Parking structure Training Mobile/re-locatable stations Flexibility of supply systems - UTS 59 8

8 10.17 Logistic hubs Trend of core business LNG market General Top north and top south Europe's ends developments Europe - Russia - China international NGV corridor Italian infrastructure Recent and future moves of the market, Europe and Global Operators of the LNG sector The Trans-Europe Blue Corridor Rally..70 9

9 1.1 LNG Blue Corridors project 1 Introduction The LNG Blue Corridors project s aim is to establish LNG as a real alternative for medium- and longdistance transport first as a complementary fuel and later as an adequate substitute for diesel. Up to now the common use of gas as fuel has been for heavy vehicles running on natural gas (NG) only for municipal use, such as urban buses and garbage collection trucks. In both types of application, engine performance and autonomy are good with present technologies, as they are well adapted to this alternative cleaner fuel. However, analyzing the consumption data, the equivalence in autonomy of 1 liter of diesel oil is 5 liters of CNG (Compressed Natural Gas), compressed to 200 bar. Five times more volume of fuel prevents the use of CNG in heavy road transport, because its volume and weight would be too great for a longdistance truck. This opens the way for LNG (Liquefied Natural Gas), which is the way globally natural gas is transported by ship.ng liquefies at 162º C below zero at ambient pressure, The cost of energy needed is only 5% of the original gas energy content. This state of NG gives LNG the advantage of very high energy content. Only 1.8 liters of LNG are needed to meet the equivalent autonomy of using 1 liter of diesel oil. A 40-ton road tractor in Europe needs a diesel tank of 400 to 500 liters for a 1,000 km trip; its equivalent volume with liquid Natural gas would be 700 to 900 liters of LNG, a tank dimension that could easily be fitted to the side of the truck chassis. LNG therefore opens the way to the use of NG for medium- and long-distance road transport. LNG has huge potential for contributing to achieving Europe s policy objectives, such as the Commission s targets for greenhouse gas reduction, air quality targets, while at the same time reducing dependency on crude oil and guaranteeing supply security. Natural gas heavy-duty vehicles already comply with Euro VI emission standards, most without complex exhaust gas after-treatment technologies, which have increased procurement and operational costs. To meet the objectives, a series of LNG refueling points have been defined along the four corridors covering the Atlantic area (green line), the Mediterranean region (red line) and connecting Europe s South with the North (blue line) and its West and East (yellow line) accordingly. In order to implement a sustainable transport network for Europe, the project has set the goal to build approximately 14 new LNG stations, both permanent and mobile, on critical locations along the Blue Corridors whilst building up a fleet of approximately 100 Heavy-Duty Vehicles powered by LNG. Figure 1-1. Impression of the LNG Blue Corridors countries. This European project is financed by the Seventh Framework Programme (FP7), with the amount of 7.96 M (total investments amounting to M ), involving 61 Partners: 22 Companies; 39 fleet operators, from 11 This document corresponds to the 7.6 deliverable within work package 7. It is a document describing the LNG stations location in the project. This document will be available at the project website: 10

10 2.1 Global LNG market 2 LNG Global market features LNG is increasingly looked at as a new and promising way of Natural gas trade. It increases the flexibility and widens the range of NG supply sources. The market of LNG is consequently growing in most of the areas of the world. The main features of the global LNG market can be summarised as below: Global LNG trade in 2016: 278 Mt (+5% vs 2015) 618 Mm 3 Short term market of LNG in 2016: 73 Mt (28% of total LNG market) Global average LNG supply price: $5.52/MMBtu ( 35c /Kg /m 3 ) Global nominal liquefaction capability as of January 2017: 340 MTPA (Million tons per year) New liquefaction capability under construction as of January 2017: 115 MTPA (+35% by 2022) New liquefaction capability planned in January 2017: 879 MTPA Global nominal regasification capability as of January 2017: 795 MTPA Capability of FRSU (floating terminals) plants as of January 2017: 83 MTPA Global LNG vessels fleet as of January 2017: 439 ships (including FRSU) Share of LNG in the global NG offer in 2015: 10% The LNG market main feature trend kept showing a constant growth over the past two decades. The global LNG imports increased by about 10% to about 290 mn metric tons in 2017, according to the annual report of the International Group of LNG Importers (GIIGNL) released mid-april 2017, and SHELL LNG Outlook The increase was the highest recorded since 2010, contrasting with an average annual growth rate of 0.5% in and exceeding the rise 5% in [NGW Magazine] Figure 2-1. LNG global market trend 11

11 Figure 2-2. LNG liquefaction terminals as of January 2017 Figure 2-3. Liquefaction capability per geographic area, in 2010, 2016 and

12 2.2 The future role of Natural gas The COP21 agreement negotiated and ratified in Paris in December 2015 will probably have a great impact on the future mix of primary energy sources. Fossil fuels, and especially coal, will be taxed in order to curb the markets. Coal, as gas, is predominantly used for power generation. Coal is cheap, scalable and reliable with low or no disruptions. The same characteristics apply for gas. However, coal emits about twice as much CO 2 per energy unit as gas, which makes gas more attractive if the consumer has to pay for the emissions. Three countries, China, US and India, currently count for 50% of the global CO 2 emissions. Thanks to lowered gas prices (shale revolution) in US, which made gas more competitive over coal, the world s second biggest emitter has been able to reduce its annual CO 2 emissions by more than 700 million tons (about 10%) since What happened in US is likely to happen in the two biggest coal consumers, China and India, as well. Replacing coal power plants with gas plants has shown to be the most effective step towards a less carbon-emitting world. This partly explains why gas consumption in IEA s 2-degree scenario is expected to increase by 12-14% towards Gas will need to replace coal to a quite large extent. The highest gas consumption growth will come in Asia and the Middle East when coal and oil are abandoned and replaced with gas as fuel for power generator. Africa s dire needs for energy and power in its race for raised prosperity, will also play a significant role in the future hunger for gas. Building a sustainable E&P industry needs both the industry and the government to cooperate and to wear the generation perspective glasses, in order to become a success. [Source: excerpt from an article from Henrik Poulsen, Senior Vice President - Government Relations at RYSTAD ENERGY] 13

13 3 Targets and expectations of potential partners in The LNG Blue Corridors Project In 2013 many European stakeholders of the NGV market did believe that the LNG Blue Corridors Project, which was going to start, was one among the actions which might better stimulate and foster the growth of the NGV market at the European level at that time. In considering joining this Project, the operators did evaluate the possible synergies with their research plans in the LNG and NGV field. They did examine carefully and with most interest the different and best options and configuration for the involvement of their companies in the Project, for example on the following activities relevant to it: Building of LNG + L-CNG refuelling stations along the corridor routes Supply of LNG along the corridor routes to refuelling stations Development and evaluation of Euro VI vehicle technologies Study of possible solutions to improve standards and regulations related to the use of LNG as road transport fuel Collection/elaboration/reporting of data from demonstrated vehicles and stations Preparation of manuals/handbooks/guidelines/press releases Evaluation of normative implications They took in consideration aspects such as: Main aims of the project to match with their own targets Partners who had already committed themselves officially to the Project, and were progressively joining it Extent of coverage by these partners of the proposed corridors Expected deliverables Cost estimate Available funds Financing; EU contribution to the total cost incurred by partners Legal implications The Project had for the European operators many points of strategic and imaging interest, such as: The theme of Blue Corridors hinging on Natural gas was particularly appreciated by the biggest gas companies trading in Europe, such as: ENI, ERDGAS, GAZPROM, GAZ DE FRANCE (now ENGIE). In particular, GAZPROM had been fostering this concept for years, starting back in the early nineties, for example with supporting the 1991 Rome to Kiev Blue Corridors Rally. The LNG Project was a potential source of prestige for the partners, and could open the gate to more operative options for them. Vice-versa, not participating could convey to the public opinion a negative image of them not being enough sensitive to the need for development of cleaner mobility, and of LNG in particular, in a time when the LNG/CNG vehicle market did show signs of increasing dynamics. The range of the operators who had already expressed their interest for this initiative did include important competitors; hence it did seem sensible to take this challenge. 14

14 This initiative seemed to contain very concrete synergies with what many company were doing already in their respective field of operation, already in the short range. The availability of funds allocated by the EC, even if of limited entity, could have alleviated to some extent the financial effort required to the operators to develop this sector. The European operators attribute a great importance to the availability on the European roads of LNG as fuel for HD long haul good transport, as a tool for increasing the energy security and for improving the impact of transport system on the environment. In the meanwhile, they also took in consideration the importance of the side advantage of the L-CNG option, made possible by the installation of a LNG vehicle refuelling infrastructure. The L-CNG option allows refuelling LD CNG vehicles, be them both private passenger cars and fleet vehicles (commercial and public fleet vehicles); it allows lower energy consumption for the refuelling operation, thanks to substitution of the gas compressor for a liquid pump, with the same pressure increase. The LD NGV were already largely available on the market, and would have provided a beneficial scale effect, hence ensuring a better profitability and a shorter payback time of the LNG and L-CNG refuelling station capital investment. Furthermore, including the L- CNG option to the LNG refuelling station would have meant just marginal additional capital investment. The Project leaders prepared the European map with the proposed stations, as a first approach. They covered what they knew as existing, plus the proposed ones in France, Germany, Italy and Belgium, identified by the long distance Spanish transporters. This map had to be completed by the time. Table 3-1. Initial set of the four corridors (Source: D 1.5 Interim progress report) 15

15 The main milestones of the Project are summarized in Table 3-2 period Main milestones Some Partners left the project, such as Linde, Cloud. They received an initial budget (pre-financing); the plan for ENOS station in Slovenia was removed from the Project The first fleet operators started to work for the project such as LC3, ADPO, DISTRILOG, FERCAM, MARINÉ, NINATRANS, DUARTE MENDYRA participation was terminated More fleets joined in such as MAUFFREY, BERT, BERTHAUD, BAUGUINI, TIEL, MEGEVAND, XPO, MATTHEEUWS, TJA, HAM Transportes. HAM Criogénica participation was terminated The latest to join were: TRANSORDIZIA, MEC, CARGAQUATRO, CODOGNOTTO, AUTOTRANSMAR, DSP, TRANSNUGON, ESK, MEYER. Two companies dropped out the project: HARDSTAFF and RENAULT TRUCKS UNIPER joined the Project with the LNG station in Berlin Table 3-2. Project Stages 16

16 4 European LNG market at beginning of LNG BC Project, in 2013 (stations; trucks; estimated sales) 4.1 Automotive LNG market In 2013 the LNG market in Europe was just budding. Some few LNG stations, 20 or 30, mainly for demonstration purposes, were in operation in few countries. At that time, only Spain, the UK, Sweden and the Netherlands had LNG stations and trucks. Some more stations, in a wider range of countries were using LNG as NG supply source, which made them independent from the gas grid; but those did only sell CNG, obtained by pressurization and regasification of LNG under high pressure of 200 bar (L- CNG solution). In Italy for example there were about 10 L-CNG stations before the LNG BC Project was launched; but no station supplying LNG. The existence of these L-CNG stations did contribute to make the operators confident on that LNG could also be sold as low pressure liquid to HD vehicles, if only such vehicles had been put on the market: in sufficient number with a sufficiently wide range of models suitable to the long haul good transport with sufficient power delivery and torque to face the characteristics of the European road system. The launch of the LNG BC Project further consolidated this confidence, thanks not only to the available financial resources offered by the EC, but also to the awareness of the availability of at least a couple (or a couple more) of LNG stations in each European country on the main roads, as a starting point. The operators of the logistic sector were already well aware of the potential economic benefit provided by LNG trucks, in case of the suitable scale. And the entrepreneurial approach of the main HD vehicle manufacturers also convinced them to start this new pathway, with an initially small fleet of trucks, to be increased by the time if the first operational period results proved positive enough. Having a look at other markets outside Europe, such as China and North America, also provided some encouraging messages to the European operators. In China the total fleet of LNG trucks were huge already then, with a national LNG vehicle fleet of 40,000 units. An inherently large fleet was in operation also in USA. In early 2015, there were over 50 public LNG stations in operation in Europe, including approx. 19 in Spain, 7 in the Netherlands, 15 in the UK, 2 in Portugal, 1 in Italy, 6 in Sweden, 2 in Belgium and 1 in France. At that time, these countries were the true LNG pioneers within Europe. Other EC Projects came to support the NGV sector, such as the CEF program. Projects such as LNG/L- CNG in Finland, BESTWay, Innovative gas solutionsfor road transport, GREAT, BioMovLNG, CNG Connect, Connect2LNG, LNG Bremen and PAN-LNG have been approved for funding as part of the CEF 2014 programme, leading to the construction of approx. 15 additional LNG stations since 2015, with more planned by the end of 2019 as these projects are still ongoing. 17

17 All together, the CEF and CEF Blending projects approved for funding since 2014 have enabled the construction of approx. 20 LNG stations until now (stations in operation as of April 2018), with over 150 more that are currently in planning more or under construction. In 2016, there were already more than 70 public LNG stations in operation in Europe, plus some private stations for captive fleets. By end 2016, in the Netherlands there were 162 CNG stations and as much as 21 LNG stations. In Spain there were 28 CNG and 21 LNG stations. In Italy there were 1,176 CNG, 8 LNG and 9 L-CNG stations; Italy plans to have 100 more CNG, 10 more LNG and 9 more L-CNG stations in operation by end The period also saw new countries entering the LNG stations' game, such as Finland (1 st station in 2016), Germany (2016), Poland (2016), Austria (2017), Bulgaria (2017), Slovenia (2017) and Czech Republic (2017). The number of countries with LNG stations in operation or planned does continue to increase, now with Hungary (1 st station in operation in March 2018), Norway (1 st station planned for 2018), Croatia (1 st station planned for 2018), Slovakia (2019) and others expected to follow the trend. Thanks to these new projects, the network of LNG stations is becoming truly European. Fig 4-1. EU Funded Projects developing CNG and LNG Infrastructure in Road Transport (source: NGVA Europe, September 2017) 4.2 Project stations In the Project, the first station opened in Piacenza, Italy (ENI, built by Vanzetti), in April 2014, already supplying a substantial fleet of trucks since the very beginning. Also in 2014, LNG stations were opened in Orebro, Sweden (SGA), Kallo, Belgium (DRIVE), Carregado, Portugal (DOUROGAS), Barcelona, Spain (GAS NATURAL FENOSA). 18

18 In 2015, LNG stations were opened in Nimes, France (ENGIE), Matosinhos, Portugal (GALP), and Elvas, Portugal (DOUROGAS). In October 2015 France opened in Rungis (ENGIE, built by HAM), its first public service station capable of supplying LNG and CNG. This was the second LNG station built in France. In the Rungis station the supply of LNG can be accomplished by pump or pressure differential with only preselect mode of operation and without modifying the installation. It was the first LNG supply station that could operate with this functionality. It allows refuel all types of vehicles and reduce operating costs as it enables optionally not use the cryogenic pump. GNVERT s Lyon LNG station was ready by mid-2016 due to delays with the permits from the authorities. In 2016 was also opened in Pontedera, Italy the second station of ENI, built by HAM. In 2014 and 2015 all the other LNG stations which progressively opened could count on limited fleets of some trucks; generally not more than three. The situation improved rapidly in The Project experienced some difficulties along its path, related to the implementation of the planned 14 LNG stations, then reduced to 13, as well as to the different progress made by the various OEMs in the development of LNG trucks. The largest problem with the LNG stations was identified in Germany, since ERDGAS did not find the business case and the Consortium was asked to find a new solution. Three companies (GASREC, GNF and GNVERT) proposed themselves to conduct a business study and competed for the allocation of the LNG station to them; however none of them achieved the goal. UNIPER was able to build the station at last. As the core activity Demonstration could not fulfill the goals in the scheduled duration period, a project extension was agreed for 1 year to selected partners (LNG stations and fleet operators mainly). The fact that one of the LNG stations of the project, i.e. that built by BRUCARGO (DRIVE), was awarded in parallel with a TEN-T project had impact to the LNG Blue Corridors, since only 13 LNG stations were to be constructed. The EU Commission agreed to keep the process for 1 LNG station in Germany while the funds for BRUCARGO were used for additional trucks monitoring. It was also not necessary anymore to have 14 LNG stations since CEF funding was supporting many LNG stations in Europe. Some of the stations were in the beginning mobile stations, for example in the case of Lyon, Nimes and Berlin. They were planned to become fixed stations at end of Project. This proved to be a sensible strategy for a developing market in totally unexploited areas. The development of the LNG market faced most problems in Germany, where only 1 station in the Project could be opened only in late 2016 in Berlin (UNIPER). It is a mobile station, and a substitution for a stationary one is planned in The very last station of the Project to open, i.e. the 13 th is the one in Sines (GALP) Portugal, which could still not be opened by the end of the project in April An LNG station was planned by the Project in the Brussels airport (DRIVE LNG/Bru Cargo). This station was built, but as it already was granted financial incentives from another EC Project, i.e. TEN-T CEF, it was removed from the Project. The Project initially included a station in Slovenia (ENOS), but this station was never built due to a lack of a good business case; ENOS LNG operates anyway a small LNG liquefaction plant in Slovenia. For this reason the stations in the project are 13 instead of 14, and the funds available for the station in Croatia were re-allocated for more trucks/fleets. The timing of construction of the Project stations had to take in due account the real progressive availability of trucks. 19

19 At end 2015 i.e. end of the second year of the Project, 8 LNG stations (61%) had already been constructed, including Matosinhos - Portugal, Rungis and Nîmes France. That meant at least one station per Corridor, already in operation or just built in 6 different countries (Italy, Sweden, Belgium, Portugal, France and Spain). And the demonstration was taking place in at least 2 additional countries since of course some of the LNG Blue Corridors trucks did not limit their operations to the origin country, but travelled across national borders, as all long haul vehicles do. For example, countries like The Netherlands and Germany had already at that time more LNG trucks on their roads. However, there were another 5 LNG stations which could not be ready by the end of 2015/mid 2016 for various reasons. The Portuguese station in Elvas built by DOUROGAS had some delays due to the reallocation of its budget originally it was going to be built by CLOUD. Finally the Pontedera (ENI) and Sines (GALP) stations also experienced some delays with the permits. By mid-2016, 11 stations hence 84% of the planned stations were in operation or built. The last two came later: the one in Berlin, Germany (UNIPER) in late 2016, and the station in Sines, Portugal (GALP) will be the last one, in trucks Cumulative LNG sales Cumulative fillings Avg. LNG sales/month/station Cumulative kilometres Jan >290 tons ~3, tons ~600,000 Feb 2016 <50 >2,300 tons ~20, tons >10 million June 2017 >110 >6,660 tons ~56, tons ~20 million Oct 2017 >140 >10,000 tons ~78, tons >25 million May ~14,200 tons ~111, tons ~32 million Table 4-1. Project features trend 20

20 5 European LNG market at end of LNG BC Project, in 2018 (stations; trucks; estimated sales) 5.1 Project stations participant Corridor country city opened 1 ENI MedBlue Italy Piacenza 04/ AGA - SGA SoNorBlue Sweden Orebro 04/ DRIVE WeBlue Belgium Antwerp (Kallo) 05/ DOUROGAS AtlBlue Portugal Carregado 10/ GNF MedBlue Spain Barcelona 12/ GNVERT AtlBlue France Rungis 12/ GNVERT MedBlue France Nimes 02/ DOUROGAS SoNorBlue+AtlBlue Portugal Elvas 04/ GNVERT SoNorBlue France Lyon 06/ ENI MedBlue Italy Pontedera 11/ GALP AtlBlue Portugal Matosinhos 11/ UNIPER WeBlue Germany Berlin 04/ GALP SoNorBlue+MedBlue Portugal Sines 2018 Table 5-1. The 13 Project stations 5.2 automotive LNG global market During this period of time the automotive market of LNG has increased remarkably worldwide, especially in Asia (China, Japan) and North America. China had already in 2013 a national fleet of 18,000 LNG buses and 45,000 LNG trucks, fueled by about 1,000 LNG stations. At end 2014 the CHINA LNG GROUP expressed intent for direct investment in a minimum 100,000 LNG-fuelled trucks and indirect-investment in 200,000 LNG-fuelled trucks by In 2017, the LNG trucks account for about 21

21 4% of the more than 6 million HD vehicles able to haul 40 to 49 tons of goods that are on China s roads. The national demand for LNG trucks is soaring as companies and manufacturers shift to vehicles that run on the gas that China s Government sees as a key part of its war against ambient air pollution. Sales of LNG heavy trucks surged by 540% to nearly 39,000 in the first seven months of 2017 [Source Cassie Liu, a truck analyst with the IHS Markit consultancy]. That was partly stimulated by a ban in 2017 on the use of diesel trucks to transport coal at northern ports in provinces like Hebei and Shandong, and in the city of Tianjin. The production of large LNG trucks broke records in 2017 in China, with a total of LNG trucks produced in that year; a sharp contrast to in 2016, according to an industry report. Gas trucks are believed to be more environmentally friendly and more economical in China, where it is estimated that gas trucks can cut fuel costs by 61 yuan (9.5 U.S. dollars) per 100 kilometers, and the demand for gas trucks will continue to rise in The strong growth of gas truck production is part of China's continued battle against air pollution through encouraging the use of clean energy-powered vehicles and tightening control over pollutant emissions from new motor vehicles. [source: NGV Magazine] 5.3 automotive LNG European market The automotive LNG market has seen some significant increase in Europe too. The main fuel companies have invested all around Europe in LNG stations, especially in Spain, The Netherlands, Italy and the United Kingdom. Spain is favored by the long time existence of many (now 7) LNG terminals, well located along the country s coasts. The Netherlands remains as the leader of investments in Europe, especially thanks to the allocation of public funding at very high levels (50% of the LNG stations) the routes inside the country are not as long as the ones in the LNG Blue Corridors Project, which focuses on medium and long distance transport. These routes are flat, and this means that also low-powered trucks are suitable for this country. UK started very early with developing the LNG mobility. In the UK, the Government implemented the Low Carbon initiative. The trial has had 11.5 million of funding from the UK Government to increase the number of low carbon trucks and refuelling stations. It is set to deploy around 350 gas trucks and 28 refuelling stations. Italy can count on the longest and widest experience with the CNG mobility sector, ranging back to the thirties of the last century. Its CNG market still remains the greatest in Europe. In Italy there are now about 1,000,000 CNG vehicles, served by about 1,200 CNG stations (there are plans for 2,000 in total), selling about 1 billion Sm 3 of CNG per year. The NGV market in Italy is facing a bit of a slow-down trend in this period, mainly due to the competition of hybrid and LPG vehicles. This long and successful experience is now leading to a natural prosecution on the LNG mobility field. Italy has become one of the champions in Europe of the LNG automotive market. The operators of this sector estimate a grown demand for LNG in the automotive market to more than 15,000 ton in 2017 (LNG + L-CNG), i.e. two times as much as in The total number of LNG stations has grown to 15 in 2017, compared to 6 in The LNG truck national fleet amounts in 2017 to 400 dedicated vehicles, plus 100 dual fuel, LNG/diesel. The National Strategic Plan (Quadro Strategico Nazionale) is predicting the total demand of LNG as automotive fuel in 2030 to amount to 2.5 million ton/year, and a total of 800 LNG refuelling stations. This network would be sufficient to refuel a national fleet of 30,000 LNG HD vehicles. The L-CNG refuelling stations could also increase their total demand of LNG to about one million ton/year. Finally, in 2030 the application of LNG to the industrial market might demand for more than 2 million ton/year as substitution of traditional fuels; the residential market application might demand for half a million ton/year of LNG. [Source: LIQUIGAS] 22

22 A substantial help also came from the Trans-European Transport Network Executive Agency (TENT-T EA) call 2012, which recommended funding 7 projects related to LNG, some under development. They are: Flexible LNG bunkering value chain on the Spanish Mediterranean coast [2012-ES S]: approx. 1 M funding, to support removing the barriers for an LNG bunkering in the Mediterranean coast. LNG hub in the northwestern Iberian Peninsula [2012-ES S]: 0.6 M for the Port of Ferrol, focusing on the design of facilities, procedures to apply LNG as fuel for vessels. LNG Rotterdam Gothenburg [2012-EU P]: approx. 34 M funding for the LNG break bulk facility at the Port of Rotterdam and the small-scale satellite terminal in Gothenburg. SEAGAS [2012-EU S]: approx. 1 M funding support for feasibility studies about LNG bunkering facilities in 2 ports: Roscof (France) and Santander (Spain). LNG Pilot Project about bunkering infrastructure solution and pilot actions for ships operating in the Motorway of the Baltic Sea [2012-EU P]: approx. 23 M. LNG Masterplan for Rhine-Main-Danube [2012-EU S]: approx. 40 M funding for feasibility studies, trials and pilot actions related to inland vessels. Study to test the potential of Bio-LNG to contribute to European Renewable energy targets based on a pilot refuelling and storage network trialled with HGV fleet operators in the UK [2012-UK S]: 5.7 M funding for pilot studies to test the Bio-LNG in a live trial with HGV operators using a pilot network of open access storage and refuelling terminals. It includes fixed and mobile stations. This Project has similarities to the LNG Blue Corridors, and will be deeply monitored. Also Gasrec, partner of the LNG Blue Corridors, was proposing this topic funded by TEN-T, and it is expected to have a good exchange of information to understand the impact of the Bio-LNG in Europe. When the LNG Blue Corridors FP7 Project started, the regulatory framework related to LNG was not fully developed. This situation has changed substantially, and nowadays LNG technology is mature and can be approved and certified. The publication and entrance in force of UN Regulation in 2013 has been one of the key items for the success of the project since it opens the possibility to register vehicles using LNG as a fuel throughout Europe. Furthermore, ISO standards that were initially in preparation have developed the requirements to be fulfilled by the LNG Refuelling Stations. The use of common standards and regulations guarantee the safe use and the compatibility of the LNG vehicles and the LNG refuelling stations around Europe. A not negligible amount of work is still to be done in the field of certification - standardization and some technological aspects should be improved. The estimated total number of public and private LNG stations in Europe is in excess of 150 as of early An average sale rate for them can be expected at 1,000 ton/y as starting point, leading to an initial LNG automotive market in Europe of 150,000 ton/y, as conservative estimate. country Public + private LNG stations (2018) Public CNG stations, including L-CNG stations (2016) Private CNG stations Planned new LNG stations short term ( available info) Austria Belgium Bulgaria Croatia

23 Cyprus Czech Republic Denmark Estonia Finland 4 27 (of which 1 L-CNG) 0 France (of which 6 L-CNG) Germany Greece Hungary Ireland Italy 22 1,176 (of which 10 L-CNG) Latvia Lithuania Luxemburg Netherlands (of which 2 L-CNG) 15 3 Norway Poland 4 27 (of which 1 L-CNG) 4 3 Portugal 6 12 (of which 7 L-CNG) 1 1 Romania Serbia Slovak Republic Slovenia Spain (of which 16 L-CNG) 0 3 Sweden Switzerland UK 30 (inc. 15 priv.) 20 (of which 4 L-CNG) 15 24

24 TOTAL 156 3,315 (of which 47 L-CNG) Table 5-1. The European LNG infrastructure as of April 2018 (NGVA Europe s estimate, based on available information; some of the listed L-CNG stations also sell LNG in liquid form; some other don t) Table 5-2. The main features of the Project stations, as of end September 2017 (available information) 5.4 Bio-LNG, renewable gas as fuel for LNG trucks LNG, like CNG, can be produced from a variety of renewable, scalable and very low carbon intensity energy sources, such as biomethane produced from organic waste and biomass through anaerobic digestion and gasification or synthetic methane produced converting carbon dioxide (CO2) into methane by using hydrogen produced from surplus green electricity. In Europe, this liquefied 25

25 renewable gas is often referred to as bio-lng or liquefied biomethane (other terms are also found, e.g. LBM for liquefied biomethane, liquefied biogas and LBG e.g. in Sweden). Renewable gas is fully compatible with the current natural gas mix, allowing any blend and unlimited use in the existing infrastructure and vehicles. In March 2018 NGVA Europe and EBA (European Biogas Association) released a report on renewable gas in transport ( Renewable Gas in Transport - Opportunity to fast accelerate decarbonisation with a clean and sustainable solution, EBA and NGVA Europe, March 2018). This study has explored the benefits of natural gas combined with renewable gas as a transport fuel, both looking at the greenhouse gas (GHG) emissions reduction and improvement in the air quality by a progressive substitution of gasoline and diesel. The EBA-NGVA analysis quantified the possible GHG emission reductions of renewable for heavy duty vehicles (HDVs) in 2030, in comparison with diesel. When comparing these fuels from a well-to-wheel perspective for HDVs, the study shows that renewable gas can produce total CO2 reduction over truck lifetime of 968 to 2315 ton depending on the renewable gas source. Liquified biomethane used as biofuel for heavy duty vehicles is a very new business. At the beginning of the LNG Blue Corridors project, there were only a few pilot plants in Europe and globally, the following ones being known by the LNG BC project partners: - One in the Altamont Landfill near Livermore, California, USA, which was the world s largest landfill gas to LNG plant when Waste Management Inc. and Linde North America started its operation in November 2009; - One in Albury, Surrey, the UK, operated by Gasrec, producing liquefied biomethane from landfill to fuel commercial vehicles in the UK; - One in Lidköping, Sweden, which started operation in summer 2012, initially run by Lidköping Biogas AB (now Air Liquide), producing transport fuel for cars, trucks and buses in both gaseous and liquefied form. The development for bio-lng continued slowly in the timeframe, essentially in Europe, with a few projects launched e.g. near Oslo in Norway (it has been opened in February 2014 by Cambi AS, with a bio-lng production capacity of 11 tons per day source: ac_puregas bio_lng_presentation.pdf) and in the Netherlands. Several bio-lng pilot projects have been experimented in the Netherlands, including the following ones: - First Dutch pilot plant by Rolande LNG, Gastreatment Services and Attero at the Wijster site of Attero, with production capacity of 177 kg of bio-lng per hour / 1,550 tons per year, start of operation in 2014 (Sources and Carlijn-Lahaye-Attero.pdf) - Small scale fiel test at Landschap Vallei in Veluwe, with Cirmac raw biogas upgrading to practically pure biomethane and Osomo liquefaction using a Stirling Cryogenerator, with a liquefaction capacity of about 7.5 kg per hour. (Source: At Accres in Lelystad, DMC biogas upgrading and Osomo's Stirling cryogenerator used for liquefaction. (Source: 26

26 - Gastreatment Services in Haarlem, with a full-fledged liquefaction system with a capacity of 122 kg bio-lng per hours. (Source: Since 2016, the European industry has put a much stronger focus on bio-lng, with a number of new projects announced, intended to demonstrate the viability of the solution, start larger scale deployment of production facilities and availability of bio-lng for trucks. Even though there are still only few plants up and running producing bio-lng in Europe (and globally) today, significant new development is expected in the coming years, in a growing number of countries, as stated by the following examples: - Announced in March 2016, the Biokraft Norway plant intended to be Scandinavia s largest biogas plant to provide fuel for buses. It is planned to be located at the Norske Skog Skogn paper mill near Trondheim, with a system supplied by Wärtsilä using Purac Puregas process converting cleaned biogas from fishery waste and residual paper mill slurry into liquefied natural gas fuel. For this plant, Wärtsilä claimed a novel natural gas liquefaction technology based on readily available, well proven components, specially designed to liquefy small methane-based gas streams. Initial production capacity is planned to be 12.5 tons of liquefied biomethane per day, then doubling to 25 tons per day. (Source: Fleets and Fuels, March 21, 2016 and 3_21_Purac_Puregas bio_lng_presentation.pdf) - In France, the first bio-lng demonstration (pilot) project is BioGNVAL, located in Valenton, operated by ENGIE s subsidiary LNGENERATION, coordinated by SUEZ and with Cryo Pur in charge of biogas purification and liquefaction. This bio-lng project started in 2013 and the production site was inaugurated in May Demonstration project period was October April (Sources: html) - In the Netherlands, in addition to the above mentioned pilot projects, a number of other bio- LNG projects are under development. Rolande LNG has been awared EU funding from the CEF 2017 programme for its BIOLNG4EU project, which is expected to enable the company to get bio-lng to the market faster. The goal of the project is to install two bio transformation stations (BTS) and four Bio-LNG fuel stations in the Netherlands and Belgium. The two BTS s will transform locally produced biogas to liquefied Bio-LNG. This action is part of a global project of 50 LNG and Bio-LNG refuelling and 15 bio transformation stations that will be established gradually close to large distribution centres and/or to major highways along the TEN-T Core network Corridors in North Western Europe. (Sources: As for Germany, Titan LNG and Osomo Projects signed in November 2015 a partnership agreement to realize a Bio LNG production facility planned to be the first in Germany. Osomo Projects represents ilng, the owner of the certified and patented Bio LNG liquefaction technology. (Source: - Also in Germany, the LNG Bremen project has been approved for EU funding from CEF 2014 programme, enabling HGM to build a bio-lng production unit in Bremen as well as a supply system to stations. The action is a study and full-scale real-life deployment project of a liquefaction and supply facility for LBG at the port of Bremen. (Source: 27

27 - Then, German energy company Erdgas Südwest GmbH announced in March 2017 a new bio- LNG production plant using Puregas upgrading technology supplied to Wärtsilä. Wärtsilä reported that the technology for this plant represents a new and unique response to market needs to liquefy and store methane-based energy streams. Both gas cleaning and liquefaction are cost- and energy efficient, thereby making profitable projects possible even for smaller gas streams. (Source: - In Italy, there are at least ten projects for bio-lng production plants, with production capacity from 5 to 50 tons/day. (Source: Consorzio Italiano Biogas panel2-2-maggioni.pdf) o Cooperative 3A Assegnatari Associati Arborea project in Arborea, Sardinia is planning to produce ~4.5 tons of bio-lng per day using Galileo Cryobox and to build L-CNG stations to use it as fuel for trucks and other vehicles. (Source: o Caviro distillery project is planning to produce 8 million Sm3 of bio-lng per year from grape waste of member wineries. o S.E.S.A. (Società Estense Servizi Ambientali S.p.A.), one of the most important refuse collection and treatment companies in Italy, based in Veneto region, has been authorized a production plant of 4,500 Sm3/hour of biolng and biocng, which will fuel 150 waste collection and transportation trucks. o Cryo Pur announced one tender won for a project in Italy. - In France, there are also several bio-lng projects in preparation. At least two more bio-lng production plants are planned with Cryo Pur equipment, one in Angers (expected in 2018) and another one (Source: As part of the CEF funded BioMovLNG, Proviridis is planning the installation of a bio-lng production unit at a Waste Water Treatment Plant. (Sources: In Slovakia, the project «LBG: Fuelling Renewable Transport was approved for funding as part of the CEF 2016 programme and will include the realization of a bio-lng production facility in Slovakia, together with a network of stations and roll-out of LNG trucks in the Visegrad countries. (Source: - In Northern Ireland, the first ever bio-lng production project was launched in July 2016 by Greenville Energy and Cryo Pur in Tyrone, with planned production capacity of 3 tons of bio- LNG per day. Greenville Energy was already producing biogas from anaerobic digestion, based on waste from dairy and other food industries. With the new project, excess biogas production will be transformed into bio-lng. This first commercial bio-lng production unit from Cryo Pur was commissioned in October (Sources: In Denmark, GreenLNG A/S intends to develop a bio-lng production plant in the port of Hirtshals. Planned production capacity is 160 tons per day / 70 million Sm3 per year and first delivery expected in Q This project was submitted and rejected for CEF 2017 funding but may be confirmed at a later stage. (Sources:

28 In the next few years, once these projects and others will be completed, bio-lng as a fuel for LNG trucks is expected to be available in a significant number of European countries, including at least Sweden, Norway, the Netherlands, the UK, Italy, Germany, France, Slovakia and Denmark. This will mark the achievement of another major milestone for the market and the environment, making almost GHG neutral operation really possible for long distance heavy duty trucks (or achieving WTW GHG emissions reduction by at least 80% compared with diesel, depending on the biomethane source). By 2030, it seems reasonable to expect that bio-lng will be produced in much larger volumes, not only from biomethane (anaerobic digestion), but also from power to gas and gasification processes, therefore offering great opportunities for GHG emissions reduction in heavy road haulage as well as economically affordable zero or low carbon heavy goods road transport in Europe. 29

29 6 Trend of station costs during Project deployment arket at end of LNG BC Project, in 2018 (stations; trucks; estimated s Before the start of this Project, the construction cost of the very first LNG refuelling stations did tend to be very high, mainly due to lack of standards and lack of experience, which had to be remedied with some redundancy. A first generation LNG refuelling station might even cost about 2.0 million Euros. The second generation stations take profit of some experience gained meanwhile, and have in general lower CAPEX, but still tend to be quite expensive, in this case due to low scale effect. The increase trend of number of LNG stations during the project is all in all not negligible and quite interesting. An average rate of about 30 new LNG stations were built per year. More stations can be counted in this respect, if including the stations only delivering L-CNG to their customers, as in the total network there are stations selling both L-CNG and LNG in liquid form, but also stations selling only L-CNG, as e.g. some 9 stations in Italy. In many cases, even if maybe not always, these L-CNG stations are more or less ready to enlarge the range of offered fuels, extending to LNG with a limited additional investment which is just a fraction of CAPEX (LNG dispenser, LNG low pressure pump if needed, LNG conditioner heat exchanger, if needed). This pace of 30 new stations per year is anyway not yet intense enough to originate the scale effect which can further curbe in a detectable way the cost of stations. This cost was and still is only depending on the adopted technology and solutions. For one thing, this increase in the number of stations involves now 14 countries, and hopefully some more in the future; hence the number of new stations in each country is for sure below the desirable level to affect significantly the cost of station components, let alone the lump sum cost. Then, most LNG station/plant components are specific to LNG, so no or very limited synergy is available with other cryogenic or normal temperature operational components. The used materials and metals are valuable and expensive: stainless steel and special alloys. The technology needed for some of them, primarily the cryogenic tanks and pumps, is quite sophisticate, so the market needs very high numbers to have access to a large scale effect on the side of costs. Also, some technology needs such as boil-off recovery and LNG truck tank vent recovery, will play against reduction of average station prices. In the early steps of this market development, quite often the LNG station manufacturers resolved to offer their customers special promotional prices, with which they accepted to renounce to a part of the legitimate and normally expectable margin and profit, to encourage their customers to take the challenge, for sake of promotion of this new pathway. With the development of this sector, at least in the beginning of the subsequent stages, any possible intentions for reduction of prices due to scale effect would hit against the need of the manufacturers for some recovery of the lost profit which they did sacrifice with the early contracts. The improvement of the technology, and the harmonization of technology solutions, service conditions and components, in particular connectors, will offer some help to reduce the CAPEX and OPEX to a certain extent. A big help can come in this respect from harmonization of standards for LNG stations in Europe (e.g. EN ISO 16924). To make one of the best examples, the future advisable general adoption of a single solution for service conditions, for example low pressure and temperature (now down to 8 bar and potentially only low pressure 3 bar in the future), besides being profitable in terms of longer running ranges and residence times of LNG in tank, and larger sale rates per individual filling, would allow some economy in CAPEX, as less components would be needed installing in the stations (e.g. LNG conditioning heat exchanger, pump etc.). The increase of the LNG HD vehicle fleets will also improve all business cases, which might have an indirect twofold effect on prices. On the one hand it would make more and more operators to be willing to build their own LNG station, be it 30

30 private or public. This will eventually provide the desired scale effect. On the other hand, the new stations built in a more settled market would probably have to be bigger than the ones in the former generations; hence more expensive. This would mean higher CAPEX; but despite this, the expectable pay-back time would be shorter, due to the better utilization rate of larger fleets. Another deliverable of this Project has identified the typical average cost of the LNG refuelling stations, as a function of their type/technology. The following table is an excerpt of D 3.8, cost analysis of LNG refuelling stations. The content of the table is still applicable to the general situation in Europe at end type Stationary station Mobile station technology saturated LNG at 7-8 bar saturated LNG and CNG (L- CNG) super saturated (18 bar) and saturated LNG super saturated and saturated LNG and CNG (L- CNG) saturated LNG at 7-8 bar super saturated and saturated LNG and CNG (L/CNG) Common cost estimate Specific cost estimate Total cost estimate Common cost actual 171, , , , , , , , ,000 67,000 Total cost actual 470, , , , , , ,000 1,150,000 Table 6-1. Typical CAPEX of LNG refuelling stations (excerpt from D 3.8, rounded figures) stationary stations and mobile stations - Euros This analysis does not ignore, but intentionally does neither take in consideration the potential effect on the prices/costs in the European LNG market, which could derive from import of technologies and products coming from other LNG makets and operators in the world. 31

31 7 Considerations about LNG retail price and NG price 7.1 General At present it is not possible to address to any official document about fuel price forecasts, which is a rather complex prevision to do, especially in the energy and fuels market. Some of the deliverables of the LNG Blue Corridors Project address the LNG market items. These documents might give some hints on the possible future trend of costs and prices. What is possible at the present stage of the LNG market development about this item is just some general considerations, and the personal opinion of Project Partners, about factors that can affect the future price trends, in one direction or another. The price of LNG at pump, as that of any other automotive fuel, is entirely at the option of the retailer, and subject to market dynamics of offer/demand. It consist of three components: industrial price; including production and transport costs plus wholesale and retail margins excise duties (tax) VAT (tax) In all Europe, the VAT is applied on the sum of the industrial price plus the excise duties; this means that there is a tax applied over a price component that is already a tax. 7.2 industrial price The industrial price could be affected in a positive way (meaning lowered), by a constant increment of the global LNG market, leading to a larger offer. The global LNG production capability is now about 300 million ton/year. Also the increasing availability of this fuel, now coming from new sources, such as those in North America (e.g. the LNG terminal in Louisiana operated by Cheniere), and Australia (e.g. the new NG liquefaction plant of Gorgon, operated by Chevron Corp, on the Barrow island, capable of 15.6 million ton/year), and in future also coming from new sources in East Africa, will probably have a positive effect, provided the new production pathways (e.g. fracking), are not too expensive, especially in the case of low Oil prices, and get reasonable breakeven prices to support and justify E&P costs, which seems to be the case often enough. As a matter of fact, the LNG industry in these very time is trying to figure out what is the safest way to manage the temporary oversupply while avoiding a shortage and associated price spikes early next decade. As the production surplus of LNG begins to rise, questions are being asked about how to deal with this in a way that does not destroy value. US has exported $139mn worth of LNG to China in the first seven months of US LNG deliveries to China have surged in this period, as low prices have encouraged buyers to switch from coal. On 8 th June 2017 two small but significant sales and delivery of spot-priced LNG from the US, i.e. the equivalent of 95 million Nm 3 produced by CHENIERE ENERGY, from its liquefaction terminal in Louisiana, landed on the shores of Poland at Swinoujscie LNG Terminal. Following this, also Lithuania s state gas trader, LIETUVOS DUJU TIEKIMAS received a supply of US LNG at its Terminal in the port of Klaipeda on 21t August For decades, the countries in the CEE region have mostly purchased 32

32 Natural gas from a sole supplier, GAZPROM, which has traditionally asked higher prices compared to western hub prices, in long term contracts with take-or-pay stipulation. As an immediate consequence, the Russian producer has already shown more contractual flexibility. With an increasing lot of new sources available from emerging suppliers, and traditional LNG providers like Qatar looking to supply new markets, coupled with easily accessible and more affordable floating storage and regasification units (FSRU) infrastructure, LNG is getting ever closer to becoming a global commodity, that could not only supply Natural gas to countries like Poland, but also to other states in Central & Eastern Europe (CEE), even those that are landlocked. Energy savings and the incremental recourse to renewable energy sources will be asked for by the decarbonization strategies of the Governments, to curb traditional fossil fuels consumption in future. The resulting migrating demand for fuels among different countries and areas of the globe is also affecting the routes and final destination of LNG supply, and the end industrial prices are influenced by this varying offer/demand in a hardly predictable way. Just as an example, exports of LNG to Japan from the east coast of Australia crashed to a 17-month low in September 2017, while volumes to China edged higher to a new record high, on October 6 [Source: Gladstone Ports Corp (GPC)]. Japan received just 60,539 metric tons of LNG in September 2017 from the Port of Gladstone in Queensland; hence down by 82% both year on year and month on month. Nowadays the energy companies are investing in the LNG sector, with the construction of Natural gas liquefaction terminals in the production sites, and LNG reception and re-gasification terminals in the consumption areas. More plans are in place also for smaller intermediate LNG storages and terminals, to create a capillary infrastructure, also aimed at the use of LNG in the automotive market, and in the maritime fuels market. According to a study done by McKinsey, the global LNG market is long, with supply exceeding demand and may be long until the middle of the next decade. Yet there is still a long list of liquefaction projects that are hoping to enter the market in the coming years. The global LNG supply glut that we are facing today is exacerbated by the 100mtpa of new export terminal capacity currently under construction in the US and Australia. By 2019, the oversupply peaks at roughly 60mtpa. The forecast deem the market to remain oversupplied unless today s low prices can stimulate a demand recovery. However, to date, the demand response to the low prices seen in the past two years has been limited. Given the market may remain oversupplied until 2024 and that it takes three to five years from Final Investment Decision (FID) to construct and start up a liquefaction terminal, one could argue that in theory, no new liquefaction terminals need to take FID for at least the next two years. In reality, new supply could still hit the market if it is able to displace more expensive existing supply or stimulate new demand currently served by piped gas or an alternative fuel. This likely tends to keep supply price of LNG in the lower range. [Source: Energy Insight by McKinsey]. According to BP Energy Outlook, nearly one third of the present growth in the LNG supply potential occurs over the first four years of the Outlook, i.e. until 2022, as a series of projects currently under development are completed. Then, after a temporary lull while this initial wave of LNG supplies is absorbed, the potential LNG supply growth is assumed to resume at a more moderate pace. In this case, there is a risk that this second wave of LNG supply growth is slow to materialize causing a temporary period of tightness within LNG supplies. Asia remains the largest destination for LNG. China, India and other Asian countries all increase their demand for LNG, helping gas to grow faster than either oil or coal in each of these economies. 33

33 SHELL mentions as well forecast for transport as well as new investments needed in 2020 to meet demand. The global LNG market has continued to defy expectations, growing by 29 million tonnes in 2017, according to SHELL's latest LNG Outlook. Based on current demand projections, also SHELL sees anyway the potential for a supply shortage developing in the mid-2020s, unless new LNG production project commitments are made soon. [SHELLL LNG Outlook ] Also the Malaysian state energy company PETRONAS expects the global LNG market to remain oversupplied until as late as Rising LNG production over the last two years, mainly from Australia and the United States, has exceeded demand and depressed prices. Asian spot LNG prices LNG-AS are now down by around 70% from early PETRONAS, in September 2017 scrapped a proposed $29 billion LNG terminal project in western Canada, as market conditions made the project economically unviable. The PETRONAS Chief Executive Officer Wan Zulkiflee Wan Ariffin told Reuters in an interview that things are volatile, but at present the firm predicts LNG market balance in The market will tighten when demand centers in developing economies start growing, as current low prices mean more take up of LNG supplies. PETRONAS is the sole manager of Malaysia s oil and gas reserves, making it the world s third-biggest LNG exporter after Qatar and Australia. Figure 7-1. Possible additional future LNG plants in the world (Source: McKinsey) The changing interconnection (correlation) of price between Oil and Natural gas will have an impact as well. The price of Natural gas is expected to become in the future more independent in its trends from the price of Crude Oil. European provisions such as the Directive 2014/94/EU, DAFI, are mandating the construction of an infrastructure for alternative fuels, including LNG. All this is expected to have a strong stimulation effect for the LNG automotive market. The cost of the construction of new LNG stations, and the need for the pay-back of this cost in a reasonable length of time might lead to an increase of the end industrial price of LNG as automotive fuel. It is also true that this tendency to increasing price may be mitigated by a positive scale effect, above a certain consumption threshold. Investors look very close to pay-back time, and a large market may allow acceptable pay-back times even with moderate sales margins. 34

34 On the other side of the coin, in the middle-long term, we will likely face a strong increase of LNG fuel consumption in the maritime sector; this might result in some increase of LNG price at the production level, as a consequence or reaction to growing demand. That s what finance is about. 7.3 LNG Fuel Retail Price at the Pump The European Natural gas industry has been adopting for nearly six decades LNG as one of the forms of Natural gas supply for general applications, through re-gasification at receiving terminals. The market of LNG as automotive fuel is younger than that instead. It has been just ground for research and demonstration and pilot initiatives across the last couple decades, and it was just budding on a larger scale back in the beginning of this decade, through which European operators have accumulated some good experience already, even if the European LNG automotive market is not yet as large as that in other parts of the world, such as China and North America. The market increase has been interesting anyway also in Europe, as we have now more than 120 public LNG refuelling stations, plus some private for captive fleets, most of which have been built in the last five years. Undoubtedly, part of the merit for this goes to the LNG Blue Corridors Project, which pushed the button for example in Italy, and to some other projects, financed by the EC, which believes in this fuel having a promising future. But for sure the automotive market is showing an increasing interest for LNG. Some European countries e.g. Spain, Netherlands, Italy, UK, France, have done already substantial investments in this sector. In Germany there are now three LNG quite small stations, but there are also short-term plans for further development, and larger plants. In a recently published study (2017), Initiative klimafreundlicher Strassengu terverkehr the German Ministry of Transport and Digital Infrastructure BMVI identifies LNG among the applicable solutions for long-distance haulage, especially in the short term and for the next 10 to 15 years. In general, the LNG fuel prices at pump have kept quite constant over the start-up period so far in Europe, similar to the case of CNG, which price trends show more stability over time compared to gasoline, diesel and even LPG. History of retail fuel prices at the pump in Europe (c.f. below figure with example for Italy) show that CNG and LNG are significantly cheaper than diesel and gasoline, but also that their price is much more stable over time, thus making it much easier for fleet operators to predict their fuel costs. 35

35 may-07 oct-07 mar-08 ago-08 ene-09 jun-09 nov-09 abr-10 sep-10 feb-11 jul-11 dic-11 may-12 oct-12 mar-13 ago-13 ene-14 jun-14 nov-14 abr-15 sep-15 feb-16 jul-16 dic-16 may-17 oct-17 Fuel price trend - Italy 1,9 1,7 1,5 1,3 1,1 0,9 0,7 0,5 gasoline /l diesel /l LPG /l CNG /m3 Figure 7-2. Example of automotive fuel price trends in Italy, over last ten years, as of end October price at the dispenser, including tax - all prices in /litre, except CNG: /m 3 (the same price of CNG applies to LNG in Italy; both CNG and LNG are sold in /kg; price in /m 3 = /kg x 0.7 kg/m3) [source: elaborations based on data from: Analysis of LNG and diesel retail prices in Italy in January 2018 (based on LNG price information from metanauto.com) shows that LNG is 52% cheaper than diesel at the pump (comparing LNG in liters of diesel equivalent with diesel in liters). Italy is one of the European countries with the most attractive LNG price vs. diesel at the pump, partially due to high diesel price. As 1 kg of LNG does not contain the same quantity of energy as 1 liter of diesel, a direct comparison of LNG price in /kg and diesel in /L is not possible. In order to allow for an accurate comparison of fuel prices, the approach taken here is to compare prices of similar energy content for both fuels, in this case liters of diesel and liters of diesel equivalent for LNG. This is calculated assuming 1 kg of LNG equals 1.38 liter of diesel equivalent. In the UK, LNG has been on average over 40% cheaper than diesel every year since 2016, and this price gap is expected to increase steadily in the coming years to reach 50% price differential already from September 2018, as shown in the below figure

36 Figure 7-3. Example of LNG vs. diesel automotive fuel price trends in the UK, history since 2013, projections until Source: Gasrec, April 2018 fuel price at the dispenser, excl. VAT and other taxes In the Netherlands, in February 2018 LNG was 38% cheaper than diesel at the pump, comparing as above LNG in liters of diesel equivalent with diesel in liters (analysis based on data from PitPoint accessed from This price gap has been similar in 2017, after recovering from significant diesel price drop early Figure 7-4. Example of LNG vs. diesel automotive fuel price trends in the Netherlands, history since Source: PitPoint, April 2018 fuel price at the dispenser, VAT included, diesel price in /L, LNG price in /kg. The available fuel price examples, summarized in the below table, show that in most of the European countries that already have a significant number of LNG trucks in operation, LNG is sold at an attractive price compared with diesel, i.e. approx. 40% cheaper than diesel or more. Given the limited 37

37 number of LNG trucks and stations in some countries and the lack of publicly available LNG price information, it is not possible to provide a complete fuel price comparison for all European countries. It should be noted that, even for the countries show in this table, the information for each country is partial (based on available data) and does not necessarily reflect the average price of LNG in the country. Country Diesel price in /L LNG price in /kg LNG price in /LODE LNG price savings vs. diesel Italy % Spain % France % Netherlands % United Kingdom % Table 7-1. Summary of LNG vs. diesel automotive fuel price examples in February Source: Westport analysis based on LNG price data from metanauto.com, gibgas.com and other public data sources and diesel price data from Feb 12, Fuel price at the dispenser, VAT included, diesel price in /L, LNG price in /kg and /liter of diesel equivalent (LODE). Further to this, the national strategies of LNG fuel retail prices at pump have been mainly oriented to the market development and promotion, and still are today. So the price of LNG tends to be set to a very similar level to that of CNG, or even the same price is adopted for both, in terms of /kg. In future the industrial part of LNG price, when the market will be more mature, might face some slight increase, if the operators will resolve to change their strategy, and will apply some premium to LNG over CNG, in consideration of its value and advantage for the long haul transport operators; but this can happen only in case of higher prices of diesel, in which case the price differential between LNG and diesel would likely remain at least as high as today. At present in most of the countries the operators still seem quite cautious on this item, as they perfectly know that the differential in prices between diesel and LNG directly affects the propensity of HD vehicle fleet owners to go for the new pathway. The Fig 7-5 shows the evolution of the price at pump of the LNG stations in the project. 38

38 Figure 7-5 Evolution of the public price of all LNG BC refueling stations [source: D 6.3] 7.4 Taxation - Excise exemption On the side of taxation, long haul HD vehicle fleet operators are offered in some cases a partial excise exemption on diesel. In Italy for example, a partial excise rebate of /litre is available to diesel truck operators, applicable to the fuel consumption in the summer 2017 [Testo Unico delle Accise - Art. 4-ter, comma 1, lett. f, of D.L. 22 ottobre 2016, n. 193, converted into Law 1 dicembre 2016, n. 225, and Art. 24-ter, comma 1, of Decreto Legislativo n. 504/95]. In Portugal, the government has decided to reduce the diesel tax by 10c, reaching an amount below the limit value of the directive on the taxation of energy products. The owners of the LNG refuelling stations are free to set the LNG fuel prices they deem appropriate, as it is the case of any fuel. But they must not forget this partial excise exemption granted to diesel when setting the LNG price at pump, so to keep the suitable end price differential between diesel and LNG, if they want to stay in the market. Further on the side of taxation, some national Governments have so far supported the CNG and LNG automotive fuel pathway, by means of reduced excise duty e.g. Czech Republic, Finland, France, Germany, Italy, Sweden (for bio-methane), or even no excise duties e.g. Belgium, Croatia, in consideration of the offered environmental benefits, and taking into account the increasing share of Natural gas coming from renewable sources (Biogas and Power to gas, turned into CNG and LNG), in substitution of fossil. This is an important part of a European shared strategy aimed at supporting the environment friendly fuels. To make just a couple of examples, Italy has the largest CNG market in Europe, and also has a strongly growing LNG market. The Italian Government has applied so far a very low excise duty on Natural gas used as automotive fuel. A new subsidy campaign has been launched in September 2017 in support of purchase of clean vehicles, including those on LNG. Also Germany has had a similar supporting strategy for NGV, now ranging up to Today it seems rather too early, if 39

39 anything, for the national Governments considering to abandon or mitigate the present strategy of favorable excise duties for CNG and LNG. And this applies also to the mid-term. It is important that this is kept for the future, at least until this market can be considered sufficiently mature to stand a bit more taxation. This applies to all the countries in Europe. 7.5 Bulk supply price Because of the present overcapacity, global prices for LNG are deemed as just too low right now to send the price signals needed for investments into more liquefaction, in the opinion of the experts attending a conference in Japan in late This means that the industry could see a shortfall in a few years, according to an article on Reuters. This also means that there may not be enough LNG for some of the countries depending heavily on LNG as Natural gas import source, such as Japan, which is the world s biggest LNG buyer. To avoid a shortfall, some of the market operators, such as TOTAL called for more investment into LNG in the future, but investments in such projects can run in the billions. [source: TOTAL SA Chairman and Chief Executive Office Patrick Pouyanne] LNG projects typically require billions of dollars of investment over many years of development. The LNG industry has usually relied on long-term contracts linked to Oil prices to ensure producers can get financing on favorable terms. An increased competition among LNG suppliers has resulted in buyers seeking better prices. Especially under the Fukushima effect, the spot LNG prices in Asia were at more than $20 per million British thermal units (mmbtu) in 2014 (~0.956 $/kg, based on a LNG LHV of 49.5 MJ/kg), but with the more recent surplus they are now trading in 2017 at less than $6 per mmbtu (~0.287 $/kg). According to some experts, a sweet spot in pricing of between $7 and $8 ( $/kg), would stimulate investment into new projects. 7.6 Breakeven prices and new production The Asian LNG markets will be paramount for East African LNG export. Similar to the oil market, the North American shale industry did turn the gas markets upside down in The rapid increased production sourced from shale gas reservoirs made US self-supplied and left the country with a significant export potential. The price of Henry Hub plummeted, and the same effect spilled over to the (Asian) LNG markets. The new LNG price became suddenly dependent on the Henry Hub pricing, as US commenced to export most of its excess production as LNG to other continents. LNG is now priced as Henry Hub + liquefaction- and transport costs. The large numbers of sanctioned LNG projects in Australia and US before the price crash has left the world currently swamped in LNG. RYSTAD ENERGY has estimated that the LNG market will remain over supplied to 2023, with a peak in 2020, where the supply capacity excess the demand by almost 70 bcm/y. However, they predict LNG demand to continue its strong growth as gas is becoming a more and more important primary energy resource in Asia and the Middle East. By the end of the 20 ies, it will be a deficit of more than 200 bcm/y, if no new LNG projects are sanctioned for development. It is likely that by 2023 the world will face a deficit on LNG, due to lack of LNG project sanctioning the last couple of years. The year 2023 coincides with prediction of the first LNG to be exported from East Africa. East Africa can/will be instrumental in filling the deficit supply gap in the second half of the next decade. If no projects are sanctioned for development the coming years, the LNG deficit by 2030 will surge to more than 200 bcm/y. East African LNG will of course face strong competition from other producers, especially Qatar, Australia and Papua New Guinea, in the race for the rising demand in South-East Asia and the Middle 40

40 East. East Africa benefits from its reasonable vicinity to India and Pakistan compared to Australia. The majority of the growing gas production in the Middle East will be needed for domestic purposes to cover an increased gas consumption. Hence, the production increase in Qatar and Iran will not find its way to Asia. It is predicted that the production deficit gap in 2025 will be about 50 MTPA (70 bcm/y), which soon need to be covered. By assessing breakeven prices for potential future LNG projects it is possible to predict which projects will most likely be developed, and to which breakeven cost. An LNG price at 7-8 $/MMbtu ( $/kg) is needed in order to develop another 50 MTPA by Fig 7-7 ranks potential future LNG-projects to come on stream by 2025 by breakeven price. Projects to the left have the lowest breakeven costs. The development of Area 1 offshore Mozambique (in red circle) has the 3 rd lowest breakeven price (6.2 $/MMbtu, i.e. ~0.297 $/kg) among the most profitable projects believed to come on stream by the mid of next decade. [Source: Henrik Poulsen Senior Vice President - Government Relations at RYSTAD ENERGY] Figure 7-6. Expected trend in LNG supply/demand (Source: RYSTAD ENERGY) 41

41 Figure 7-7. Breakeven prices for new LNG production (Source: RYSTAD ENERGY) 7.7 Asia s effect In October 2017, the emergence of LNG hubs in Asia could be expected to be a game-changer for the region s future energy mix, global energy security, infrastructure investment as well as the environment. The expanding LNG hub-based pricing could stimulate regional gas demand from emerging importers, and encourage policies to progress coal substitution for NG in large, heavilypolluted Asian cities. The Indian government announced launching a NG trading platform in Japan and India cooperate to promote a flexible and open LNG market. But Asian global gas players must press ahead with regional hubs rather than getting distracted by short-term market opportunities that slow them down. The low oil price and the return of competitive oil-indexed LNG prices in Asia have removed the urgency for buyers to diversify away from oil-indexed pricing and bring hub-based formulas to the region. As Brent crude prices have plummeted since mid-2014, oil-indexed NG prices have dropped ~40%. As a result, Asian buyers have entered into competitive LNG contracts that are indexed to oil adhering to traditional price formulas. More than 11 million tons (~20 billion Sm 3 ) of NG in new oil-indexed contracts have been signed in LNG stakeholders, governments, industry, and lenders, should not limit to short-term considerations. Oil prices are likely to spike again in future. They are advised on focusing on regional hubs to help importers get more competitive and transparent pricing systems. That would also enable exporters to trade more easily in the global market with new and smaller buyers. It also facilitates selling their surplus and uncommitted spot volumes at a time of supply glut. The emergence of LNG hubs in Asia 42

42 has become credible with the ongoing transformation of the global LNG market that started in The rapid growth in LNG supplies, rising volumes of flexible spot supplies, and the increase in the number of market players have led to more serious steps to create one or several regional hubs. Asian LNG hub initiatives would differ from existing hubs in the US or Europe by generating liquidity through increased LNG flows within the region, rather than through NG pipeline integration or domestic production. Some NG hub initiatives in Asia are underway in different progress e.g. in Singapore, Shanghai, Tokyo. An Asian market-based reference price would put the industry in a better position to confidently trade LNG or invest in new LNG infrastructure projects. This new hub-based Asian LNG price benchmark could make LNG prices competitive and transparent. The main benefits of this approach are: energy security, as a trusted hub contributes to a more liquid and better functioning market; genuine Asian LNG price marker that helps resolve the current investment paralysis, paving the way for decisions to build new liquefaction plants which could transform LNG project finance; more affordable and accessible LNG that strengthens the environmental prerogative to favor cleaner gas over coal and fuel oil in the power sector and polluted cities. If Asia s LNG hub initiatives fail, the current status quo for Asian LNG pricing will continue, at the risk of darkening LNG s future as the appropriate fuel in Asia at a time of energy transition, demand uncertainty, and environmental degradation. With Asia serving as the engine for global LNG demand growth, the resolution of the Asian LNG pricing issue would transform not only Asia, but also the outlook for global LNG markets. 43

43 8 Identification of efficient LNG European network and potential cost 8.1 Network The Directive 2014/94/EU, DAFI, mandates the build-up of sufficient infrastructure, but is not mandating any particular pattern for the refuelling stations network. It gives anyway an indication of suitable maximum distances between filling points, as 150 km for CNG stations and 400 km for LNG stations in At first this was proposed as a mandatory prescription; then some constraint on this parameter were realized, and the prescription become just suggestion. European countries have different characteristics in terms of land, woods, mountains and lakes. There are large portions of uninhabited land in some of the countries, especially in northern ones. There are regions full with a large number of lakes, like Finland, and large forests, like Germany. Europe has a complex system of high mountains ranges, e.g. the Alps, Apennines, Ardennes, Balkans, Carpathians, Pyrenees, etc. All these characteristics are bound to make a mandatory maximum distance between stations not advisable in many cases. Instead in the more industrial areas with dense population rates, the distances between stations can and should be shorter than the limits the Directive suggests. In early 2015 one of the LNG stations in northern Europe caught fire. Due to this, it had to be shut down for a period of time for repair, during which the truck drivers passing by in that area had to face a long diversion from their itinerary, of more than 200 km for the whole trip back and forth. This can happen also in case of less dramatic instances, such as components break-down, extraordinary maintenance interventions, strikes, vandalism acts, etc. And this can eliminate all the economic advantage offered by the price differential between diesel and LNG. Unexpected and unpredictable situations such as this one must be taken in account; truck drivers must be offered alternative options for refuelling, just in case. The LNG truck driver should plan more carefully his trip beforehand, compared to the case of diesel trucks, taking into account the development rate of the LNG network. Anyway all the main roads, be them motorways or highways, must offer the LNG truck drivers the possibility to refuel with limited diversion length, which means waste of money and time. A well set network, with a multiple option offer, also goes in the direction of a suitable level of commercial competition between operators, leading to fair prices, at least as theoretical tendency. 8.2 Size Due to the current low consumption of some of the stations in Europe, partial charges must be planned for the stationary tanks of the LNG stations. This of course increases the OPEX cost. But this will stop being an issue as soon as the market grows and settles to higher levels, which appears now quite likely to happen in the short-term. Based on the current LNG tank capacities, it seems they can perfectly refuel trucks on daily basis with no risk of fuel depletion. The capacity tank is high in most of cases of the stations at present in operation (>60m 3 ). In some cases, stations must be charged with fuel every 2 days like in the case of Piacenza, but in other cases, almost 3 weeks like in the case of Barcelona. 44

44 8.3 Location The installation of a LNG refuelling plant inside existing diesel and gasoline station seems the solution to be preferred, as it will take profit of already existing land, structures, safety system, building and personnel. The existing liquid fuels station must be chosen in consideration of parameters such as: Distance from the nearest LNG supply site (LNG terminal; small scale local terminal; small scale local LNG storage tank); a number of plans are in place for small scale LNG; with the exception for the mono-fuel LNG stations built inside or close to the LNG terminals, or inside some of the small scale plants, the supply of LNG to the station must involve the LNG tanker truck or the LNG train. The trip of the LNG tanker truck supplying the fuel to station should not be too long; distances in the order of km are acceptable anyway. For trains this distance can be longer. In the case of LNG stations built inside the logistic hubs, the best option for LNG supply seems to be by rail; rail carts can transport more product per trip compared to tanker truck; trains are not prone to traffic conditions, and less prone to weather conditions; the specific transport cost is probably lower also (train fuel cost is shared with the rest of train load; no hotel and meals cost of drivers; salary cost of train drivers is shared with the rest of train load; if the train only transports LNG, the very large amount of product reduces the specific cost). Importance of the road system in the proximity of the station; motorways and highways should be the preference, but sometimes the bureaucratic process and contractual aspects in the case of motorways might be an obstacle to this operation. For example, a limited time concession reduces the pay-back expectations, hence the investing propensity. Logistic hubs seem to be a preferable option when available, also due to scale effect and possible synergies. Available space inside the station for the additional devices to be installed; national LNG station norms are different in Europe between countries on this item; sometimes there is still no norm for LNG, in which case generally a suitable professional risk analysis is part of the design process; the adoption and publication of EN ISO LNG refuelling stations, may simplify this aspect. The norm was positive under ballot. The publication was done in early Available space inside and around the station to meet the requirements of internal and external safety distances (same as above point). 8.4 Connector harmonisation Three connector profiles are at present on the market: JC CARTER PARKER KODJAK MACROTECH 45

45 Figure 8-1. Nozzles compatibility They are not fully interchangeable in terms of compatibility with the respective receptacles, one to another; in particular PARKER KODJAK cannot connect to the receptacles that are suitable to the other two connectors. But the situation is becoming increasingly complex now. At present the connectors/receptacle system is, or should be in compliance to the international standard ISO ISO is now working on another connector profile standard, the ISO NP 21104, aimed at better performance in terms of: Lower service pressure; 18 bar instead of 31. Extremely low spillage of LNG at decoupling: < 1cc, to minimize GHG emissions, and avoid risk of cold burn. The activity is also aimed at some additional improvements, which in the opinion of most experts of this sector, can anyway be reached already with the present profile (ISO 12617): Easy and simple handling ( Diesel-like ); possibility of one-hand operation. A single line for the delivery and for venting, including grounding; i.e. combining filling and gas return over the same hose, thus improving user friendliness and reducing the amount of potential leak sources. No need for special protection to be worn during filling (i.e. special clothes, gloves, face shield mask etc.). Proper swivel functionality as part of the nozzle to prevent hose failure due to torque forces. Mechanical interlock functionality; mechanically secured. This standard might be published in 2019 or

46 9 Vehicles 9.1 General In the Project 100 LNG HD vehicles were planned. At mid-2015 this level was already reached. At end the monitored trucks, representing the Euro V and Euro VI technologies, of the LNG Blue Corridors had successfully covered more than 4 million kilometres using only (Spark-Ignited) or partially LNG (Dual-Fuels) and had consumed more than 1,200 Tons of LNG. The Project had a total of 115 trucks monitored during the Q3-2015, with budget still to be allocated for other companies. So the goal to reach more than 120 trucks as was expected was reached. During the period 2014 to 2015 an important technical achievement of the LNG sector was the certification of an IVECO LNG truck to EURO VI. IVECO Stralis Euro VI became available in the third quarter of 2014 at commercial level, while the fully compliant R110 LNG tanks were approved in July 2014 and available from February At end-2015 the Project the demonstration in different corridors was at this stage: AtlBlue: Portugal, France and even Spain MedBlue: Mainly routes from Spain to Italy, operation in the North of Italy SoNor: Combination of AtlBlue and MedBlue routes WEBlue: Belgium, The Netherlands and even Germany Also at end-2015 the balance of Dual-fuel and Spark-Ignited trucks was about 30% Dual-fuel and 70% spark-ignited trucks. Among these trucks, about 33% of them (36) were Euro V and 66% were Euro VI. During Proyect deployment, about 30 additional LNG Euro VI trucks progressively joined in, which perfectly meet the request of the EU Commission regarding the number of LNG trucks. In the end the Project had the participation of more than 140 trucks, thus exceeding by 40% the original plans. Figure 9-1. Project truck distribution at mid-2017 (78% IVECO; 22% VOLVO) 47

47 By early May 2018, the truck fleet had run a total of 31,639,938 Kilometres, and had consumed a total of 14,206 tons LNG, with 111,000 refuelling, and an average refuelling rate of about 128 kg LNG per fueling operation. One of the initial aims of the Project was to know how dual-fuel engines were going to be able to achieve compliance with the Euro VI emission limits and to understand the new efficiencies, which should be closer to Diesels. New Emissions UNECE Regulation and EC 595/2009 (Euro VI, amended in 2014 with the Dual-Fuel requirements), regulate the emissions of the engines (CO, THC, NHMC, CH 4, NO 2, PM, PNP, NH 3 ) and the THC limits are especially difficult to fulfil for Natural gas engines (lean burn or dual-fuel) because of the very low new limit for Hydrocarbons. Dual-fuel engines were at the beginning of Project the only ones which provided more than 340 HP (IVECO Stralis dedicated engine delivered at that time 330 HP). Companies like IDIADA have developed engines, demonstrators mainly, which deliver up to 560 HP with replacement of Diesel higher than 70% in some conditions and better than Euro V (EEV emission levels), making them the choice preferred then by fleet operators which were new to using LNG or for those who needed to ensure the operation of the truck at any time and did not have guaranteed gas deliveries. Also these engines units were preferred by those companies who had to transport goods on routes where a power of 340 HP is not considered enough because of the profile of the route (as for example MONFORT or MATTHEEUWS). In the majority of the cases of fleet operators, the standard configurations for the trucks are, regarding the engine, 450 HP or more. The fuel savings and vehicle reliability are, for the fleet operators, the main concern. Aspects like the fuel consumption efficiency of Euro VI Natural gas engines when compared to the diesel units is of high interest and therefore the fuel consumption of the bigger NG engines is crucial for the transport sector LNG adoption. The CO 2 reduction is also critical, and the reduction achieved when compared to Euro VI diesels or Euro V diesels/gas engines is one of the most interesting topics to be explored. Savings between 6% and 10% are well within reach normally. 9.2 Vehicle models All Euro VI truck models from OEMs were supposed to be in the market in early But until late 2016, because of different reasons, there were only Euro VI trucks provided by IVECO. These launching trucks delays make the construction of most stations start with delays as well. Some stations started to be built late because approval issues. A budget was available in the Project for the theoretical VOLVO Euro VI trucks which was not finally used. The LNG market in Europe did tend to be affected by a certain lack of truck models; VOLVO offered at the beginning a dual-fuel model, followed by a more sophisticated and powerful one. This came on the market too late for joining effectively the Project. HARDSTAFF dealt with dual-fuel vehicles. It went into administration at the beginning of 2015 and a new company, Vayon Group, took over their dual-fuel technology. As consequence, HARDSTAFF left the Project. RENAULT TRUCKS did also withdraw from the project. The company tried to be involved with a spark ignited truck based on its current commercial product D-WIDE CNG, however finally the management decided for internal reasons they could not participate in the LNG Blue Corridors project, so RENAULT left the Project in 2015, because of lack of commitment in development of prototypes. IVECO has been since the beginning very committed to the LNG market and to the Project. The first generation IVECO LNG Stralis has a Chart LNG tank, 26 diameter x 90 wide, with a net capacity of 511 litres, as well as 4 CNG tanks of 70 litres capacity each. The CNG tanks are used to ensure system sealing and to ensure the vehicles can be moved if they are stopped for a long period of time. The working pressure of the LNG tank is set to 8.5 bar, which means an LNG density of about kg/litre. Therefore a total of 201 kg of LNG and 45 kg of CNG is available. In 2016 IVECO introduced to the market a new model Stralis NP NP AS440S40T/P, propelled by the Cursor 9 engine, with increased 48

48 power delivery to 400 hp, 1,700 Nm torque and increased running range to 1,500 km, with the twin LNG tanks. IVECO sold 400 LNG trucks already at end By mid-2017 up to 1,300 LNG Stralis NP 400 trucks were sold in Europe which shows a real market interest for this side of the NGV sector. It is the first NG truck specifically designed for long-haul operations and the only truck running on CNG and LNG to deliver the power rating, comfort, transmission technology and fuel autonomy to suit long haulage missions. With more than 22,000 units sold, IVECO claims position as the absolute market and technology leader in Natural gas commercial vehicles. IVECO has at present 90% of the LNG market in Europe. In October 2017 IVECO has secured the largest deal for Stralis NP vehicles to-date, with 500 new trucks set to enter operation with the pan-european transport and logistics specialist, the Belgian Jost Group. The first 150 vehicles will enter operation during 2018, with the full fleet to be in service by The 500 Stralis NP trucks will replace 4 to 5 years old diesel-powered vehicles in the firm s fleet of 1,400 trucks and 3,000 trailers. The company already operates 132 Stralis vehicles, including two running on CNG. The Company begins a strategic move away from its dependence on diesel and towards green logistics, as requested by its customers, who are demanding a more sustainable transport. The plan of the Company for the next three years is to have 35% of its fleet running on LNG. The group is also supporting this with an investment in its own LNG refuelling infrastructure, with plans to open up to three filling stations within its major operating centers in Belgium. In late October 2017 IVECO has presented to the public its new Stralis NP 460 at its heavy trucks center of excellence in Ulm, Germany. Classed as the most sustainable truck ever, the Stralis NP 460 achieves close to zero emissions on bio-lng, cutting CO 2 emissions by up to 95% when running on compressed or liquefied biomethane. The Stralis NP 460 is fitted with the most powerful Natural gas engine on the market, the IVECO Cursor 13 NP engineered by CNH Industrial s powertrain brand FPT Industrial. It has got the latest-generation automated transmission. The Cursor 13 NG engine delivers power up to 460 HP at 1,900 rpm and torque up to 2,000 Nm at 1,100 rpm. The Stralis NP 460 delivers a 99% reduction in particulate matter, a 60% reduction of NOx in comparison with Euro VI limits; noise emission level is less than 71 decibels. The truck s double LNG tank version ensures a range of up to 1,600 kilometers. It offers up to 15% less fuel consumption and up to 9% lower Total Cost of Ownership than a diesel truck. [Source: NGV Journal October 31] Figure 9-2. IVECO LNG truck In August 2017 the first LNG filling was done from Rolande at Gate terminal to a LNG truck with LNG as engine fuel. This was the first case ever of a LNG tanker truck fueled with LNG, i.e. the same fuel that the vehicle transports. So far, generally the LNG tanker trucks have been running on diesel. Also, 49

49 subsequently, during the Oil&Nonoil fair in Rome on 11th and 12th October 2017, a new IVECO LNG Stralis Natural Power 400 CV LNG tanker truck was in exhibition, and this was the second case. This is also a new step forward, allowed by the recent amendment of the ADR directive on the transport of dangerous goods, in force since January The second initiative in Italy is the merit of the Company TRANSADRIATICO, from Grottammare (San Benedetto del Tronto), which is active since 1951 in transport and logistic of liquid fuels. The Iveco truck set has been arranged by OMPS Macola, which is also working on a second vehicle with the same features. The LNG transport service that this Company plans to offer, starting from the main LNG terminals in Europe, will take profit of an electronic satellite data communication system. The customer will hence be able to remote monitoring the state of transport, product conditions and all the operations done by the truck driver, besides all normal information provided by the traditional vehicular GPS sets. The first SCANIA LNG truck was the P 280 model, launched on market in 2015, powered by a SCANIA Euro VI engine. Figure 9-3. SCANIA LNG truck More than 100 SCANIA LNG trucks are to be used in northern Germany in late 2017, in an initiative to make the transport activities of the Volkswagen Group more environmentally compatible. The VW project is supported by the German Government, associations and gas suppliers. SCANIA maintains that its trucks, with an LNG powertrain emit up to 20% less CO 2 than comparable diesel engines. The use of regional and local biogas even reduces CO 2 emissions by as much as 90%. In addition to the improvement in the carbon dioxide balance, these powertrains emit some 95% less nitrogen oxides (NOx). Particulate matter emissions are almost completely avoided (-95%). Compared with diesel engine trucks, the noise levels produced by combustion are reduced by about 50% (-3 db). The commitment to the use of LNG trucks is part of the Green Logistics initiative of Volkswagen Group Logistics. This is based on the TOGETHER 2025 Strategy under which the Volkswagen Group has committed itself to responsible management of the environment and the continuous reduction of emissions. The objective of the Green Logistics initiative is to ensure sustainable logistics within the Volkswagen Group. During AUTOPROMOTEC in Bologna on May 2017, SCANIA has presented its new LNG truck model put on the market, the G340 LA4x2MNA. It has two LNG tanks, with a total fuel capacity of 300 kg (190 kg in the main tank on the left of truck, plus another 110 kg in the optional one on the right side), LNG is stored on-board at a temperature of -130 C and pressure of 10 bar. It has a running range of 1,100 km, with an average specific consumption of about 28 kg/100 km. This innovative SCANIA LNG truck is propelled by the 9.3 litres 5 cylinders Natural gas engine OC Euro VI. In November 2017 SCANIA launched a new, more powerful NG engine Euro VI. So now SCANIA is hence offering on the market LNG trucks with three engine options: 9.3 litres, 5 cylinders - power: 280 HP at 1,900 rpm torque: 1,350 Nm at 1,000 1,400 rpm 50

50 9.3 litres, 5 cylinders - power: 340 HP at 1,900 rpm torque: 1,600 Nm at 1,050 1,400 rpm 13 litres, 6 cylinders - power: 410 HP torque: 2,000 Nm at 1,100 1,400 rpm Characteristics: Otto Cycle SI, stoichiometric combustion, turbocharged with Wastegate, Scania EGR (5-20%), multipoint injection, 3 way cat. In fact, most OEMs, such as VOLVO, had in the beginning no commercial versions for Euro VI LNG trucks was seen as a barrier since many fleet operators seemed to prefer this OEM, and no commercial versions were expected from VOLVO before Therefore the project has only the IVECO solution for Euro VI, as the VOLVO LNG trucks in the Project are only Euro V, dual-fuel. In a press release in late 2017, released by Lars Mårtensson, Director Environment and Innovation at VOLVO Trucks, VOLVO maintains that by replacing diesel with LNG or biogas, CO₂ emissions from heavy trucks can be drastically reduced. LNG is today used primarily in industrial operations, but it has excellent prerequisites for being a competitive vehicle fuel with considerable environmental benefits. This is the opinion of VOLVO Trucks, which is now intensifying its development of natural gas-powered trucks for heavy regional and long-haul operations. Reducing climate-impacting emissions from heavy commercial fleets is a challenge that engages politicians, transport purchasers, haulage companies and vehicle manufacturers. Many of VOLVO customers and their customers already work hard to reduce their environmental footprint. Regulations will drive the development of lower emissions, where the firm see a clear possibility for increasing LNG market shares as a vital part of the solution. The vision is that trucks from VOLVO will eventually have zero emissions, although the way of achieving that is not by one single solution but rather through several solutions in parallel. Natural gas is mainly a fossil fuel, but it can produce 20% lower CO 2 emissions than diesel. If biogas is used instead, the climate impact can be cut by up to 100 per cent. Biogas is thus far only produced in limited quantities, but has a good potential already in the mid-term. The long-term availability of Natural gas is excellent in a global perspective. VOLVO shares the opinion that this is an important condition for large-scale expansion, as is a competitive price. In many European countries, natural gas costs less than diesel. A strategy for expanding LNG infrastructure is also included in the European Commission s and member states action packages for securing Europe s long-term energy supply. VOLVO believes that this makes LNG the best widely available climate alternative on the market for long and heavy transports. What is needed now is gas-powered trucks that can compete with diesel in terms of performance and fuel consumption, and continued expansion of LNG infrastructure. In both cases major progress has been achieved. [Source: Lars Mårtensson VOLVO Trucks]. At last, during the 14 th edition of the Solutrans, held on 21 st to 25 th November 2017 at the Paris Eurexpo, with the theme: Performance au service de demain, VOLVO Trucks France put in exhibition for the first time its last innovation product: the FH LNG, which will be on market in spring This innovative technology represents a considerable step in terms of fuel cost, productivity and emissions. VOLVO Trucks is now introducing Euro 6-compliant HD trucks running on LNG or biogas. The new trucks have the same performance, drivability and fuel consumption as VOLVO s diesel-powered models. Furthermore, the new trucks CO₂ emissions are per cent lower compared with diesel, depending on choice of fuel. The new VOLVO FH LNG and VOLVO FM LNG are available with 420 or 460 HP for heavy regional and long-haul operations. Instead of an Otto cycle engine, which is the conventional solution for gas-powered vehicles, the VOLVO FH LNG and VOLVO FM LNG are powered by the G 13 C engines utilizing Diesel cycle technology. VOLVO s 460 HP gas engine delivers maximum torque of 2,300 Nm while the 420 HP version produces 2,100 Nm. This is the same as VOLVO s corresponding diesel engines. What is more, fuel consumption is on a par with VOLVO s diesel engines, but 15 to 25% lower than for conventional gas engines. In order to maximize the driving range, LNG is stored in the tanks at 4-10 bar pressure at a temperature of -140 to -125 C. The biggest 51

51 fuel tank variant contains enough LNG for a range of up to 1,000 km. When driving, the fuel is warmed up, pressurized and converted into a gas before it is injected into the engine. In order to ignite the gas, a tiny quantity of diesel is added at the moment of injection. A 100% reduction of CO 2 emissions requires that fossil diesel is replaced with HVO (Hydrogenated Vegetable Oils) and combined with bio- LNG. VOLVO Trucks is now working together with gas suppliers and customers to develop the expansion of LNG infrastructure in Europe. This development is also being supported politically in many countries and by the EU. Figure 9-4. VOLVO LNG truck VOLVO new NG and biogas trucks received Italy s Sustainable Truck of the Year 2018 award. It was handed over at a ceremony in connection with the Ecomondo exhibition in Rimini on 7 th November Behind the Sustainable Truck of the Year award is Vado e Torno, one of the truck magazines in Italy, in cooperation with Italian university Politecnico di Milano. [Sources: NGV Journal VOLVO] 9.3 Trains Railway trains are out of the scope of the LNG Blue Corridors Project, apart from being a possible and interesting way to supply LNG to inland applications. This document is anyway focused on the market development of automotive LNG. This form of transport may have a not negligible impact on, and synergy with the market of LNG; so some attention also to trains is devoted in this document. The railroad sector is potentially of some interest for LNG, as there still is a part of the railroad system which is not electrified, and is today the realm of diesel engines. The LNG application as fuel for train is just budding. Some few initiatives have been launched in the recent years in North America and in Europe. In 2017, BRYANSK MACHINE BUILDING PLANT, part of the TRANSMASHHOLDING group, delivered the LNG-powered TEM19 locomotive to Russian Railways. The construction of the locomotive is part of the Russian Railways effort to replace diesel fuel with Natural gas. The total investment program provides for the purchase of 484 locomotives at a cost of 60.2 billion roubles. According to the company, the world s first locomotive to be powered by LNG was delivered to the Yegorshino locomotive depot at Sverdlovsk Railways. The development of the six-axle TEM19 shunting locomotive with a gas-piston engine began in The gas engine is manufactured by MAMINYKH VOLGODIESELMASH in Balakovo. TEM19 consists of the driver s cab, a cryogenic unit with a system of gas preparation and LNG feeding, a motor-generator set, a cooling system, an equipment chamber, an electrodynamic 52

52 brake equipment module, and a compressor unit. LNG is stored in a removable cryogenic tank based on a 20-foot container. In July 2017, GAZPROM GAZOMOTORNOYE TOPLIVO has started fuelling Russian railroads with LNG, in the station of Egorshino, in Sverdlovsk region. At present three engines are running on LNG, in the section Egorshino-Serov-Sortirovochny of the railroad line of Sverdlovsk. One is a dual-fuel diesel engine switcher; the other two are dedicated main-line gas turbine locomotives. The rail station in Egorshino also has now an LNG stationary tank, which is supplied through tanker trucks by GAZPROM GAZOMOTORNOYE TOPLIVO, under a contract signed with Russian railroads which amounts to a total supply of 600 tons LNG. The plan is to install fueling depots along the non-electrified railroad sections. In April 2017, VTG Aktiengesellschaft, European wagon hire and rail logistics company, loaded an LNG tank car with cryogenic LNG at Brunsbu ttel Ports Elbe port for the first time, in cooperation with CHART FEROX A.S. and PRIMAGAS. The companies also built the tank car s tank. More than 80 m 3 of LNG was pumped into the wagons from two PRIMAGAS LNG trucks. This is yet another milestone in the development of LNG transportation via rail. With a volume of about 111 m 3, the LNG tank car can carry approximately m 3 of product. This corresponds to an energy value of about 600,000 kwh per wagon. Even industries with a very large energy requirement can be supplied permanently with LNG in this way. In cooperation with Brunsbüttel Ports as an LNG terminal location, using the LNG tank cars to supply the Baltic Sea ports is deemed to be a conceivable idea. In late 2017 the Members of the Baltic Sea Region LNG cluster, representing Lithuanian business organizations, and two science institutions signed LNG hybrid rail locomotive production agreement in Vilnius Locomotive Repair Depot. First stage of prototype design and development will take about six months. The locomotive, expected to be operational by 2020, will be used to maneuver in the territory of Klaipėda Seaport. Gradually the trajectory will be expanded. The project has combined the engineering and technological resources of the LNG cluster members and partners including AB Lietuvos geležinkeliai (Lithuanian Railways), Klaipėda Stevedoring Company BEGA, AB Klaipėdos nafta, Vilnius Gediminas Technical University and Klaipėda University. Development of innovative technology will provide great benefits for the logistics industry and should give significant impact in reducing pollution. It is estimated that LNG-powered locomotive fuel consumption will be up to 40% lower, while carbon dioxide emissions will be reduced by 25%. Project partners are the first in the whole Baltic Sea region to focus on the possibility of using cleaner railways. RENFE, GAS NATURAL FENOSA AND ENAGÁS, in collaboration with Institut Cerdà, ARMF (Association for the Reconstruction of Railway Material) and Bureau Veritas, are also preparing a pilot test for locomotives powered by LNG in Europe; it is the first in the world for passenger rail transport. The aim is to verify the feasibility of a solution with potential environmental and economic advantages for traffic currently running on diesel power. This innovation project will assess the feasibility of adapting locomotives to run with LNG engines and tanks, and the relevant technical, legal, economic and environmental analysis for the Spanish and European rail network. The project is coordinated by Institut Cerdà and also involves ARMF as rail integrator, and Bureau Veritas as the specialist inspection and certification company. It is part of the Strategy for the promotion of Alternative Fuel Vehicles (AFV) in Spain , in line with the purpose and scope of Directive 2014/94/EU on the deployment of alternative fuels infrastructure in Europe. The agreement involves a pilot test being carried out with an LNG-powered engine on a locomotive from the Feve diesel train depot along a 20 km section between Trubia and Baiña stations, extending to Figaredo, in Asturias. For this purpose, the diesel engine on one of the two paired locomotive units will be replaced with one powered by Natural gas, and tanks for storing LNG will be fitted, alongside other necessary auxiliary equipment. The test will allow the results obtained for both diesel and gas technology to be compared, given that a locomotive running on each type of fuel will be used on the same train. This track test will be used to draw conclusions on 53

53 technical requirements for space, weight, refrigeration, and autonomy for running on NG, as well as other considerations and comparative variables in emissions and operating economy. Spain has had wide experience in LNG management, and its logistics system is being considered under the frameworks of action developed by the Ministries of Industry and Development under European directives, factors that may guarantee the security of supply for this potential market. RENFE, GAS NATURAL FENOSA AND ENAGÁS are also assessing the possibility of presenting a second phase in this project for the CEF European funding, intended to support the financing and subsidising of innovation projects for the environmental improvement of transport systems along the core European rail network corridors. 9.4 Social cost benefit Another deliverable for this Project has shown that the aspect of social cost benefit is rather complex. The LNG trucks have shown a certain tendency so far to have higher social cost, as they have lower environmental cost, but higher purchase price, a social cost of reduced government revenue, and higher fuel cost before taxes in some cases (This is anyway to be updated to the actual situation). In general, the sale prices of HD LNG trucks in Europe still tend to be too high compared to the expectations of the NGV sector, which is not in favor of the development of the market. By end of Project, 25% of the fleet in the Project is made of EURO V trucks; the rest is EURO VI trucks. 54

54 10 Market barriers/improvers Many aspects, technological and economical have an impact, negative or positive on the development of the use of LNG as automotive fuel. Below are shown and commented some among the main aspects that are hampering or vice-versa stimulating the growth at European level of the LNG sector Power delivery The maximum available power and torque delivery of LNG engines used to be one of the main issues in the beginning. During Project more powerful LNG trucks entered, and are still entering the market now, built by some of the OEM, with a power delivery up to 460 HP, hence the same as diesel versions, also in the case of maximum torque, thus providing an increasingly effective solution to this Running range More or less the same considerations apply as those of the power delivery. Last generation LNG trucks tend to increasingly adopt larger or twin LNG on-board tanks, thus providing almost the same driving range as the diesel version, in the order of 1,100 up to 1,600 km. This is a real breack-through Fuel price advantage Diesel price for HD goods delivery vehicles is granted some excise reduction in some countries. This reduces the price advantage versus LNG, which is mostly hinging on excise differential. This point is discussed further elsewhere in this document Purchase price of LNG trucks Even if the global fleet of LNG HD vehicles is growing constantly, there is not yet a scale effect suitable to reducing the purchase price differential between diesel and LNG trucks. A price premium of 35-40% is still to be expected for LNG trucks compared to their diesel counterparts Boil Off Usually in the start-up period of a LNG refuelling station located in a virgin area, there is an initial low sale rate, which may be the cause of some boil-off gas (BOG). This does require special care and generates extra OPEX in order to prevent venting to atmosphere. As the local market increases, with more LNG trucks joining in, this problem dissolves. Until a regime situation is reached, refilling of the stationary LNG storage tank needs careful planning. LNG station manufacturers claim today that they are anyway able to design plants adopting zero-venting solutions Traffic limitations In general, no traffic limitations apply to LNG trucks, apart from the normal limitations in place for HD vehicles, deriving from their size and weight. Some limitations are in place instead in the case of tunnels. Traffic through tunnels of LNG vehicles (whether or not ADR) depends on national regulations. In some cases, an inspection could be done to provide LNG vehicles that cross the tunnel regularly with a special badge (Mont Blanc case). Running along The Eurotunnel connecting France and UK is forbidden to all NGV (CNG and LNG); maybe this will be the case also in future. Boarding of ferries and 55

55 ships is generally not forbidden instead for NGV, provided the ship has the necessary safety devices and is designed taking gas vehicles in consideration, which is normally the case. Other Deliverables of the Project cover these items Fuel quality Fuel quality is an important item. It is in fact even more important for the engine applications of NG than it is for all, or most of the other applications. What is seen as an important target in this respect, is to develop a main LNG quality specification in order to meet the demands from the automotive industry, so it is in a better position to design very clean and efficient vehicles. This is covered by other deliverables of Project. Some recent milestones: CEN/TC 408 EN Natural gas and bio-methane for use in transport and bio-methane for injection in the natural gas network - Part 2: Automotive fuels specification - Approved June 2017 CEN/TC 234 EN Gas infrastructure Quality of gas Group H - Published December 2015 Sector Fora Gas formed a WG in order to evaluate EN Main purpose: to include more parameters such as Wobbe Index 10.8 GHG emissions The LNG sector is very active in developing technologies, measures and strategies to minimize and eventually eliminate any boil-off gas. NGVA Europe has set his target of Zero venting target policy. In the older LNG stations, a rate below 1% BOG was considered as something which could be accepted. This is absolutely no longer the case, and BOG must go down to zero for all new stations. Stations must not vent to atmosphere in normal conditions. ISO covers venting in several aspects: Prescriptions for prevention of venting of natural gas Venting of the LNG storage tank during filling Prevention of venting from vapors generated by cool down, operation and cold standby Hose design and dispenser installation Pipework and venting The present generation trucks in Europe have got engines with closed crank-cases and vapor recovery, hence they are also not emitting NG from the engine in normal operations, besides unburned methane at tail pipe, which is strichtly regulated by legislation (e.g. R 49). The LNG trucks and buses may need on-board tanks to be vented before LNG refuelling, to relieve built-up pressure; the stations must provide this collateral service, by recovering the vented gas in a suitable way. This aspect is peculiar for LNG, and no other fuel needs addressing it; not even LPG, thanks to its far higher boiling temperatures LNG nozzles and receptacles for station supply Couplings (nozzle) between the station tank and the thermo trailer (LNG tanker truck) supplying LNG are expected and required to change to dry cryogenic couple (without drips). ISO states the requirements of safe LNG delivery to the station from the LNG tanker, but does not fix the design of the LNG connector from supply tanker truck to station. Connections and disconnections between tanker trucks and stations tanks are far more limited in number compared to customer truck to station connections and disconnections; for the sake of a zero vent strategy, also this aspect must be dealt with anyway, and it is actually. 56

56 10.10 Refuelling pressure and temperature The need to cope with different LNG on-board systems service conditions (temperature, and relevant saturation pressure), impose to station designer the inclusion of additional devices in the plant, with the consequence of higher CAPEX and more complex operations. For this main reason, in the short term the sector goal, especially on the side of vehicle OEM, should be to standardize on 8 bar onboard tank pressure, and as consequence station pressure, as the harmonized pressure system. Over the longer term, further lower pressures should be the target, in order to minimize potential venting and maximize vehicle range. Lower saturation pressure means lower temperature, and higher density of LNG. It also means longer holding time, as more time and heat creep-in would be taken before the vent valve is operated by excessive internal pressure of the tank. Saturation on the fly is a technique that is becoming increasingly available at LNG stations. This technique allows LNG stations to provide LNG vehicles with different pressure depending on onboard installed LNG pump Separation distances As LNG is inherently new as automotive fuel, the Authorities so far tend to be overcautious on plants prescriptions, when editing norms, also to compensate for the short operational experience that might be available to them. The safety distances have the aim of avoiding domino effect in case of accidents, protecting from flying fragments in case of explosion, and from heat radiation in case of fire, and allowing safe access to rescue people in case of emergency (protection distances). Hence long separation distances are among the provisions more often adopted with redundant margins. The proper and reasonably cautious approach to internal safety distances is to be recommended regarding LNG installation, LNG dispenser/truck refuelling with LNG, shop and other vulnerable components of the establishment, so to adopt the proper safety level, while not imposing too expensive prescriptions, in particular in respect of the land surface requirements. Besides the effect on the cost of required land, long safety distances also affect the actual feasibility of installation of LNG selling points inside already exisiting traditional fuel stations. ISO and ISO set provisions relevant to separation distances in Annex B Consumer information about LNG price LNG is a new fuel; customers must be able to easily compare it to the other fuels, especially in terms of price and cost. The fuel is generally metered by electronic mass meters, which directly and accurately detect how many kilograms are flowing through the dispenser during the filling operation. So the price should be displayed in /kg in the station, also for metrological reasons. Who tried in the past to change this, had to discover how difficult that may be. In order to facilitate price comparison, it would also be beneficial to indicate, besides the official price in /kg, the price of LNG in some other units more familiar to the vehicle users/owners. Somebody proposes the /DLE (Diesel per litre Equivalent). Others are more in favor of energy units, such as /kwh, or /MJ, with reference to the Net Heating Power. Some is inclined to consider /100 km run, by doing the correct and necessary assumptions. What is important is the same approach for all fuels. The EC is looking after this aspect with possible enforcement of future provisions, as another consequence of Directive 2014/94/EU, DAFI. The EC seems to prefer the option of /100 km run Parking structures In case of indoor parking, this is quite an important, even if maybe not much obvious, aspect affecting LNG development. Indoor parking structures for LNG vehicles face the very unlikely but still possible 57

57 challenge of very low temperature potential leak gas clouds, which are heavier than air for a while, and vehicle vent valves, which might actuate in some (extreme) conditions of vehicles staying out of operation for long time. The option at parking structure should be chosen between installing methane detectors or prove that the ventilation system is good enough to vent out any possible methane emissions. In theory, something worth considering is also the installation of a piping system in the parking so that the fuel system of the vehicle can be connected and the gas is vented outside the building structure when parking for a period longer than the holding time. Venting to atmosphere is to be avoided (prohibited) anyway, and ways to store and/or consume the vented gas are to be considered as a must. The vehicle operation manual should contain information about long-term parking. There also is a need to define the equipment to recover gas from LNG tanks prior to longterm parking and how to use it Training Training for LNG trucks drivers and for station attendants is an important and complex item. It needs harmonization and development and is under development of CEN TC 326. It has important implications both for safety and for the environmental affect of the LNG sector operations. Local institutions are looking after or planning such training courses, e.g. in Italy, Netherlands, Spain Mobile/re-locatable stations This is a winning asset for new market in virgin areas. As a good example of this concept, in September 2017, the Breda based Company LIQAL, turnkey supplier of small-scale LNG systems, developed a skidmounted LNG refuelling station that offers station operators the flexibility of a re-locatable system at lower investment requirements for both fuelling equipment and onsite project preparations. This completely pre-fabricated and transportable LNG refuelling unit, the MRU, is SIL-2 classified and complies with the latest international standards such as ISO It has an on-the-fly saturation, a vapor return economizer, a MID certified LNG dispenser with patented heated and purged nozzle docking bay and 24/7 iscada remote monitoring system. The fuelling performance can be compared to a fixed LNG station configuration. Any tank type including mobile ISO storage can be connected to it, which also holds space for LIQAL s proven micro liquefaction technology that ensures unlimited holding time of LNG in the storage tank and enables supply of both saturated- and cold LNG to effectively fill all available LNG truck types. The MRU offers the opportunity to position the dispenser at a distance from the skid for 2-sided refuelling of LNG and to add a L-CNG system. After turnkey supply and commissioning of the MRU, LIQAL takes responsibility for technical operation and maintenance of the system, if requested by client. Figure Drawing simulating the re-locatable LNG station, connected to an ISO LNG portable container [source: LIQUAL] 58

58 10.16 Flexibility of supply systems - UTS The new concept of the Universal Transfer System (UTS) is now a market-ready system that widens the range of possibilities in the LNG small scale business, by means of floating LNG ship to shore system. GAS NATURAL FENOSA and CONNECT LNG have made the successful sea launch of the first full-scale UTS on 7 th October The companies carried out a complete operation including transfer of LNG from SKANGAS LNG carrier Coral Energy to the onshore LNG terminal at Herøya, in Norway. The UTS is a game changing floating solution for LNG transfer, consisting in a platform which can connect to any LNG carrier. LNG is then transferred from the platform to the onshore terminal through floating flexible pipes. The design and fabrication of the UTS has involved the highest safety standards, and the complete system has undergone an extensive classification process by DNV GL. The patented UTS will replace the need for expensive and environmental intensive harbor and jetty structures. This solution allows for rapid expansion of the value chain and transfer of LNG at locations where it was previously not possible due to environmental and economic constraints. It is a plug&play solution which requires no modifications to the LNG carrier. [Source: CONNECT LNG NGV Journal] Figure UTS floating LNG ship to shore system (Source: NGV Journal) Logistic hubs Logistic hubs offer opportunities and synergies to the automotive LNG market. Different transport systems are present and simultaneously operate inside logistic hubs, e.g. trucks, vans and trains, which can take profit of innovative fuels, LNG, CNG, bio-methane. The large vehicle fleets hinging on them create good business cases for the multi-fuel refuelling stations to be built inside their premises, or for LNG selling plants to be added to the diesel existing stations. The presence of train offers a promising alternative option for quick and reliable mass fuel delivery, also applicable to LNG, already at present, and in prospect. In Italy, on Friday 21st April 2017, LIQUIMET held the inauguration of its LNG/L-CNG Station in Padova Interporto (Padua s logistic hub), and the concurrent delivery of the first 20 trucks IVECO NP/400 LNG to AUTAMAROCCHI logistic company. This was the first step of the GAINN4DEP national project for the build-up of the LNG infrastructure in the more strategic Italian spots, (Core ports and logistic hubs), as part of the national strategy to fulfill DAFI. This is the first LNG station in Italy, and probably also in Europe, to be supplied with LNG by train. In fact, LNG is not taken there by tanker truck from Marseille or Barcelona, as has been the case so far for all the other LNG and L-CNG stations in Italy, but is delivered through railroad train, coming from Rotterdam LNG terminal, by means of ISO containers, loaded on train cars. This station has some more innovative features as well. 59

59 11.1 General 11 Trend of core business LNG market The LNG core business infrastructure has developed significantly over the last years, and the efforts of the European Commission to facilitate the development of a genuinely integrated single market are bearing fruit. The LNG market is increasingly active, European and worldwide. Here some facts or predictions are enlisted, to show how differentiated and dynamic this sector is becoming. The LNG shortage following the events of very quickly turned into an abundant LNG supply in the following years. This was partly due to a rapid ramp up of American production and the emergence of the US as a major exporter. There is a huge industry in Australia as well, but the Australian investment consisted of long lead times and projects which were reasonably predictable. The US had a very rapid ramp-up in shale production and quickly turned from an LNG importer to an LNG exporter. The imports of LNG to Japan, which is the largest LNG importer in the world economy, were stabilized and then they began to decline, because nuclear power is coming back to the Japanese energy system, several new coal plants were built, solar power is doing very well in Japan, and the country has always been very successful in energy efficiency and in curbing energy demand. So, overall, there has been a ramp-up of supply and declining demand at the largest importer coinciding, and all this created an abundant LNG supply in global markets. Among the largest gas companies, GAZPROM reacted to this and changed its marketing strategy by renegotiating long-term contracts, adopting more flexible, market-oriented pricing, being prepared to compete to maintain market share. Despite the abundance of LNG in international markets, Russian gas exports to Europe are at an all-time high they ve never exported more gas to Europe than in This was achieved by a sharp competition between LNG and Russian gas. If combining the better infrastructure, better regulation and better competitive conditions in global markets, the effects are quite significantly positive for Central and Eastern Europe, where in general renewables are lagging behind the leading European countries. Romania, for one, has a decent wind and solar fleet; Poland has some wind in the Baltic Sea region, but overall the growth of wind and solar has been less rapid in CEE than in the West. In general the political environment is more favorable to nuclear power in Eastern Europe than in most European countries. In Eastern Europe there are several important countries where the government has declared publicly nuclear power as strategically important. This means that NG will have to find the niches, and there is a fair amount of ageing coal capacity in Eastern Europe. It is possible to foresee some coal plant construction here and there but not to the extent that the old coal plants will be decommissioned. So if combining the future decommissioning of coal, the slow growth of wind and solar, and even with the pro nuclear politics, there are some interesting opportunities for NG. Considering the future of NG in that region and the various infrastructure projects, LNG terminals, etc., experts try to figure out how much of the actual LNG will be consumed, or see if it is just part of creating diversification of sources. The point of the drive towards a single integrated market in Europe is that in a genuine single market it doesn t really matter where the LNG is coming in. For example, Germany doesn t have an LNG terminal at all and many German companies have investigated the viability of an LNG terminal in northern Germany, near Hamburg, and the result was always that it is not commercially viable. However, Germany is very well interconnected with the Netherlands, with France and the North Sea system via which Norway can supply NG either to Germany or to the UK. That region has four gigantic LNG terminals Dunkerque, Zeebrugge, Rotterdam and South Hook all 60

60 more than half empty. It has a powerful impact upon the German NG market, even without a single LNG terminal in Germany. This is not the case in Central & Eastern Europe which doesn t have that intensive infrastructure integration that Germany has with Northwestern Europe and the distances in CEE are also bigger. So projects like the Polish LNG terminal, the Lithuanian LNG terminal, a possible terminal in Croatia, make a difference in terms of integrating the region into LNG markets. The NG pipeline system in the Czech Republic, which plays a very important role as a hub, is fully reverse-flow capable and can deliver gas from the east to the west and from the west to the east. This is also a very important development. It was not the case just a couple of years ago. The International Energy Agency currently see a decline of LNG investment as the big projects in Australia are completed. The investment spending is still sizeable, but most of the spending is committed to projects that were launched before 2014 that was the year when global prices collapsed. Countries like Poland and Lithuania now have their LNG terminals. Other countries like Estonia, Bulgaria, Hungary, Slovakia, Ukraine don t; so for them energy diversification is more of a problem. But EU member states in the CEE region have been urged by EC to join up their gas markets via gas interconnectors that can provide reverse-flow capacity. The completion of the North-South Corridor project would mean the complete networking of the gas networks of the European member states along a north-south axis through central Europe. This would result in all of these countries being able to access the gas delivered via LNG terminals in both the north and south of the region. So 12 countries in the region have pledged to come together to improve infrastructure and trade and to develop better connections in transportation, digital communication and energy, including NG along a north-south axis. One target is a connecting the LNG terminal in Poland with a pending project in Croatia which plans to finish the construction of an LNG terminal off of the island of Krk in A project that has been in the works for nearly a decade, in early 2017 received a 102 million grant towards construction of the terminal; it has got the support of the Slovak transmission system operator EUSTREAM, and preliminary underwater research and drilling activities began at the site at end August A long period of high prices for oil and gas at the first half of the decade made the industry a bit complacent, so several large LNG projects experienced cost inflation and project delays. Now industry has to shape up and get better. In the US there is an increasing interest in brownfield projects, e.g. adding one more liquefaction train to a project, taking advantage of the existing pipeline structure and independent shale upstream. There also is increasing interest in 1 2 million tons/year-sized floating liquefaction units. Some of the most interesting projects that succeeded in attracting investment finance in the current market environment, like Cameroon or one of the projects in Mozambique, used this smaller sized floating LNG technology. Instead of taking a decade to build a gigantic land-based facility, they construct a floating unit of 1-2 million ton/y size in three years, and if market conditions allow they can add more. Some projects show better management than others. Papua New Guinea LNG for example is located in an extremely challenging remote region nevertheless it came online on-budget and ahead of schedule. Probably, the project management capability is going to be one of the key competitive advantages for the industry. [Source: László Varró IEA Chief Economist- September 29, 2017 speaker in the session: LNG in Transition at the Budapest LNG Summit on October] The Italian company ENI believes that the price of Mozambique LNG would fit well into European gas markets when ENI ships its first cargo in Europe has been using only 25% of its LNG import and regasification capacity because it has been relying more on lower-priced pipeline NG and coal. 61

61 Mozambique LNG would be priced correctly to fit European markets because the gas exploration and production costs there are very low. Probably the US LNG prices would fit better into the Asian markets, leaving Europe open to supply from Mozambique. It takes only 3-4 weeks to drill a well in Mozambique, allowing production to be increased quickly and economically. ENI is expecting to get its first cargo of LNG from Mozambique from the Rovuma Basin by a 2.5 million mt/year floating liquefaction train, which will be followed by two onshore trains later. The ENI s gas resources in Mozambique are enough to satisfy the whole Italian demand for 30 years. [Source: Claudio Descalzi, CEO of ENI - keynote address at IHS Cambridge Energy Research Associates (CERA) week October 2017] 11.2 Top north and top south Europe s ends developments The EC has approved the Finland strategy for NG import diversification through the construction of small scale LNG terminals, as an alternative option to the pipeline NG import from Russia. On late 2017 Margrethe Vestager, European Commissioner, announced the support to the construction of a LNG small scale reception terminal in the port of Hamina, on the south coast of Finland, and the grant offer of 31.5 million. The EC has allocated a similar subsidisation sum in 2015 for another LNG terminal planned on the west coast of the country. This strategy is in line with all efforts so far in that region to remedy to the energy isolation of Baltic countries and to improve energy security there. In the intentions of the EC, these small scale terminals will provide a new source of clean fuels also for maritime applications. Finland's Wartsila has been awarded on October 4 a turnkey contract to supply the LNG receiving terminal to be built in Hamina. The contract was awarded by HAMINA LNG, a joint venture of municipally-owned HAMINA ENERGIA and Estonian infrastructure group ALEXELA, which decided in June to build the 95 mn project. Completion of works is expected in This is also a valid example for the other Baltic countries: Lettonia, Estonia and Lituania, which like Finland only depend on Russia for their supply of NG. This solution could also suit to the case of south end of Europe, i.e. some regions in the Mediterranean Sea, such as Sardegna and Corsica, which are at present the only regions in the Tirreno Sea that don t have a NG network, and to the case of the costs of Balkan countries, which have neither NG pipelines nor LNG re-gasification plants. In this respect, in 2017 ENI has submitted to the Italian Ministry of Economic Development the feasibility study for the construction of a LNG Terminal, in the port of Gela, south of Sicily. The initiative follows the Protocol signed in November 2014, under which ENI has committed to evaluate the possibility of building an infrastructure for the supply/storage of LNG or CNG, with the aim of bunkering both maritime transport and heavy transport on-land. For its industrial conversion project, ENI has decided to focus on the LNG solution. This would involve the construction of a small scale liquefaction plant of NG, imported from North Africa by pipeline, and a storage and distribution infrastructure for the shipping and heavy-duty land transport needs. The feasibility study has examined, inter alia, the potential LNG market in terms of future developments in the maritime and on-land transport, the synergies with the existing port and the logistical and distribution infrastructure, the opportunities in other Mediterranean basins which do not have yet NG infrastructures. [Source: Conferenza GNL] 62

62 11.3 Europe Russia - China international NGV corridor 2030 In late September 2017 Vitaly Markelov, Deputy Chairman of the GAZPROM Management Committee, Huang Weihe, Vice President of PETROCHINA, and Daniyar Berlibayev, Executive Vice President for Transportation, Processing and Marketing of KAZMUNAYGAS, signed a Memorandum of Understanding at the 7th St. Petersburg International Gas Forum. The document reflects the interest of the parties in long-term strategic cooperation in the NGV market, including via developing the NG refuelling infrastructure at the Europe China international transport corridor. The MOU also provides for an assessment of the potential number of NG freight trucks and the amount of NG that could be used for refuelling vehicles at the Russian, Kazakh and Chinese sections of the route in the period up to The results of the assessment will serve as the basis for the drawing up of the tripartite Roadmap for the development of a natural gas filling network along the Europe China international transport route Italian infrastructure Despite being among the more active European countries in the automotive LNG market, Italy lacks a national supply source on the large scale side, let alone the small scale one. At present there are three LNG terminals in Italy. The oldest one is in La Spezia, and it started back in Another one is close to Rovigo, on the Adriatic Sea, and the third one is in Livorno, on the Tirrenian Sea; both started in the present decade. The terminal in La Spezia is the only one on-shore, but it is old now, and the characteristics of its location prevent access to LNG tanker trucks there. The other two terminals are off shore, so no way to supply LNG directly to tanker trucks also in their case. Therefore Italy needs building up from scratch the intermediate infrastructure for the supply of LNG to the tanker trucks. At present the supply is through trucks coming from the terminals of Barcelona or Marseille, and via train from the terminal of Rotterdam; this last a very recent step. A national supply source would reduce travel needs and costs. After successfully passing the feasibility study phase, the project of new small scale LNG terminal which DECAL and SAN MARCO PETROLI are planning to build in Porto Marghera, is starting the authorization procedure. The new infrastructure will have total storage of 32,000 m 3, made of one atmospheric full containment tank of 30,000 m 3 and two horizontal pressurized bullet, full containment tanks of 1,000 m 3 each. This plant is designed for LNG tanker ships carrying from 7,500 to 30,000 m 3 load. The plant is meant for supplying in its turn LNG in liquid state to the automotive market, as well as for the supply of residential applications not connected to the national NG pipeline system, and as bunker for marine applications. Besides the mooring pier for ships unloading LNG, the plant will also include an additional pier to load LNG on small tanker ships of about 1,000 m 3 load, which will be bunkering dual-fuel ships sailing in the port of Venezia. Five tanker truck loading bays will be also part of the plant. In a second project step a loading bay will be added for railroad trains. In the port of Santa Giusta Oristano in Sardegna HIGAS has started the construction of a coastal LNG small scale storage in the Mediterranean Sea, after the release in January 2017 of Authority permission for this work from the Ministries of Industry and Transport, and after the land purchase. The majority share of HIGAS has been acquired by the Norwegian company STOLT NIELSEN, specialized in fuels sea shipping. The plant expected CAPEX is 30 million euro. Total capacity of the coastal LNG storage is 9,000 m 3, divided among six 1,800 m 3 tanks. The Norwegian company aims at diffusion of LNG as marine fuel in the Mediterranean Sea, besides fulfilling the need for it in Sardegna, where it will be applied as automotive fuel, and as fuel for the local industry and for residential applications. The ship manufacturer KEPPEL SHIPYARD is already building in Singapore for STOLT two 7,500 m 3 LNG carriers which will serve coastal LNG small scale terminals and will offer ship-to-ship LNG bunkering. 63

63 11.5 Recent and future moves of the market, Europe and Global Lithuania s LITGAS, the gas trade arm of state energy holding LIETUVOS ENERGIJA (Lithuanian Energy), begun LNG sales to Poland's electricity and gas supply company DUON in late The gas is hauled there by trucks from Lithuanian seaport Klaipeda s new ground LNG distribution station. Figure Independence, the Hoegh terminal in Klaipeda (Source: Hoegh) The Norwegian firm CONNECT LNG and GAS NATURAL FENOSA have successfully used pioneering, 'plug and play' technology, Universal Transfer System (UTS), to deliver LNG ashore in an operation carried out in Norway on October 7. During the successful sea launch of the first full-scale and marketready UTS, CONNECT LNG and GAS NATURAL FENOSA carried out a complete operation including transfer of LNG from Skangas LNG carrier Coral Energy to the onshore LNG terminal at Heroya. The Port of Rotterdam plans in 2017 to build a new multifuel bunker station for the refuelling of LNG and other cleaner fuels. Krabbegors/Duivelseiland at Dordrecht Inland Seaport has been designated as the location for the station. Port of Rotterdam and PITPOINT.LNG signed a letter of intent to jointly further study the feasibility of the station. This will encourage the use of LNG as an alternative to fuel oil in shipping. Dordrecht Inland Seaport is the most inland seaport in the Netherlands. It forms the meeting point of the shipping lanes for the cities of Amsterdam Rotterdam Antwerp, and the main shipping route into Germany. All fuels (including LNG/CNG and hydrogen) supplied by the multifuel bunker station should produce fewer harmful emissions than traditional fuels. This includes fuel for ships, trucks and/or commercial vehicles with the aim of working together to achieve cleaner air and a better living environment. This station forms part of PITPOINT.LNG s strategy of developing a European LNG refueling infrastructure. Greek gas supply monopoly DEPA has signed a co-operation agreement with Greek utility GASTRADE, the company developing an LNG terminal in Alexandroupolis in northern Greece. The two CEOs DEPA's Theodoros Kitsakos and Gastrade's Konstantinos Spyropoulos agreed that DEPA would contribute to Gastrade's share capital and share in the further commercial development. [Source: Depa - October ] Norway-based ADD ENERGY is planning to use small floating liquefied natural gas (FLNG) vessels to unlock standard gas fields. In October 2017 the company OFFSHORE AUSTRALIA declared interest for the initial pilot project. It has partnered with Australia s TRANSBORDERS ENERGY to create a rapid deployment business model for the FLNG industry that ADD ENERGY promised will free up small-scale stranded resources around the world. 64

64 REGANOSA has launched its LNG hub project in the Northwest of the Iberian Peninsula. The energy company aims at providing LNG as marine fuel to a wide range of clients from its first regasification terminal, located in the port of Ferrol (Galicia, Spain). Every year, there are 40,000 ships sailing close to there on route from Europe to America, Africa and Asia, and vice versa. REGANOSA is supporting the transition to NG as the fuel of choice among many sectors and, for that reason, is trying to create a hub in the northwest corner of Spain which serves the whole of Europe. In the plan of the Company, the LNG HUB in Galicia will serve as a major lever for guaranteeing sustainability within some of the most important sectors, such as fishing and the port network. Dhaka is preparing Bangladesh industry for the start of imports of LNG from April 2018 [Source: staterun Petrobangla chairman Abul Mansur Md Faizullah]. The PETRONET s Kochi LNG terminal capacity utilisation is expected to rise to 40% by The terminal has had in 2017 a low capacity utilisation of just 15-16% owing to a lack of pipeline infrastructure. A joint venture comprising Malaysia's PETRONAS LNG, Hongkong Shanghai MANJALA POWER and a Bangladeshi company GLOBAL LNG is preparing to build a 3.75 million metric tons/year floating storage unit and a fixed jetty-based regasification unit at Kutubdia island in the Bay of Bengal near Cox's Bazar district in southeastern Bangladesh. In October 17 the Shanghai-based HONGHUA GROUP has awarded a $12 mn front-end engineering design (Feed) contract to UK-based contractor WOOD GROUP, for an LNG platform development in the West Delta area of the US Gulf that Houston-based developer ARGO LNG, headed by ex HOEGH LNG CEO Gunnar Knutsen, aims to complete around Japan announced a $10 billion public-private initiative that will help to boost LNG infrastructure in Asia. The announcement was made by Hiroshige Seko, minister of economy, trade and industry, at the LNG Producer-Consumer Conference October 18. The Yemen LNG has been now offline for 30 months. October 2017 marked two and a half years since Yemen LNG declared force majeure in mid- April YLNG stopped all LNG producing and exporting operations 14 April 2015, evacuated most staff, and said arrangements were in place to protect the Balhaf liquefaction site. [Source: NGW - October 17] The Queensland CURTIS LNG facility (QCLNG) on the east coast of Australia hasn t sold a spot cargo of LNG since March 2017; as all volumes in excess of the contracted levels at QCLNG have been sold in Australia to local customers [Source: Shell Australia s Chairwoman Zoe Zujnovich]. The MEXICO PACIFIC Ltd LLC (MPL), owner and developer of a LNG project on the Gulf of California in Mexico, received an investment from AECOM Capital s Infrastructure fund to advance development of its liquefaction complex. Based at Puerto Libertad in the state of Sonora, MPL is a cost-advantaged and scalable liquefaction project that has a deep-water port and is interconnected with the U.S. shale gas grid by multiple natural gas pipelines, which are already in service bringing NG to the site. This is considered an important milestone that advances the ability of that operator to offer the lowest all-in cost LNG to Mexican, South American, Central American and Pacific basin markets from a nextgeneration west coast LNG facility. [Source: Mexico Pacific Limited] In 2017 ENI reached a final decision on development (FID) of the Coral South gas field in Mozambique. The project will be developed by a floating LNG (FLNG) production unit. The production capacity is (by the operator) estimated to be 3.4 million tons per annum MTPA, equivalent to 4.7 bcm/yr. RYSTAD ENERGY believes first LNG shipment from Mozambique to be in either in 2023 or 2024, and Tanzania to follow 4-5 years later. The combined gas and LNG production in East Africa is expected to exceed 120 bcm/yr by 2040, whereof LNG will be the dominant product. [Source: Henrik Poulsen Senior Vice President - Government Relations at RYSTAD ENERGY] 65

65 12 Operators of the LNG sector The group of operators of the international and European LNG market is inherently small; but its commitment to this market is in constant growth. The following list of companies is focused on onroad LNG infrastructure (i.e. fueling stations for trucks) and tries to be as comprehensive as possible, anyway it is not necessarily exhaustive of the whole LNG sector. The manufacturers and operators of which the Project partners are aware of were included in it. Operator Address Product AGT AMERICAN GAS & TECHNOLOGY 1695 S. Seventh street - San Jose, CA T: +1 (408) f: +1 (408) LNG infrastructure construction AIR LIQUIDE LNG infrastructure construction AXEGAZ 120 Rue Jean Jaurès Levallois-Perret France Edouard de Montmarin T: edouard.demontmarin@axegaz.com LNG infrastructure construction/operation BALLAST NEDAM IPM B.V. Nijverheidstraat HM Leerdam The Netherlands Joost Jansen joost.jansen@ballastnedam.comt+31 (0) M+31 (0) LNG infrastructure construction/operation BOHLEN & DOYEN GmbH SAG Group Hauptstraße Wiesmoor Marcus Reher T+49 (0) F+49 (0) M +49 (0) E m.reher@bohlen-doyen.com I LNG infrastructure construction/operation BRN BERNARDINI operative headquartes Via G. Galilei 35, Faenza, Italy Legal heaquarters and Call Center: Via Finlandia 70, Modena, Aldo Bernardini T / Fax: aldo.bernardini@bernardininet.com LNG infrastructure construction/operation CHART FEROX a.s. Ustrecka 30 CZ Decin - Czech Republic Mr. Vaclav Chrz Vaclav.chrz@chart-ind.com Josef Semeràd Josef.semerad@chartind.com T: f: FEROX GmbH - Brosshauser Strasse, 20 D Solingen Germany T: +49 (0) f: +49 (0) sales@chart-ferox.com LNG components CRYOMEC Binningerstrasse, 85 - CH 4123 Allschwil 1 - Switzerland T: f: Service.commercial@cryomec.com LNG components CRYONORM SYSTEMS BV Koperweg LH Alphen aan den Rijn The Netherlands Office: Fax: LNG infrastructure and cryogenic vaporisers CRYOSTAR SAS 2 rue de l Industrie - ZI BP Hesingue (F) T: f: Josef pozivil T +33 (0) F +33 (0) info@cryostar.com LNG components CRYOVAC GMBH & CO KG Heuserweg 14 D Troisdorf Phone: +49 (0) Fax: +49 (0) info@cryovac.de Cryogenic tanks 66

66 DRIVE SYSTEMS NV Leeuwerikweg 8 B-3300 Tienen Belgium Philippe Desrumaux T: philippe@drivesystems.be LNG infrastructure construction/operation ENERGOCRYO Hauptstrasse, 49 CH 4422 Arisdorf T: f: Je.tornare@eblcom.ch Engineering/consulting ENGIE LNG Solutions BV GDF Suez LNG Solutions BV Grote Voort BL Zwolle The Netherlands Jan Joris Van Dÿk LNG infrastructure construction/operation ENN Business Park de Bedrijvige Bij Lagendijk 1-3 Suit C KA Koog aan de Zaan the Netherlands Joost Jansen Business Development Manager T +31 (0) O +31 (0) M +31 (0) joost.jansen@enncleanfuels.com LNG infrastructure construction ENOS LNG d.o.o. C. Zelezarjev 8 SI-4270 Jesenice Slovenia Andrej Stušek T: andrej.stusek@enos.si FLUXYS Belgium Av. Les Arts, Brussels Belgium Vincent Malisoux T: vincent.malisoux@fluxys.com LNG infrastructure ss liquefaction construction/operation LNG supplier; LNG terminal operator GABADI GABADI, S.L. Polígono Industrial Río do Pozo Avd. Xesús Fernández Pita, Narón A Coruña Telf. [+34] Fax: [+34] gabadi@gabadi.com Membrane LNG tank GALILEO Av. General Paz 265 Sàenz Pena Buenos Aires B1674A Argentina Osvaldo Del Campo T F info@galileoar.com LNG components/infrastructure/ss liquefaction GAS AND HEAT SPA Livorno Cryogenic tanks GAS FIN 62, Rue des Romains LU-8061, Strassen Luxembourg Liquefied Natural Gas (LNG) infrastructure operation GNL ITALIA S.p.A. Sede legale: Piazza S. Barbara, San Donato Milanese (MI) - Tel Sede operativa: Località Panigaglia Fezzano (SP) Tel Giuseppe Vareschi giuseppe.vareschi@gnlitalia.it LNG supplier; LNG terminal operator GOLDENGAS Viale Giordano Bruno, 20/ Senigallia (AN) Italy tel , fax LNG trade GTT Gaztransport & Technigaz 1, route de Versailles Saint-Rémylès-Chevreuse France T: +33 (0) commercial@gtt.fr LNG tanks HAM CRIOGENICA Polígono Industrial Sant Ermegol P Abrera Spain Jaume Suriol T: ham@ham.es LNG infrastructure construction/lng transport/supply JC CARTER LLC World Headquarters Curtiss Wright Pkwy, Suite 106 Cleveland, Ohio JCCarterCares@jccarternozzles.com LNG connector/receptacle INDOX - ROS ROCA INDOX CRYOENERGY Industrial la Serra s/n Anglesola (Lleida) Miquel Fontova Cemeli Tel: mfontova@indox.com LNG infrastructure construction/operation 67

67 LINDE BoC Priestley Centre Surrey Research Park GU2 7XY Surrey UK Linde AG Seitnerstraße Pullach Germany Mark Lowe (UK) - Olof Kallgren (Germany) LNG components/liquefaction LIQAL Heilaar Noordweg RR Breda The Netherlands Phone +31 (0) Mail address: P.O. box LK Breda The Netherlands info@liqal.com LNG infrastructure construction LIQUIGAS via Giovanni Antonio Amadeo, 59, Milano Andrea Arzà LNG infrastructure construction/operation LIQUIMET S.p.A viale Montegrappa 18/a Treviso Italia Antonio Nicotra Presidente Antonio.Nicotra@liquimet.it LNG infrastructure operation MARITIME LNG PLATFORM e.v. Esplanade Hamburg Germany Georg Ehrmann LNG trade MOLGAS ENERGÍA S.A.U Avenida Astronomía, San Fernando de Henares Madrid Tel: info.madrid@molgas.es LNG trade NATIONAL GRID- GRAIN LNG Grain LNG Terminal Isle of Grain Rochester Kent ME3 0AB Paul Ocholla T: Paul.Ocholla@nationalgrid.com LNG infrastructure/lng terminal operator NEXGEN FUELING 3505 County Road 42 West - Burnsville, MN T: f: LNG trade PARKER HANNIFIN Racor Filter Division Europe Shawcross Business Park Dewsbury WF12 7RD United Kingdom Steven Wilson T: +44 (0) filtrationinfo@parker.com LNG connector/receptacle PIT POINT Gelderlandhaven PG Nieuwegein The Netherlands Kim Bentum T: kim.bentum@pitpoint.nl LNG infrastructure construction/operation POLARGAS S.r.l. via Avv. Giovanni Agnelli, Moretta (CN) t: f: ing. Diego Pegorari cel pegorari@polargas.it LNG transport by tanker truck PRF PRCF Gás, Tecnologia e Construção, S.A. E.N. 356/1- Km 5,8 Alcogulhe Azoia Leiria Portugal Joao Pedro Cordeiro Ferreira T: joaopedro@prf.pt LNG infrastructure construction PRIMA LNG N.V. Uitbreidingstraat 2-8, 2600 Berchem, Antwerpen, Belgium Peter Frühwirth info@primalng.com LNG infrastructure operation RAG ROHÖL- AUFSUCHUNGS AKTIENGESELLSCHAFT SCHWARZENBERGPLATZ 16, 1015 Vienna Austria Georg Dorfleutner T +43 (0)50 724, erdgas.mobil@rag-austria.at LNG tanks REGO GMBH Industriestrasse 9 D Gladenbach Germany Freddy Deyk T: info@rego-europe.de MACRO TECH connector LNG infrastructure/lng connector/receptacle ROLANDE LNG Postbus ZH Almkerk The Netherlands Peter Hendrickx T: P.Hendrickx@Rolandelng.n LNG infrastructure construction/operation ROSETTI MARINO SpA via Trieste, Ravenna Italy Marino Rosetti T F rosetti@rosetti.it LNG infrastructure operation 68

68 ROS ROCA Indox Cryo Energy S.L. Pol. Ind. La Serra s/n Angesola (Lleida) Spain Ismael Callejon Agramunt T F M jcallejon@indox.com LNG infrastructure construction SAPIO S.r.l. v. Silvio Pellico, Monza (MI) Italy Sergio De Sanctis t.: f.: gruppo@sapio.it Technical gas supplier SIAD SIAD S.p.A. Via S. Bernardino, Bergamo Tel Fax Productiob plants of technicalgases STIRLING CRYOGENICS & REFRIGERATION BV P:O: Box 218, Building AQ 5600 MD, Eindhoven (NL) T: f: LNG components TECNOCRYO via Ugo Foscolo, Basiano (MI) Italy T: f: tecnocryo@tecnocryo.com Marcello Riva t f m m.riva@tecnocryo.it LNG components TERMINALE GNL ADRIATICO Srl p.za della Repubblica, 14/ Milano Italy t f via Canalini, Rovigo t f LNG storage & supply UNIPER Technologies GmbH Alexander-von-Humboldt-Strasse 1, Gelsenkirken Cliff Muller-Trimbusch Project Manager Cooperation & Business Development T M Cliff.mueller-trimbusch@uniper.energy LNG infrastructure operation VANZETTI ENGINEERING Srl Via Avv. Giovanni Agnelli, Moretta (CN) Italy t f info@vanzettiengineering.com LNG infrastructure/components construction VRV S.p.A Via Burago, Ornago (MI) Italy Massimiliano Spada T: f: LNG tanks VCT Vogel GmbH (CHART) Table Manufacturers and Operators involved the European LNG truck refueling infrastructure market 69

69 13 The Trans-Europe Blue Corridor rally On 18 th September 2017 the Blue Corridor-2017: Iberia Baltia Rally kicked off from Carregado (Lisbon). The rally, which is promoted and organized by GAZPROM Group and UNIPER, gathers every year representatives of energy and logistics companies, vehicle manufacturers and operators in the NGV market, to demonstrate the benefits of NG as automotive fuel. The participants drove across Europe to St. Petersburg in 19 days, running more than 5,300 km, and passing through 12 countries: Portugal, Spain, France, Italy, Switzerland, Lichtenstein, Germany, Poland, Lithuania, Latvia, Estonia, and Russia. The Blue Corridor Rally 2017 demonstrates the progress made in the development of the NG infrastructure in Europe, confirming the viability of this fuel in long haulage, and rose awareness of the benefits of LNG use in the transport sector. Along the route, some events were held in Lisbon, Milan, Ulm, Berlin, and Tallinn. Government officials, OEM, representatives of the gas industry and transport companies discussed the technological and legal aspects, and environmental, economic and social benefits of NGV. The caravan did stop at IVECO s Ulm plant in Germany to refuel at the station which was the first to open in Germany. On September 25th, IVECO did host at its Ulm Delivery Centre a round table with customers and other stakeholders in the development of NGV. The Rally ended in October 5 th, coinciding with the St. Petersburg International Gas Forum. The main theme of the rally was the use of LNG in heavy vehicles. LNG-powered trucks successfully completed every stage of the rally. Among them were Russia s first certified LNG-powered vehicles: the KAMAZ truck and the URAL NEXT workshop truck with a crane manipulator. The prototypes of the trucks were developed by the KAMAZ concern and the GAZ Group in conjunction with GAZPROM. The rally also involved LNG-powered trucks made by IVECO, SCANIA, and Minsk Automobile Plant, as well as CNG cars from VOLKSWAGEN, SEAT, and LADA. Figure Start of the Rally in Carregado 70

70 Figure Arrival of the Rally in St Petersburg This year s edition of the Rally focused on LNG for freight transport, to show that this sustainable fuel combines the benefits of excellent environmental performance with cost efficiency, and provides a viable alternative to diesel for freight transport that is available now. 71

71 Partners 72