BHP signs LNG supply deal with Shell to fuel iron ore vessels
Mining company BHP has awarded Shell a liquefied natural gas (LNG) supply agreement to fuel BHP’s five Newcastlemax bulk carriers in a move that aims to lower emissions in their maritime supply chain.
BHP said the vessels will transport iron ore between Western Australia and China from 2022.
The mining giant will also charter the vessels from Eastern Pacific Shipping (EPS) for five-year terms.
In a statement, BHP Chief Commercial Officer Vandita Pant said the LNG bunkering contract marks the company’s commitment in slashing emissions across their maritime supply chain.
“LNG fuelled vessels are forecast to help BHP reduce CO2-e emissions by 30 per cent on a per voyage basis compared to a conventional fuelled voyage between Western Australia and China, and contribute to our 2030 goal to support 40 per cent emissions intensity reduction of BHP-chartered shipping of our products,” Pant said.
The contract is the result of a tender process that included potential suppliers across several geographies.
To make the choice, some of the criteria used were technical capability, available infrastructure and cost competitiveness.
Shell Energy Executive Vice President Steve Hill stressed that decarbonisation of the shipping industry must begin today and LNG is the cleanest fuel currently available in meaningful volumes.
“This LNG bunkering contract strengthens the bunkering market in the region and we look forward to working with BHP and other customers in the maritime sector on their journey to a net-zero emissions future,” Hill continued.
LNG bunkering – the process of fuelling ships with LNG – will take place through the first LNG bunker vessel in Singapore, “FueLNG Bellina”. The vessel is operated by FueLNG, a joint venture between Shell Eastern Petroleum and Keppel Offshore & Marine. The bunker vessel will be able to bunker fuel at a rate of 100-1,000 cubic metres per hour.
Pant said the LNG bunkering contract will enable BHP to manage fuel supply risk, build LNG operational capability internally, and also help to strengthen the emerging LNG bunkering market in the region.
She said this contract is expected to form up to 10 per cent of forecasted Asian LNG bunker demand in FY2023.