INTERVIEW: Titan focusing on LNG, LBM while exploring green methanol, ammonia

Titan Clean Fuels is focusing on LNG bunkering, liquefied biomethane supply, and carbon insetting while also considering green methanol and ammonia as the industry prepares for tightening environmental rules in international shipping, Michael Schaap, company commercial director said.

LNG seems "really top of mind" in major bunkering ports such as Singapore and Rotterdam, Schaap told S&P Global Commodity Insights in an interview.

"In some ports, LNG is being bunkered every day and it is common practice...Pricing benchmarks for LNG are liquid and we can carry out hedging activities for the fuel," he said.

"So, in many ways, it has really started to resemble a conventional bunkering fuel," he added.

When Russia invaded Ukraine, LNG prices soared, leading to some demand destruction for LNG as a marine fuel because it became much more expensive than competing fuels such as very low sulfur fuel oil and marine gasoil.

The situation, however, provided insights that it is very good to hedge bets on a multitude of fuels, Schaap said.

LNG prices have stabilized now and eased sharply since Russia’s invasion of Ukraine, he said.

Platts, part of Commodity Insights, assessed Singapore delivered LNG bunker fuel price at an average of around $15.2198/MMBtu in September. This compares to an average of about $32.747/MMBtu in March 2022, around the time Russia invaded Ukraine.

Schaap said it is imperative to have visibility over LNG supplies to justify the needed investments, and that requires different stakeholders to collaborate.

Due to high prices in the past, there was an underinvestment in LNG bunkering infrastructure to be delivered. That “could bite into the market” going forward, Schaap said.

He added that despite new parties entering the market and more LNG bunkering vessels being ordered, there is a supply gap compared to the potential uptick in demand.

Titan currently has six LNG bunker barges, of which four are owned and two are chartered.

"One of our largest barges is 12,000 cubic meters that will soon come back to our fleet as it looks now, and one of the barges is sitting in Malaysia," Schaap said.

The company plans to expand the LNG bunkering fleet further once it achieves sufficient utilization of its existing fleet, he said.

The company serves most of Northwest Europe, with the Mediterranean going to be the “very next prominent expansion as we already have customers there”, Schaap said.

Other steps for transition

In 2023, Titan and blockchain-based carbon insetting platform 123Carbon issued the first LNG-based carbon insets that were readily available to the market.

Carbon insetting enables fuel suppliers and ship operators to transfer the environmental benefits of clean, lower carbon-intensity fuels throughout the maritime value chain to freight forwarders and shippers.

“Methanol is quite high on our radar because it is relatively easy to use for us. We have a safety regime in place like we do for LNG, and we know how to handle this fuel,” Schaap said, adding that Titan wants to focus on green methanol—bio-methanol or e-methanol—as part of its portfolio.

“I don’t think running on grey methanol is a step forward for the marine industry because it might end up increasing the carbon footprint,” Schaap opined.

“As far as ammonia, we are monitoring developments out there closely too. As a company, we are well positioned to be in this market at an early stage as well because of our capabilities to handle gaseous fuels,” he added.

However, there will be other sectors to decarbonize as well, which may lead to strong competition for these green molecules, he said.

Liquified biomethane potential

In terms of time horizon, the development of e-fuels is further away, Schaap noted.

“We cannot make any investments currently because it is going to be a while before you have any significant throughput and make some money from a trading perspective,” he said.

"Depending on the CII [Carbon Intensity Indicator] score, the ISCC Certification and the duration of the contract, an indication of the LBM price would be an additional premium over the LNG price plus a supply premium, which would be about Eur40 per megawatt hour. So that is twice as expensive as the base price molecule of LNG," he said.

Currently, there is a lot of additional interest in bio-LNG bunkering because of shipping's sustainable focus, with the bunker fuel market forecast for LNG by 2030 expected to be 10 million mt at the very least, Schaap said.

Schaap said that including a small amount of LBM with a very good CII score can help a company achieve its decarbonization goals and put it at the forefront of compliance with the FuelEU Maritime rule.

To promote the wider adoption of LBM, it is necessary to strike long-term contracts with green gas producers, invest in fuels projects, have trained manpower, market intelligence to ensure good visibility of opportunities, and access to enough customers, he said.

“It is vital for the industry to have consistency in regulations and a visibility of where we need to go to after certain years,” Schaap said.

"We can do a lot, but if the rules change in between the transition that is underway, that creates exposure and risks for companies on the forefront, be it shipowners, suppliers, or producers, jeopardizing the process," he added.