BHP awards supply agreement for LNG-fuelled iron ore vessels

BHP has awarded its first LNG supply agreement for five LNG-fuelled Newcastlemax bulk carriers, which will transport iron ore between Western Australia and China from 2022.

Shell has been awarded the contract to fuel the vessels, which BHP will charter from Eastern Pacific Shipping (EPS) for five-year terms.

“The LNG bunkering contract marks a significant step in how BHP is working with our suppliers to reduce emissions across the maritime supply chain,” said BHP Chief Commercial Officer Vandita Pant. “LNG-fuelled vessels are forecast to help BHP reduce CO₂e emissions by 30% 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% emissions intensity reduction of BHP-chartered shipping of our products.”

“I would like to congratulate BHP on reducing emissions in their maritime supply chain with the world’s first LNG-fuelled Newcastlemax bulk carriers,” said Steve Hill, Executive Vice President, Shell Energy. “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.”

The contract is the result of a tender process that included potential suppliers across several geographies. Technical capability, available infrastructure and cost competitiveness were among the stringent criteria.

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 100–1000 m³/h.

“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,” said Pant. “This contract is expected to form up to 10% of forecasted Asian LNG bunker demand in FY2023.”

Image: Ship-to-ship bunkering. Source: FueLNG.