LNG is coming to town!

LNG is coming to town!

Jasper Groen
Jennifer Hoovers
11 June 2013

For the last few years, LNG has been causing quite a stir in the Rotterdam port. In September 2011, when the first Dutch LNG import terminal ‘Gate Terminal’ opened, in November 2011, when the Dutch “Argonon” became the first LNG-powered barge in operation in Europe, and with the new build of the LNG Breakbulk Terminal starting within the next six months, enabling the transshipment of LNG to trucks and inland vessels. 

Why all this interest in LNG? Well, in light of the EU’s ambitious climate and energy targets (by 2020 the emission of CO2 must be reduced by 20% compared to the emission in 1990) and the strict emission regulations for the shipping industry coming into effect in 2015, the transport sector cannot continue to solely rely on HFO/diesel/gasoil as its main fuel source. The fact that the air pollution in the Netherlands, with its port of Rotterdam, is one of the worst of Europe attests to that. 

Despite the fact that CO2 reduction has become more of an issue the last years, also in the transport sector, we have got a long way to go if we want to meet the serious targets that we have set ourselves. LNG seems to be one of the key ingredients to make our race to the bottom successful. Not only does the ‘liquid’ LNG take in 600 times less space than gas, making is very useful to transport by truck or inland vessel, but it is also much cleaner than HFO/diesel/gasoil (a reduction of the emission of particulate matter and NOx by 90%). 

In light of the recent LNG developments, one might wonder how the upcoming LNG market is going to affect everyday life. With the build of the aforementioned Break Bulk Terminal, an opportunity is created to distribute the LNG from the import “Gate Terminal’ directly into trucks and inland vessels, and thereby transporting LNG further into the mainland. As such, a new supply chain is created, literally into our backyard. Of course this is only effective if more terminals and filling stations are created in the mainland and along the rivers, just like the currently existing bunker facilities. If such LNG facilities become more common, the number if LNG-powered trucks and (inland) vessels will increase, bringing us closer to meet our climate targets. In this regard, the ambitious view of the National LNG Platform (a periodically held meeting of LNG and transport interests) is to have at least 50 inland vessels, 50 seagoing vessels and 500 trucks operating on LNG by 2015. For day-to-day life this means that increasingly more LNG-powered trucks and vessels will travel our roads and rivers, and therefore also trucks and vessels carrying LNG as a cargo, in order to meet the demands for LNG as a fuel. 

When a (relatively) new product like LNG is going to be used (either as a fuel or as a cargo), the existing national and international legislation must be reviewed to that end. When it comes to LNG as a cargo, it is currently still considered a class 2 (UN1058) ‘dangerous good’ under i.a. the European Agreement concerning the International Carriage of Dangerous Goods by Road (ADR) and by Inland Waterways (ADN). On a national level, the by-laws of the port of Rotterdam contain separate proceedings for vessels carrying LNG. However, under the current regulations (Rhine Vessel Inspection Regulation and the Inland Ship Rules) LNG is not allowed to be used as a fuel for inland vessels in the Netherlands, because it has a flashpoint below 55 degrees Celsius. This is a clear example of legislation having to catch up with reality. However, the authorities are willing to make exceptions in order to stimulate the use of LNG, as they have done with the “Argonon”. And even the UN Economic Committee for Europe has introduced a Task Force LNG in order to make the necessary amendments to the international regulations. These developments show a hopeful willingness to move forward, not only by those few business pioneers, but also on a national and international level. 

All in all, LNG is an innovative product that – due to its continuing development – creates exciting business opportunities for all port related players. And although the legal and practical issues surrounding LNG have not yet been completely figured out, the first steps have been taken. As a law firm we took our next step by taking part in the National LNG Platform. Who follows?