LNG market shift – what are the implications for Japan?
As the largest LNG importer in the world, Japan is an exciting marketplace to be in, but there are also challenges. The domestic LNG demand is slowing, charter contracts are becoming shorter, and the competition is increasing. In times like these, novel digital solutions can offer the competitive edge that may very well become a deal-breaker.
As Japan relies almost solely on import of LNG to cater for its need for natural gas , the market is highly dynamic. In terms of exporting countries, Japan is tapping into a multitude of options, including Australia, Malaysia, Qatar, Russia and Indonesia . The traffic is increasingly expanding all the way to the United States as well , i.e. the import routes are getting increasingly longer.
To enable such an immense import, roughly half of the global LNG carrier fleet currently sails under Japanese flag [3,4]. Despite the challenges the industry is currently facing, the Japanese order book for new LNG carriers remains solid . To manage the uncertainties and ensure the success of the new fleet investments, we believe data-driven solutions are in a key position.
LNG shipping has unique differentiating features and optimization opportunities. Using data collection as a foundation, digital solutions can address the needs of diverse stakeholders covering operational, commercial, and asset management applications.
For LNG vessel owners, digital solutions can deliver e.g.:
- reductions in maintenance OPEX
- better management of commercial risks
- more informed new building / technology decisions, ultimately leading to enhanced service levels and differentiation in a competitive environment.
For charterers, digital services can e.g. contribute to:
- reduced fuel / gas consumption
- greater cargo retention
- reduced uncertainty when making commercial decisions
- increased understanding of transportation costs.
Together these enable dynamic fleet optimization and increased profitability .
To name a few concrete examples of what digital solutions for LNG carriers entail, operational applications may include speed optimization and laden voyage management, ballast voyage optimization (heel and cool-down), fuel mode and engine load optimization for multiple engines, and trim optimization. Asset management applications include asset performance/reliability and input to new designs and technologies. Finally, commercial applications may include charter party monitoring and performance level definition, dynamic fleet optimization, and accurate understanding of transportation costs .
Keeping in mind that most of the Japanese fleet growth will be in the form of so-called “unconventional LNG shipping”, i.e. floating storages, FSRUs and coastal carriers [4, 6], the importance of operational transparency, data analysis and new means for optimisation becomes even greater. In times of change, it is often a wise move to partner with an experienced player. Start by having a look what we’ve learnt so far, and what our thoughts on the future are: Insights that enable 21st century LNG operations!
Let me know your thoughts!
Head of Sales, East Asia