EU Strategy for the Baltic Sea Region 

On Wednesday 26 May 2010, the kick-off meeting for the flag ship project “a feasibility study on LGN
infrastructure for short sea shipping” was held at the premises of the Danish Maritime Authority (DMA) in
Copenhagen, Denmark. 21 persons representing shipowners, ports, LNG providers and states participated
in the meeting.

As an inspiration for the discussion about a possible feasibility study on an LNG filling station infrastructure,
Arne Mikkelsen from the Danish Shipowners’ Association, Aksel Skjervheim from Gasnor and Oskar Levander
from Wärtsila gave presentations reflecting the point of view of respectively the shipowners, the providers and
the engine manufacturers on the use of LNG.

The discussion touched upon several issues regarding LNG fuelling, e.g. that LNG is an environmental friendly
fossil fuel, that pilot oil and lube oil create environmental harms and that economies of scale are important.

Central outcomes from the discussions

From an action point of view, the discussions concentrated on a feasibility study for an LNG filling station
infrastructure in the Baltic Sea and possible pilot actions.

Ad. the feasibility study

LNG as a fuel has been discussed and studied from different angles, but not from the point of view of an LNG
filling station infrastructure.

A holistic paper on this issue is needed and it must be relevant for:

• Shipowners;
• Ports;
• LNG providers;
• States; and
• EU.

The paper must focus on critical enablers for the establishment of an infrastructure.

The following enablers were discussed:

1. Safety  from a ship, a port and an LNG provider perspective. Regulations are on their way
   in the IMO and the classification societies for LNG fuelled ships. The safety situation for
   land-based installations and the loading of LNG from terminals to ships[1] does not
   seem clear. As for the ships, common regulations are preferable here. 

2. Public awareness has a close connection to safety. The move from a highly specialized
   LNG-industry with large terminals and ships to a more decentralized industry creates
   a new situation which has to be explained to the public. Risk-based approaches seem
   appropriate and it is important to involve the various industrial organizations.

3. Technical possibilities for fuelling ship engines with LNG today, in the short term
   and in the medium term – new ships as well as for retrofitting (today and in the short term).

4. LNG filling stations

• Different layouts, from mobile – land as well as sea – to fixed stations.
• Scaling possibilities for LNG filling stations according to the development in the
  demand for LNG.
• Operational models.
• Financial models – investment and running expenses,
• ...

5. The expected development (scenarios) in the price of LNG compared to 0.1% sulphur oil
   (the ECA demand for marine fuel or equivalent solutions).

6. The potential for using LNG

• Existing lines in the Baltic.
• Ship characterization – age, size etc. for these lines.
• The age profile of the ships.
• …

7. Economy from a ship, a port and an LNG provider perspective

• The importance of economies of scale.
• The problem of a modal back shift for cargo because of the new ECA regulations.
• …

8. What are the expectations of states/the EU with regard to creating a framework fostering an
   LNG filling station infrastructure?

• Market driven.
• State planning.
• A co-operative/mixed strategy.
• Incentives for promoting the LNG option, including economic issues at the local
  and state level as well as the EU level.
• Infrastructure/general facilitation must be the driving force.

Finally, this leads to discussions on:

Alternative strategies for the development of an LNG filling station infrastructure.

A lot of the above topics have been studied already and there are practical experiences from
Norway. This means that a major part of the work will have the character of stock-taking and
scoping to the present work.

Furthermore, the question of education was discussed, from the point of view of both
seafarers and LNG filling station workers. It did not seem necessary to include this
question as it was not considered a critical enabler. It was stressed that education and
safety were closely interrelated. Especially, as mentioned above, when the use of LNG moves
from a highly specialized industry with large terminal and ships to a more decentralized industry.

Ad. pilot actions

Today, the expertise as regards LNG filling stations and LNG fuelling of ships is a Norwegian
speciality and international experiences are needed.

The participants found that possible pilot projects were available and economic incentives
could bring them forward.

The TEN-T[2] Motorways of the Sea (MoS) Call 2010 as a vehicle for further work on the LNG issue

The recent TEN-T call on Motorways of the Sea opens up for studies as well as for pilot actions.
Both studies and pilots can be financed by up to 50 %.

In practice, there is an indicative amount of 2 mill. euro per submission with regard to 
eligible costs. A feasibility study will be only a minor part of this.

Consequently, it is possible to formulate an LNG proposal containing both a feasibility study
and pilot actions.

The call is published as follows:

http://tentea.ec.europa.eu/en/apply_for_funding/follow_the_funding_process/motorways_of_the_sea_
mos_call_2011.htm

For TEN-T submissions under Motorways of the Sea calls it is a prerequisite that proposals are
submitted to the involved member states. The proposals will be evaluated jointly by the involved
ministries and authorities.

The countries bordering the Baltic Sea and Norway published local preparatory calls for submission
of Motorways of Sea proposals in November 2009.

Furthermore, the call texts give an overview of potential sources of financial investment support for
Motorways of the Seas projects.

In the call text it is stated: If you are thinking of submitting a proposal we would encourage you to make
early contact with the relevant contact point in your country to discuss the proposal.

The involved member countries will coordinate a feasibility study and pilot projects into a common
proposal on the LNG issue.

As the Commission call closes on 31 August 2010, time is short for potential LNG projects contained
in one proposal. So it is important that potential applicants take contact to the relevant national contact
points as early as possible.

Is the Baltic Sea too small a geographical area for a pilot study on an LNG filling station infrastructure?

The participants found it natural to consider an expansion of the scope to the North Sea and the
English Channel as ECA areas; both for the feasibility study and pilot projects.

The way ahead

The outcome from the meeting should be developed further. The Danish Maritime Authority would, in
close contact with the Ministry of Transport – which is the TEN-T responsible authority in Denmark –
facilitate an outline for a proposal on a feasibility study and pilot projects. The time limit is the end of July/beginning of August 2010. At that time, a decision will be taken with regard to the necessity to
hold a new meeting on an LNG submission.

Further it was agreed:

• The participants in the meeting would come up with further input, including pilot projects –
  as fast as possible! This invitation counts for all the participants invited to the meeting!
• The Danish Maritime Authority would discuss the outcome of the meeting with the Commission,
  EMSA and the North Sea/English Channel countries. Up to now, contacts had been established
  with Flanders and the Commission[3]. The aim of these discussions is to develop the thinking further.

   

• Further potential partners will be included in the discussions.

Finally, it was made clear that a feasibility study demanded financial means, but it seemed immature for the
individual countries etc. to take a position on finance until the project was further developed[4].