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LNG RISK In association with West of England P&I
LNG growth needs to be risk managed Suumit Madhu, Senior Underwriter at West of England P&I, is a recognised expert in the field of LNG shipping. In this article, he explains four key risk management areas that will continue to evolve in this increasingly important market. The LNG shipping market is evolving, be it by technological advances in the cargo containment systems, or the differing propulsion technologies that offers participants of the trade multiple fuel options, or the varying contractual charter party terms or indeed operational practices on board and ashore. These changes are intended to reduce loss, increase flexibility and efficiency, meet international regulations and improve the bottom line. There are arguably four main areas that will evolve and this need to be focused upon.
SHIP DESIGN The first areas are ship design, cargo containment and propulsion systems. Traditional long-term charters with established players in the LNG industry, where the risk of The Marine Insurer P&I Special Edition | July 2020
loss and allocation of responsibility for liability is clearly defined, continue to dominate the market. This, along with large conventional steam turbine driven vessels with either moss or membrane cargo containment systems, constitute a large percentage of the LNG shipping tonnage. We have however observed a rise in the number of short to medium term charters in the last 5 years. Equally, the number of vessels with different propulsion solutions for LNG carriers, ranging from dual fuel diesel electric propulsion, tri-fuel diesel electric propulsion, combined gas turbine electric and steam system, and hybrid propulsion based on steam turbine and gas engine, are also on the rise and constitute a significant percentage of the global LNG fleet. Propulsion systems significantly influence the shipâs capital cost as well as emission regulation compliance and navigational safety. A propulsion system which is technically sound and operable by the shipâs staff along with being economically viable is an important consideration for LNG shipowners. When adopting new technologies, it is essential that they are properly examined, crew appropriately trained and any contractual arrangements creatively analysed, and carefully considered, so that Members have certainty of cover.
LNG AS FUEL LNG is increasingly being used as fuel on vessels other than LNG carriers. The search for âgreenâ fuel, as well as develop-
