POSEIDON MED: ‘Med Sea into the Gas Era’

Panayiotis Mitrou, Marine Research, Development & Innovation Manager, Lloyd’s Register presentation during the 2015 GREEN4SEA Forum.

Talking about sustainability, Poseidon Med is the project which aims to revive the shipping sector through the planning and executing of a smooth transition for East Mediterranean shipping to a new era, the Gas era. This presentation aims at presenting the opportunity arising from the adoption of  LNG as a marine fuel and how this can, in the context of challenges ahead and the respective European Union policies, foster maritime competitiveness, support the shipbuilding and marine manufacturing industry and safeguard shipping against the forthcoming regulatory changes.

Talking about sustainability, Poseidon Med is the project, which aims to revive the shipping sector in the eastern Mediterranean area and lead it to a new era, what we call the gas era through a smooth transition.

It is about planning and having the whole solution in order to move forward. Thus, we will see how and why this new era may constitute a great opportunity for our area in particular. There’s a turmoil ahead we have in our area and we are not talking about ECAs, the EU and the global Sulphur cap, which will come in 2020 and potentially 2025. We will see that there is a potential gap being constituted between 2020 and 2025 for our region in the Mediterranean. On the other hand, we have EDI, MRV and the potential market-based measures (MBMs), which will further put pressure on shipping.

So, what is the EU case? We have refineries being reluctant in the investment needed for the desulfurization of the fuels. Specially, in the EU due to the environmental legislation, we see the margins now been exhausted.

Although, on the well to wheel or propyl in our case basis desulfurization for fuel, we will increase greenhouse gas emissions. Consequently, there is controversy on the alternative solutions and the conventional fuels. And there is also ambiguity on solutions like scrubbers. We have seen some criticism. It is not something concrete, but there are still problems.

So, what is again the case of the EU? The EU owns a fleet around 48% of the global fleet. It has more than 40% of the global marine equipment manufacture. It is a dominant stake for the whole world. Therefore, there is a great interest in the EU in having a solution.

However, what has the EU already done in this field? There are a number of policies about:

• Sulphur directives,
• Energy security,
• Reduction of greenhouse gas emissions like MRV,
• Diversification of energy sources, the alternative fuel directive,
• Competitiveness of the transportation sector, especially the shipping sector,
• Interconnection with remote areas in Europe and
• Macro regional strategies with the Adriatic and Ionian region.

As a deduction, we see that there are a number of projects being now developed around Europe and there is a lack of such initiatives in the South Europe and the EU Med Europe.

What about LNG? What is LNG? Is it the solution? Is it a prospect or a lifetime opportunity? It is true that LNG may offer a holistic solution to the environmental aspects. Practically, it extincts greenhouse gas emissions, CO2. It will extinct, as well, particulate matters and to some extent it will solve the CO2 and the NOx emissions. It also extincts Sulphur oxide and particulate matters.

On the economic side, we have huge changes in supply with the US sale gas being available for exportation now. The Australian’s new supply, the Russia – China pipeline and the Japan’s destined view to nuclear energy again after Fukushima disaster.

Certainly, we have good news for the supply and demand aspects for LNG:

• The strategic reasons,
• The abundant resources of LNG,
• The diversification over other fuels,
• The political risk hedging
• And a reliable supply chain working now for a number decades.

Nevertheless, we see criticism as well. Firstly, it is supported that the LNG may not be safe. The answer is that we have a proven safety record beyond doubt for many decades for LNG and natural gas. And we have applications of natural gas all around us already with perfect, quite good safety record.

We, also, say that LNG requires a huge investment, a very costly infrastructure. This is true, but it pays back well and there are excellent synergies with the shore energy sector as well. And the latest myth is that LNG is not competitive under low oil and HFO price. We must say that an efficient LNG market is currently developing and is still under development. In the case of shale gas, bunker equivalent can reach 550 US dollars per ton of HFO. This is something you cannot compete with HFO. The 0.5 Sulphur cap minimum cost will also put pressure and amount to an additional 150 US dollars for HFO. And, of course, we have the amortization factor that would strengthen the LNG position an additional benefit that may stand from further regulatory changes.

So, how do we camp to LNG? We have set up a number of partners, the Poseidon Med project, which is the first European project, which aims to introduce LNG as the main fuel in the area and at the same time, it sees the sufficient infrastructure as well as the demand side. It focuses on the eastern Mediterranean region with all five EU member states in the region being part of this and it is a partnership between gas suppliers, shipping companies, port authorities, technical organizations etc. It is officially included as a candidate project in the newly developed “Juncker package”.

What are the barriers we are trying to address? First one is infrastructure, where a hub and spoke hub is developed in Piraeus. And we will perform risk assessment review operation establishing safety port for Piraeus and Limasol in the first phase. Moreover, we will have six vessels reviewed for gas readiness approval in principle level (AIP). And two among them will be in more detail while there will also be a feasibility study for LNG barge convention.

What is important here is what we have to do with the non-existing regulatory framework. In consequence, we have to work from scratch. We see what the solutions have been in Northern Europe and elsewhere and we are making a comparison with all current bodies that are working on the regulatory framework for LNG as marine fuel. And definitely, I would say most of all, we are also working on the development of a sustainable model for financing according and with the assistance of all EU financing instruments, taking into account the particular and very severe Greek market and other countries in the area conditions.

At the same time, working toward sustainability, what are the next steps ahead? In the next phase, which is a running proposal right now, we will have the first pilot vessel LNG fueled to be operated in the Mediterranean area which is a pilot and innovative vessel. That will be built for Venice Port and will be funded 50% (this is a projection) run by the EU. We will also see 10 and more vessels approval in principle (AIP) and detailed review including both new buildings and retrofits. We will continue on with the follow-up and the specific actions of the regulatory framework for Poseidon Med first phase. And we will see that all gap analysis results are taking into account. And, of course, we will perform the same study and enhance the study for five core ports in the area.

One last thing that has also included in our effort is shipyard preparedness carrying out the gap analysis for us to see what the gaps are and the incentives for shipyards in the area to be destined for this new sector.

So, what we see out of this? What are the objectives of the project?

• We see a significant reduction in emissions, especially, in adversely affected coastal areas like Piraeus and the city of Piraeus.
• The fostering of competitive maritime transportation.
• The notable introduction and application of technological expertise to strengthen the maritime and shipping sector.
• We will see out of this an improvement in transportation cost.
• Safeguarding of industry and the country though smooth harmonization with the future key challenges. We must say here that shipping is a jewel for the country.
• Potential and revival of the shipbuilding sector in new sectors of added value.
•  Synergies with small scale LNG and the shore energy sector.

We have already see Greece as it stands. Patra is quite an opportunity in western Greece. Furthermore, we have the islands, we don’t mean we are going to bunker LNG on the islands, but there is a great potential in synergies for small scale LNG barges to also supply LNG implants in the islands or especially small energy plants in the Greek islands.

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Above article is an edited version of Panayiotis Mitrou presentation during the 2015 GREEN4SEA Forum

You may view his presenation video by clicking here

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About Panayiotis Mitrou

Marine Research, Development & Innovation Manager, Lloyd’s Register

Panayiotis Mitrou is a Naval Architect and Marine Engineer NTUA, holding an MBA in Shipping from ALBA Business School. During his seven year service with Lloyd’s Register Piraeus Design Support Office, he has been dealing with series of statutory and other reviews. He has supported and lead the implementation of several pieces of new legislation ranging from Ballast Water management to the latest Energy management related requirements. He has also been deeply involved in MARPOL and the Chemical codes matters. He is currently employed as a member of Lloyd’s Register Piraeus Business Team in an account management and technical support role focusing among other on forthcoming legislation as well as energy management solutions. He has represented Hellenic Lloyd’s and Lloyd’s Register in a number of international forums, research and other projects developed within the TEN-T and other EU frameworks. He is currently involved in Poseidon Med as the project Manager for LR.

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