World Oil Outlook - Opec

Moreover, as already underscored, prior to any sustained LNG adoption for ships,
a robust LNG retail sector has to be established at major world sea ports.
It should also be noted that there continues to be an oversupply of cargo vessels and
this will continue to depress new ship order books for some time. Market adoption
is expected to mostly take place through new ship orders, as retrofitting old vessels
is much less appealing, due to higher safety concerns, the enormous costs involved
and the ship’s long off-duty time during conversion.
In addition, slow steaming, alongside the use of kites and sails, will bring longvoyage
fuel oil consumption down further, thus reducing the incentives and pushing
forward the date when early adopters could start ordering new LNG-powered
vessels in greater numbers.
Many ship operators can also be expected to wait and observe the performance of
any newly delivered LNG vessels for a few years. Only if these vessels produce attractive
profits, prove safe and reliable, will others follow the early adopters and lead
to LNG establishing itself as an additional bunker fuel.
Figure 5.4 demonstrates changes introduced to this year’s update, compared to
the WOO 2011. In this year’s WOO, projected global gasoline demand in 2035 is
expected to be around 1 mb/d lower, compared to the WOO 2011.
The revision for diesel/gasoil oil is much smaller. It is around 0.5 mb/d lower by
2035 compared to WOO 2011. For this product group, several factors interplay. In
contrast to gasoline, diesel demand is spread across several sectors and is more sensitive
to a region’s overall economic performance. For example, downward revisions for
China’s economic growth versus WOO 2011 and an upward revision for India, play
a role. In addition, it is also essential to look at efficiency improvements. In the road
transportation sector, a relatively large portion of the diesel demand is consumed by
medium and heavy duty vehicles and buses where efficiency improvements are likely
to be less swift. And another factor that comes into the equation is the likely switch
from heavy fuel oil demand to diesel fuel in the marine bunkers sector. In this year’s
update, a slightly delayed compliance with the IMO regulations is assumed, which
yields some delays in the volume of the projected switch over time, whereas the assumption
about the use of onboard scrubbing was kept unchanged. This reflects the
widely accepted industry view that scrubbers will likely be fitted to around 20% of the
marine fleet, but that these will be the larger vessels consuming about 80% of bunker
fuels.
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