BHP iron ore vessels to be fuelled by Shell LNG

The Vega Dream cargo ship is chartered by BHP. Image: Vessel Finder.

BHP has awarded Shell a contract to fuel five Newcastlemax bulk carriers with LNG.

The vessels will be used to transport iron ore between Western Australia and China from 2022 and will be chartered by BHP from Eastern Pacific Shipping (EPS) on five-year terms.

The bulk carriers utilise LNG bunkering which uses an LNG bunker vessel in Singapore to fuel the ships.

The fuelling vessel  is operated by FueLNG, a joint venture between Shell Eastern Petroleum and Keppel Offshore & Marine, and is capable to bunker fuel at a 100-1000 cubic-metre-per-hour rate.

BHP chief commercial officer Vandita Pant said LNG bunkering demonstrated the miner’s commitment to cutting emissions.

“The LNG bunkering contract marks a significant step in how BHP is working with our suppliers to reduce emissions across the maritime supply chain,” Pant said.

“LNG fuelled vessels are forecast to help BHP reduce CO2-e emissions by 30 per cent on a per voyage basis compared to a conventional fuelled voyage between Western Australia and China, and contribute to our 2030 goal to support 40 per cent emissions intensity reduction of BHP-chartered shipping of our products.”

According to Pant, the contract will form 10 per cent of LNG bunker demand in the 2023 financial year.

“The LNG bunkering contract will enable BHP to manage fuel supply risk, build LNG operational capability internally, and also help to strengthen the emerging LNG bunkering market in the region. This contract is expected to form up to 10 per cent of forecasted Asian LNG bunker demand in FY2023,” she said.

BHP stated that technical capability, available infrastructure and cost competitiveness were part of the criteria that led the company to award Shell with the LNG contract.

“Decarbonisation of the shipping industry must begin today and LNG is the cleanest fuel currently available in meaningful volumes,” Shell Energy executive vice president Steve Hill said.

“This LNG bunkering contract strengthens the bunkering market in the region and we look forward to working with BHP and other customers in the maritime sector on their journey to a net-zero emissions future.”

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.