Market Trends of India Bunker Fuel Industry
Very Low Sulfur Fuel Oil (VLSFO) to Witness Significant Growth
- Bunker fuels are rich in sulfur content and can emit toxic gases. However, the sulfur content can be reduced using different processes. One such type of fuel product is very low-sulfur fuel oil. VLSFO has sulfur contents of less than 0.5%, and the demand for this fuel is increasing after the imposition of IMO regulation in January 2020.
- As a way to reduce greenhouse gas emissions, the IMO regulation encourages ships to use low-sulfur fuel.This rule also encourages the use of fuels with less sulfur, which means that more of these fuels will be made.
- Due to the International Maritime Organization (IMO) 2020 regulation, it is expected that the demand for VLSFO will rise over the next few years.The increasing environmental concerns among the population in the country are another growth-driving factor for VLSFO.
- The country is taking several steps to comply with IMO regulations and promote the utilization of VLSFO. For instance, in 2020, the Government of India abolished the import tax on the VLSFO utilized by the ships.
- Some of the major ports in the country by marine traffic are Deendayal Port, Paradip Port, J. L. Nehru Port, Visakhapatnam Port, Mumbai Port, Chennai Port, and a few others. During FY 2021, the ports handled nearly 1251.28 million metric tons of goods, around 1320.0 in FY 2020. According to the Ministry of Ports, Shipping, and Waterways (India), a total of approximately 20 thousand vessels sailed from India's major ports during the fiscal year 2021.
- All of these things are expected to help the VLSFO segment grow over the next few years.
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Rising Maritime Trade and LNG Terminal to Augment Growth
- During the time period predicted, the bunker fuel market in India is likely to grow a lot. During the forecast period, the country's bunker fuel market is expected to grow because of things like rising international trade and higher demand for different goods and fuels, like LNG.
- Furthermore, maritime is a suitable route for international trade as it is a convenient trade route, giving rise to maritime transport in India. The country is a net importer of things like LNG, crude oil, and others, and shipping is used to bring these things in.
- India imported about 23.6 million metric tons of LNG in FY 2022, according to the Ministry of Petroleum and Natural Gas.During the forecast period, it is expected to grow a lot because natural gas is being used more in many industries, such as city gas distribution (CGD), power, fertilizer, and refining.
- India is also a big importer of natural gas, which makes the need for natural gas trade even higher. Furthermore, it increases the demand for the natural gas terminal. With the increasing demand for natural gas, the government plans to build four more terminals in the country. Thus, an increasing number of such terminals is expected to increase the import capacity of LNG to around 50 MMTPA by 2025.
- In January 2022, LNG Alliance proposed to the Government of Karnataka and NMPT that a large LNG import terminal be built in Karnataka. The terminal would have an initial capacity of 4 million tons per annum (MTPA) and could grow to 8 MTPA as demand grows over the next twenty years.This import and regasification terminal will have places for ISO LNG containerization and LNG truck loading, which will help the industry and transportation sectors.It will also be India's first LNG bunkering facility. Ships visiting the NMPT port will be able to get LNG fuel and bunker shuttles to the West Coast of India from this facility.
- So, the above situation is likely to help India's trade business and is expected to drive the marine fuel market over the next few years.
