CEO, Andreas Enger, says Höegh Autoliners would like to add a further four Aurora Class vessels with ammonia dual-fuel capability, taking the total number on order to 12.
As previously reported, the company has ordered eight LNG-fuelled car carriers, which will be ammonia- and methanol-ready, and has an option for an additional four vessels which is due to expire this summer.
Speaking to Bunkerspot in Oslo in late March, Enger said: ‘I think it’s pretty clear that we want to call these options and we want to do it with ammonia dual-fuel propulsion. We have both financing and equity available so it’s something that we can do relatively easily based on our old friends – we don’t need access to any additional external capital to do it.’
Nevertheless, the Norway-based shipping company will continue to keep tabs on market conditions before pulling the trigger, said Enger.
‘Our ideal case is that we see sufficient customer interest and that we see the world is real on carbon pricing ando that these things move in the right direction.
‘We are talking to customers, we are talking to engine suppliers, we are talking to the yard with the objective of being ready to call the options and then whether we do it or not will be a pure commercial decision that we will make with all the information that we have available and that will include a number of other things – but we want to be ready for it.’
February saw the steel cutting on the first Aurora Class ship. Scheduled for delivery in Q4 2024, the vessel will likely run on a combination of LNG and biofuel as well as traditional marine fuels ‘until zero carbon fuels are commercially available’, said Enger.
There is a sense that these fuels could arrive sooner than was anticipated. Höegh Autoliners signed a letter of intent (LOI) with China Merchants Heavy Industry (Jiangsu) Co. to build the vessels in October 2021 before firming up the deal in January 2022.
‘We started working on this in the fall of 2020 and at that timeoviously LNG was fairly cheap and we believed ammonia was still some way out,’ said Enger.
‘So, our ammonia readiness was really a futureproofing initiative and our expectation was that the conversion would happen at either the 5-year class or 10-year class renewal. But now we are seeing it’s accelerating to the point that we actually have a [letter of intent] with MAN [Energy Solutions] and we have the understanding with the yards that for the vessels delivered in second half 2026 there is a real possibility of running directly on ammonia.’
The flexibility of the Aurora Class vessels, said Enger, will play an important role in the shipping industry’s energy transition. This is a lesson that the company is currently learning with its biofuels offering which is available on multiple vessels as an alternative to traditional bunker fuels.
‘What we see is that there is a difference between the carbon reduction appetite among our customers,’ explains Enger. ‘For example, from Europe to ouh Africa we have customers that basically buy biofuel for their share of the voyage and then we run proportionally.’
Is it fair to assume that the ambition to invest in more ammonia dual-fuel vessels reflects a confidence that there will be sufficient bunkering infrastructure and supply?
‘Maybe in the early days the ammonia tank infrastructure will not be global but even with ammonia bunkering capacity in northwest Europe and Singapore we will be able to do a substantial part of our roundtrip,’ said Enger. ‘And if you add Australia and South Africa and somewhere in the US Gulf, we would be able to run 100%.’
And according to Enger, the company’s ammonia-fuelled vessels are beginning to attract attention from companies that could potentially fuel them.
‘I must say that it’s quite intriguing because we have more than 10 companies with series-funded green ammonia projects actively pitching at us, but I think our main focus right now is really getting the customers on board,’ said Eger‘As long as you are talking about “ammonia-ready” vessels, you don’t really get those real discussions with customers.
‘We are not able as a shipping company to underwrite the fuel cost. When we go into making contracts with fuel suppliers, we will have to do that in consort with customers and have it enter the frame. That’s really our main priority but we are confident and comfortable that the fuel suppliers are there.’