Shell seals $1bn LNG sales deal with ZIM

By Innocent Obasi

Oil major Shell has sealed a 10-year sales and purchase agreement with Israeli-based shipping line, ZIM Integrated Shipping Service, for the supply of liquified natural gas (LNG) and for 10 LNG-powered newbuild containerships which will operate between Asia and the United Securities Equity Corp (USEC) trade.  

 The agreement signed between ZIM and Shell NA LNG, LLC is valued at more than $1 billion.

Under the agreement, Shell will supply 10 LNG-fuelled vessels that will be deployed on ZIM’s flagship ZIM Container Service Pacific (ZCP), on the Asia to USEC trade. The 15,000 TEU (Twenty-foot Equivalent Unit) vessels are expected to enter into service during 2023-2024 and will be transporting goods from China and South Korea to the U.S. East Coast and the Caribbean. The agreement may also cover other trades where ZIM LNG vessels could be deployed, the company said.

Seaspan Corporation (Seaspan), a wholly owned subsidiary of Atlas Corp (Atlas), in February 2021 announced that “it has entered into agreements with a major shipyard for 10-15,000 TEU dual-fuel LNG containership newbuilds. The ultra-modern containerships are anticipated to begin deliveries in the first half of 2023, and upon completion will enter 12-year charters with a global liner”.

The construction of the 10 LNG-fuelled vessels has commenced. Korea’s Samsung Heavy Industries (SHI) has laid keel for Sammy Ofer 15,000-TEU dual-fuel containership at its Geoje yard, reports Rotterdam’s Offshore Energy.

On the basis that LNG emits approximately 20 percent less greenhouse gas (GHG) when compared to conventional marine fuels, using LNG on these 10 ships is equivalent to having two out of the 10 vessels in the fleet with zero emission, ZIM said in a statement.

“With the addition of significant LNG-powered capacity to our fleet, beginning in 2023, we have positioned ZIM as a leader in carbon intensity reduction among global liners. We are pleased to execute this long-term supply agreement with Shell to secure LNG at competitive terms and look forward to partnering with a global industry leader such as Shell as we take an important step to ensure our fuel sourcing is well planned and of the highest quality,” said Eli Glickman, ZIM president & CEO.

“Our growing LNG-powered fleet will enable ZIM to be more carbon and cost efficient, while improving our competitive position, particularly on the strategic Asia to USEC trade, and allowing customers to reduce their carbon footprint,” Glickman said.

Steve Hill, executive vice president, energy marketing at Shell, congratulated ZIM “for introducing the world’s first LNG fueled very large containership (VLCS) fleet to operate on the Asia-North America shipping route”.

“We are delighted to collaborate with them on their impressive efforts to reduce emissions in their maritime supply chain. Decarbonization of the shipping industry must begin today, and LNG is a lower emission fuel choice currently available in meaningful volumes, and via liquefied biomethane and liquified e-methane, offers a credible pathway to net zero GHG emissions,” Hill said.