Shell enters $1bn LNG sales agreement with ZIM

Oil major, Shell has entered into a 10-year marine liquefied natural gas (LNG) sales and purchase agreement with an Israeli container shipping company ZIM, valued at more than $1 billion.

The LNG is intended for 10 LNG-fueled vessels that will be deployed on ZIM’s flagship ZIM Container Service Pacific (ZCP), on the Asia to USEC trade.

These ten 15,000 TEU vessels are expected to enter into service during 2023-2024 and will be transporting goods from China and South Korea to US East Coast and the Caribbean. The vessels have been chartered from Seaspan Corporation. The charter agreement, announced in February last year is also valued in excess of one billion dollars.

The construction of the vessels has already been launched with South Korean shipbuilder Samsung Heavy Industries (SHI) completing the keel-laying for Sammy Ofer dual-fuel containership at its Geoje yard.

On the basis that LNG emits ~20 per cent less GHG emissions 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.

“We are delighted to collaborate with ZIM on their impressive efforts to reduce emissions in their maritime supply chain. Decarbonisation 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,” said Executive Vice President,Steve Hill,  Energy Marketing at Shell.

The agreement with Shell may also cover other trades where ZIM LNG vessels could be deployed, ZIM said.