small scale LNG

1. S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L
S M A LL S CA LE LNG A ND LNG BU NKER ING
M O NT H LY NEWS LET T ER
AU G U ST 2020
A F F INIT Y ENERGY INF R A ST R U C T U R E

2. PRIVATE & CONFIDENTIAL
LNG SMALL SCALE AND BUNKERING TEAM
2
Dr. Jonathan Gaylor, Business Development
Jonathan joined Affinity (Shipping) LLP in April 2015. He
has experience in the energy markets, particularly in
upstream/downstream resources. Prior to joining
Affinity, Jonathan focused on evaluating upstream oil
and gas assets both in a financial and geological sense.
He has been increasingly involved in developing strategic
projects in-house as well as supporting clients projects.
These have been and continue to involve new markets
for LNG both from liquefaction through to mid/small
scale, bunkering, FSRU’s and power generation. Jonathan
has been actively involved in developing new cost
effective bunker hubs worldwide.
Petter Arentz, Partner
Petter has over twenty years experience as a
Newbuilding broker with broad expertise in
industrial shipping markets including LNG, LPG,
Chemical and open hatch bulk carrier markets.
He has strong relationships with the yards through
a track record of good quality contracts concluded
over the last two decades.
Additionally he has extremely strong contacts with
Norwegian KS/finance arrangers allowing
structured financial deals, 2nd hand sale and lease
back transactions.
Previously he was Senior Partner at RS Platou, Oslo
before moving to Platou LLP in London in 2013
.
Comprised of a small, dynamic and specialised team with a wide array of expertise. With Extensive proven track record within the
industry demonstrating both long term commitment and competence
Charlotte Vandeville, Business Development
Charlotte joined Affinity (Shipping) LLP in January 2020.
Previously, Charlotte worked three years as Business
Development Manager at Sofregaz, an engineering
company specializing in the design of LNG import
terminals and LNG small scale infrastructure projects.
In her role, Charlotte covered projects in Europe, Africa
and South East Asia, as well as the Middle East, where
she developed most of her expertise heading Sofregaz’s
activities from the Abu Dhabi office. Her experience in
onshore infrastructure complements the shipping
expertise of the team and allows Affinity to tackle all
aspects of projects.
Richard Fulford Smith, Managing Partner
Richard has invaluable commercial insight to the
newbuilding and shipping processes and markets,
experienced through a life-time of deal making.
He has Extensive involvement in capital market
transactions and fleet sales incl. Ceres Hellenic to
Euronav (Suezmaxes), three Metrostar fleets sold
at independent times to Georgiopoulos entities
(Handysize Bulkers, Capesize Bulkers, VLCCs),
managed the exit of the Niarchos family from
shipping, as well as the sale from Euronav of a fleet
of Aframaxes to Genmar.
Richard has long-standing relationships with key
LNG shipowners.

3. LNG BUNKER PROJECT EXPERIENCE:
Conventional shipping
ü Contracted over 50 LNG carrier newbuildings for short, medium and long term
charter commitments as well as speculative orders.
ü Supporting private and tender driven business both on newbuilding and
chartering where charterers are primarily IOC’s and international trading
houses.
ü Chartering activity spanning over spot, medium and long term business.
ü Driving force behind establishing and building innovative chartering constructs
in LNG, i.e. seasonal charters, COA’s etc.
Small scale/LNG bunker vessels
ü Contracted on behalf of clients 13+ small scale LNG bunker newbuilds to
date with several more under negotiation.
ü Involved in numerous bunker vessel/small scale tenders.
ü Strong focus on cost competitive solutions in order to improve competitive
advantage and reduce residual value risk.
ü Experience in negotiating/concluding time charters & COA’s.
ü Active member of the Society of Gas as a Marine fuel (SGMF)
Broker
Sardinia
FID Expected Q3 2018
July-2013
Broker
1 Vessel- 1+1 Year charter
May -2017
Broker
2 Vessels 7,500 cbm
Nov-2016
Broker
1+1 Vessel 7,500 cbm
2012
Broker
1 x 15,600cbm
Small Scale Newbuilding Small Scale Chartering
Projects
Feb -2019
2 Vessels 7500 cbm
Broker
Developing Key LNG bunker hubs
• In the process of creating a new bunker hub located in North America utilising
shale gas.
• Created a consortium/working group between the liquefaction firm, bunker
provider and gas producer to provide a complete end to end cost effective
value chain in order to promote bunkering to the region.
• Organised four way party discussions to ensure that the LNG bunker prices
were competitive on a worldwide basis.
• Affinity provided advisory on the LNG bunker vessel newbuild including yard
selection and negotiation on behalf of the bunker supplier.
• Created a variety of LNG fuel pricing mechanises to offer LNG fuelled owners.
• Worked actively with the port to help set up SIMMOPS and licensing for LNG
bunkering.
• Managed timings of all parties involved to ensure start up period, bunker
vessel newbuild, port licenses and LNG fuelled newbuilds arrive inline with
timing expectations.
• We are now actively involved with a large container shipowner to place
existing LNG fuelled vessels on this particular trade route.
• We are also in discussion with other potential LNG fuelled vessel operators to
attract further business to the area.
2019
Broker
5 year TC
Private
2 Vessel 20,000 cbm
2019
Broker

4. PRIVATE & CONFIDENTIAL
4
SMALL SCALE MARKET COMMENT
There is an overall quietness in the market due to COVID, European summer, upcoming recession, low commodity prices and overall sense of
impending doom but this month we have seen a trickle of good news with a number of new potential LNG bunkering projects in Europe
being awarded subsidies. These future potential orders will soon bolster the fleet in an already competitive landscape, especially when you
compare it to demand of the existing and upcoming dual fuel vessels on order. Whilst we hoped to see other geographical areas boosting
their infrastructure during this year, we can’t be shocked. As many owners/suppliers seek to stay afloat during this wreckage of a year,
newbuild dual fuels have slipped somewhat down the pecking order.
So why are we now seeing new potential business in an already competitive area of the world? Reading the news, its reported that both
Enagas and Titan have a potential cushion of subsidies to help soften the large expense of development. These aren’t the first subsidies
associated with the bunkering sector in Europe and likely won’t be the last. Potential bunker suppliers that have looked into bunkering are
fully aware of the ramp up period and ability to easily haemorrhage cash waiting for the market to pick up. To capitalise on the low LNG
prices, the delivery fee has to be kept to a respectable level. If you try placing all of your capital costs onto first mover owners, then this
industry will simply never lift off. Its for these reasons we see that subsidies are becoming a necessary aspect of bunkering for the time being
but will prove themselves to be worth it in the long run.
It would be great to see subsidies being offered globally elsewhere to support this sector but this may not be completely necessary. A large
European bunker fleet could incentivize owners to switch to LNG and in turn bolster dual fuel orders enough to trigger other markets to
build infrastructure to compete with European hubs when demand becomes sufficient.
A new development in LNG bunkering by Pilot LNG in the states was announced this month and it will be great to finally see LNG bunkering
on an Industrial scale in this part of the world. For owners utilising LNG around the Americas this will be a great option, but for ships calling
at other global hubs, LNG will have to be offered at global market price to compete. We have seen shut-ins recently in the US due to the high
costs compared to the market and owners could be sceptical on signing up long term fuel agreements basis HH+liquefaction.
For the SSLNG fleet, there continues to be a few potentially open vessels that are currently already being lined up for projects, soon to be
snapped up leaving the market once again constrained. The lack of newbuild orders this year will also mean that those seeking projects 1+
years out will have to rely on a newbuilding or vessel swaps/portfolio optimization to get what they need.

5. PRIVATE & CONFIDENTIAL
ENVIRONMENT UPDATE
Sniffing out trouble
Understandably, the focus this year has not been on IMO 2020 as originally planned. It’s therefore
encouraging to see that enforcement of the sulphur regulations is, in some corners of the world,
being taken seriously.
A new “sulphur-sniffing” drone has begun analysing the emissions from ships operating in Danish
waters. By flying into the ship’s exhaust gas plume, the drone can use its “sniffer technology” to
register the sulphur content of the ship’s fuel. If a ship is found to be emitting too much of the
regulated substance, the data are immediately beamed to the Danish Environmental Protection
Agency.
The environmental consequences of installing scrubbers are often debated. Those in favour argue
that their effectiveness at removing sulphur from the exhaust fumes is beyond doubt; those against
argue that the sulphurous waste simply becomes the ocean’s problem. However, it is now the
physical effect on the vessels fitted with scrubbers that has entered the spotlight. In an era where
sending engineers and technicians aboard is becoming increasingly complicated, the CEO of Seanergy
argued this week, should owners really be considering the installation of devices that impose
“significant stress and fatigue” on the vessels that operate with them?
Coupled with the fact that the spread between VLSFO and HFO has diminished (averaging $54/ton
since lockdown), it’s easy to see why the value of the world’s largest scrubber manufacturer’s new
orders fell by 40% in the second quarter. Finland's Wartsila, has seen the value of ordered scrubbers
fall from €198mn to €119mn ($136mn). Could this be a sign of things to come?
Green Bunkering
An envelope has been awarded to a Dutch LNG bunker supplier for a project set to expand the bio-
LNG supply chain. Securing $12.6m in EU funding, Titan LNG will build and supply three new bunker
barges fitted with four tanks, one of which will accommodate bio-LNG.
A so-called “drop-in” fuel, bio-LNG is indistinguishable from traditional LNG while being carbon-
neutral (if produced correctly). Marine customers will be able to buy straight bio-LNG or a blend of
fossil and bio-LNG in order to reduce their carbon footprint. Titan is touting this as a truly “future-
proof” system: fossil LNG offers around a 30% CO2 reductions over conventional bunkers, with the
option to reduce to carbon neutral emissions over time. It remains to be seen just how much more
expensive bio-LNG is than fossil LNG; however, gas prices remaining stubbornly low (Sept TTF at
$2.55/mmbtu) might go some way towards off-setting that potentially costly carbon-neutral bunker
bill.
5
0
100
200
300
400
500
600
700
10/2019 01/2020 04/2020 07/2020
$/ton
Spread VLSFO HFO
Rotterdam Spread for Scrubbers
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Well-to-Wake Tank-to-Wake Bio/Synthetic LNG
Theoretic CO2 reduction of LNG versus HFO

6. PRIVATE & CONFIDENTIAL
6
LNG BUNKERING UPDATES
• Commodity trader Louis Dreyfus Co (LDC) is planning to charter in its first LNG-fuelled tanker newbuilding, which is set to be ordered in China. The
lone newbuilding, and an option for a second vessel, are due to be ordered by China’s CSSC Leasing.
• Spanish energy company Enagas has won over €20m ($23m) in funding from the European Union to build and supply two LNG bunker vessel (LNGBV)
newbuildings
• Titan LNG is growing its fleet with three new bunkering barges after being granted €11m ($12.6m) in European Union funding. Titan will build and
supply three new bunker barges fitted with four tanks, one of which will accommodate bio-LNG. Two of the barges will be similar in size to Titan’s
1,500-cbm FlexFueler vessels. The third, the 8,000-cbm Titan Hyperion will work as a mother ship in the Amsterdam-Rotterdam-Antwerp region
supplying the FlexFuelers.
• Pilot LNG has revealed plans and an application for permission to site a bunkering terminal in the US port of Galveston in Texas. It will use floating
liquefaction technology. Pilot expects to take a final investment decision on the new terminal in the second half of 2021 and see it in operation from
2024.
• South Korea’s state-run gas buyer Korea Gas (Kogas) is teaming up with five domestic companies to grow a network for LNG bunkering in the country.
Local reports said Kogas is forming a grouping with Busan Port Authority, steelmaker Posco International, refining company S-Oil, service provider
Daewoo Logistics and shipping outfit Hyundai Glovis on the new venture.
• US-based Fincantieri Bay Shipbuilding has recently started building a 5,400 cbm LNG bunkering barge for NorthStar Midstream’s unit Polaris New
Energy. Fincantieri expects to complete the LNG bunkering barge in late 2021.
SMALL SCALE LNG PROJECTS
• Anthony Veder has taken over the ownership of a 30Kcbm dual fuel LNG carrier and renamed it Coral Encanto
• US company SYCAR has unveiled plans to build Ecuador's first LNG import terminal which will utilise a floating storage and regasification unit (FSRU)
with a demand capacity of 50 MMSCF. The company will still need to comply to a governmental tender soon to be issued.
SMALL SCALE LNG AND BUNKERING MARKET UPDATES (AUG20)

7. PRIVATE & CONFIDENTIAL
7
FLEET BY SIZE BANDS AND SUBTYPE
Fleet by Size bands table
Fleet by Subtype
Vessel Type No. Vessels Percentage of Fleet
FLNG 1 1,4%
FSRU/FSU 4 5.5%
LNGBV 36 50%
SS (no bunkering capacity) 31 43%
Total 72 100%
Age Category Number of Vessels Percentage of Fleet
Newbuild 17 23.6%
0-5 Years 29 40.3%
6-10 Years 10 13.8%
11-15 Years 6 8.3%
16-20 Years 3 4.2%
21+ Years 5 6.9%
Total 72
Size Band Number of vessels Percentage of fleet
0-5000 19 26.4%
5001-10000 15 20.8%
10001-15000 8 11.1%
15001-20000 13 18.1%
20001-30000 15 20.8%
30000+ 2 2.8%
Total 72 100%
Size Band Construction On Order Trading Total
0-5000 4 0 15 19
5001-10000 8 0 7 15
10001-15000 1 0 7 8
15001-20000 3 1 9 13
20001-30000 2 0 13 17
30000+ 0 0 2 2
Grand Total 18 1 53 72
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Small scale vessels by yard location
Fleet by Yard status
Fleet by Age Category

8. PRIVATE & CONFIDENTIAL
8
GLOBAL LNG BUNKER VESSEL CAPACITY
Size band by Status
Age profile
Europe
18
Asia
11
• The LNG bunker vessel sector has expanded quickly over the last few years with a further
11 being built as of Q2 2020.
• The largest segment size remains between 5-10,000 cbm.
• The majority of bunker vessels are located in Europe.
• Two ATB jones act LNG bunker barge are currently being used in the US
• Within Europe the majority of infrastructure is found in the Baltics and ARACON regions.
North
America
2
Potential total throughput per year
(discharging once a week) LiqCub
Total capacity by the end of 2019 3,200,000
Total capacity confirmed by the end of 2020 7,171,760
Potential capacity confirmed by the end of 2021 13,728,079
No. Vessels Percentage of Fleet
Newbuilding 16 41%
0-5 14 36%
6-10 Yr old 6 16%
10-15 Yr old 2 5%
16-20 Yr old 0 0%
20+ 1 2,56%
Total 38 100%
Size Band Order / Constr Trading
0-5,000 3 8
5,001-10,000 8 7
10,001-15,000 1 4
15,001-20,000 3 4
20,001-30,000 0 1
Central/
South
America
4
Uncommitted
4

9. AFFINITY GLOBAL OFFICES
LONDON
Dry Cargo
Tankers LNG
Sale &
Purchase
Newbuilding
Research
SEOUL
Sale &
Purchase
Newbuilding
SINGAPORE
Dry Cargo
Sale &
Purchase
SYDNEY, MELBOURNE &
PERTH
Dry Cargo
HOUSTON
Tankers
BEIJING
Tankers
LNG
Finance Valuations
Tankers
SANTIAGO, LIMA &
MONTEVIDEO
Dry Cargo
HONG KONG
Tankers
OSLO
Offshore
LNG
Sale &
Purchase
LNG
9

10. PRIVATE & CONFIDENTIAL
DISCLAIMER
The information contained within this report is given in
good faith based on the current market situation at the
time of preparing this report and as such is specific to
that point only. While all reasonable care has been
taken in the preparation and collation of information in
this report Affinity (Shipping) LLP (and all associated
and affiliated companies) does not accept any liability
whatsoever for any errors of fact or opinion based on
such facts.
Some industry information relating to the shipping
industry can be difficult to find or establish. Some data
may not be available and may need to be estimated or
assessed and where such data may be limited or
unavailable subjective assessment may have to be
used.
No market analysis can guarantee accuracy. The usual
fundamentals may not always govern the markets, for
example psychology, market cycles and external events
(such as acts of god or developments in future
technologies) could cause markets to depart from their
natural/usual course. Such external events have not
been considered as part of this analysis. Historical
market behaviour does not predict future market
behaviour and shipping is an inherently high risk
business. You should therefore consider a variety of
information and potential outcomes when making
decisions based on the information contained in this
report.
All information provided by Affinity (Shipping) LLP is
without any guarantee whatsoever. Affinity (Shipping)
LLP or any of its subsidiaries or affiliates will not be
liable for any consequences thereof.
This report is intended solely for the information of the
email recipient account and must not be passed or
divulged to any third parties whatsoever without the
written permission of Affinity (Shipping) LLP. Affinity
(Shipping) LLP accepts no liability to any third parties
whatsoever. If permission is granted, you must disclose
the full report including all disclaimers, and not
selected excerpts which may be taken out of context.
10

11. Affinity LNG LLP, 44th
Floor, The Leadenhall Building,
122 Leadenhall Street, London, EC3A 8EE
Richard Fulford Smith – Managing Partner
E. rfs@affinityship.com
T. +44(0)20 3142 0131
M: +44(0) 752 504 4777
Petter Arentz - Newbuilding
E. petter.arentz@affinityship.com
T. +44 203 142 0115
M. +44 7867 974 431
Jonathan Gaylor – Business Development
E. jonathan.gaylor@affinityship.com
T. +44 203 142 0139
M. +44 7917 658 109
Charlotte Vandeville – Business Development
E. charlotte.vandeville@affinityship.com
T. +44 203 142 0139
M. +44 7991 337 441
Hugo Wilson – Environmental Officer
E. hugo.wilson@affinityship.com
T. +44(0)20 3142 0121
M.: +44 7917 695577
AEI@affinityship.com