Ship Owners: Here's How High-Nitrogen LNG Cargoes Impact Your Vessel's Performance

You've heard of LNG as super-chilled natural gas, primarily methane. But what if I told you there's an increasingly significant, non-combustible "passenger" onboard LNG carriers that's causing quite a stir? Enter high-nitrogen LNG.

The global LNG market stood at $122 billion in 2024 and is expected to grow at a CAGR of over 11% until 2030, primarily driven by growing demand for clean fuel. In terms of volume, the global LNG trade volume was around 550 billion cubic meters. At the end of 2023, the global LNG tanker fleet, including floating storage units, comprised around 772 vessels. The LNG trade is evolving globally with diverse cargo sources and compositions. However, high-nitrogen LNG cargoes present a multitude of challenges to shipowners as they impact the vessel performance and could also potentially lead to contractual disputes due to differences in observed fuel consumption as compared to contractual numbers, leading to breach of fuel performance warranties. As a result, it becomes imperative to understand the behavioural impact of high-nitrogen cargos and vessel performance issues so that shipowners can take measures to manage the same.

LNG is primarily natural gas cooled to -162 degrees Celsius, which reduces its volume by roughly 600 times. The composition of LNG is primarily methane with small quantities of other hydrocarbons and nitrogen. A high-nitrogen cargo refers to LNG where Nitrogen composition exceeds 1% as per classification societies.

So, Where Is The Problem?

Unlike other hydrocarbon impurities, nitrogen contributes nothing to the gas’s energy content. Secondly, nitrogen’s boiling point is much lower than methane’s. As a result, when loaded into cargo tanks, nitrogen vaporises faster than methane in the relatively warmer temperature of the tank, creating a ‘Boil Off Gas’ (BOG). The BOG so produced can either be reliquefied or consumed as a fuel by the vessel.

And herein lies the problem – in the case of reliquification:

• The plant has to spend more energy to cool the gas mixture, as nitrogen's presence lowers the average condensation temperature of the overall stream. This inherently reduces the plant's operational efficiency.
• On the other hand, if the BOG is used as a fuel,  nitrogen’s lower calorific value, due to its inert nature, does not contribute to combustion.
• As a result, either the engines consume a larger-than-stipulated volume of gas to compensate for the presence of nitrogen, or more conventional liquid fuels such as Marine Gas or heavy fuel oils are added to the fuel mixture. Either way, it leads to higher levels of fuel consumption.

The second issue is when the nitrogen content is higher in the BOG and the reliquefication process is pushed beyond its capacity. In such an event, the excess BOG has to be purged (if it cannot be redirected as a fuel, in case of single-fuel vessels). This means methane-rich BOG also needs to be purged, which, besides being an environmental issue, is also a direct financial loss.

Finally, at the end of the voyage, the inability to strip the tanks efficiently due to the presence of nitrogen vapors will also increase the stripping time and make the process of cleaning the heel much more arduous.

There are other issues such as managing the pressure dynamics due to heightened levels of BOG and a low Wobbe index (indicator of fuel quality) due to high nitrogen levels can compromise stability of combustion.

Implications

Besides the above-stated impact on the vessel performance, there are broader implications for an owner or a charterer. Most charter contracts stipulate the fuel consumption parameters and use Fixed Fuel Equivalents (FFE) values based on standard LNG specifications. These values can get seriously upended due to high-nitrogen LNG, since lower energy density will lead to higher fuel consumption.

This scenario will necessarily turn litigious as there will be a marked difference when the contractually stipulated values are compared to the actuals. To address the issue, the contract must incorporate clauses related to the ‘maximum nitrogen content ‘ in the cargo. In addition, installing a Gas Chromatography (GC) apparatus in the vessel can also help in measuring the accurate composition of BOG and energy consumption by the engines.

Typical loss:

• For every 1% increase in nitrogen, energy value drops by ~0.5–1.2%

• Higher nitrogen content = higher BOG rate,

• If nitrogen content exceeds design limits (typically 1%), the ship may:

• lose its Certificate of Fitness for that voyage.

• There could be delays in voyage clearance or cargo rejection.

• incur retrofit costs (estimated at $500k–$1M for N₂ removal systems).

• be liable to potential non-compliance with charter party specs, leading to penalties or off-hire.

• be subjected to terminals and buyers discounting high-nitrogen LNG due to added processing needs.

• have a situation where cargoes with >1% nitrogen often sell at a lower price.

Given the rate at which the LNG market is growing, and the mandate for clean fuel is accelerating, it is important for shipowners as well as charterers to understand the issues that can impact the operational aspects, as well as those having commercial considerations insofar as the LNG trade is concerned. In order to remain efficient and also dispute-free in a competitive market, a proactive management of the cargo will become a necessity and not a ‘nice-to-have’ attribute for stakeholders.