LNG bunkering dynamics: An exploratory study for Türkiye

United Nations’ decarbonization and greenhouse gas reduction targets are to be achieved through the utilization of alternative fuels globally. LNG is a viable alternative for mitigating maritime transport-related greenhouse gas emissions. This study investigates LNG bunkering supply chain development in Türkiye. Semi-structured interviews with bunkering supply chain representatives were conducted to explore phenomena. The results of the research provided a pathway to establish a new supply chain for alternative marine fuels. The research findings indicate that collaboration and setting a regulatory framework are vital for supply chain development.


Introduction
More than 80% of world trade by volume is handled by shipping and maritime transportation is considered the most fuel-efficient mode of transport. However, ships are increasingly defined as a critical source of air and water pollution. According to GHG (Greenhouse Gas) research conducted by the International Maritime Organization (IMO), CO2 emissions from the shipping industry might increase by 50% to 250%, depending on economic development and energy expansion at the bunkering stage. The LNG supply chain is extended to marine end-users through strategic collaborations between stakeholders such as ports and suppliers (Wang & Notteboom, 2015). In some context, LNG marine fuel requires to use existing supply chain in some context, and bunkering can develop where the LNG market already exists for industrial purposes or power generation (Sharples, 2019).
Türkiye already has a natural gas grid and LNG terminals serve for power generation, industrial use and domestic heating. However, as a marine fuel, it has not yet been activated commercially. Türkiye is listed in the top 20 of the world's largest economy by GDP and by port call (UNCTAD, 2019), taking advantage of being surrounded by the sea and controlling an important shipping route from the Black Sea to the Mediterranean. LNG as ship fuel has an increasing demand across the world and it's worth investigating LNG bunkering development in Türkiye. Erkmen (2018) only conducted research in the literature by studying small-scale LNG in Türkiye however this study was not focused on the supply chain development (Erkmen, 2018). This study explores different perspectives of bunkering supply chain stakeholders in the Türkiye context as the first research in this field. In this study, semi-structured interviews have been conducted with potential stakeholders of small-scale LNG supply chain and LNG bunkering. Ship owners, suppliers, port authorities, policymakers and technical service providers' opinions were explored to explore the LNG bunkering option in Türkiye.
This study aims to explore and contribute to LNG bunkering application in Türkiye based on different stakeholders' views in the supply chain. The following research questions have been formulated for this purpose: RQ1-What are the bunkering dynamics in Türkiye? RQ1 is important to gain insight into Türkiye's present bunkering structure, supply locations and volumes.
RQ2-How is the current situation in the existing natural gas and LNG infrastructure in Türkiye? RQ2 is critical to determine potential LNG bunkering development at an optimum level.

RQ3-
How can a small-scale LNG supply chain for LNG bunkering be developed in Türkiye? RQ3 is essential for gathering different stakeholders' view in the supply chain and proposing a model for LNG bunkering development.
The structure of the study is organised as follows. Section 2 explores bunkering activities in Türkiye, section 3 investigates natural gas and LNG in Türkiye. The research method and data collection have been described in section 4. Section 5 discusses empirical findings and section 6 includes the conclusion and future research.

Bunkering Activities in Türkiye
Ship supplies are critical for any shipping activity.
Provision, crew change, spare parts and consumable deliveries have tremendous importance to operating a vessel effectively.
Bunkering could be vital among all these supplies as vessels cannot proceed from A to B or cannot perform cargo operations without fuel on board or without convenient fuel onboard. Ship supply hubs are strategically located on busy maritime transportation routes. Straits, narrow seaways, and busy ports create demand for any type of supply, repair, or service as well as bunker (Lam et al., 2011).
Türkiye involves in significant international and domestic shipping activities. Istanbul and Çanakkale Straits are the densest nods since they connect Black Sea ports to international shipping activities. The Marmara Sea has substantial marine traffic which includes not only transit traffic from the Black Sea to the Mediterranean but also port calls such as Izmit, Gemlik and Tekirdağ. Nemrut, Aliağa and Izmir ports show high traffic density. Cabotage traffic around Türkiye's West Coast is also significant along with connection with islands although it represents seasonality. Mediterranean ports such as Antalya and Mersin have dense marine traffic activity. However, Iskenderun Gulf is observed as the busiest region as it has substantial port activities for dry bulk, containers, and oil and gas cargoes. As these ports usually handle large vessels, high traffic density not only explains the number of the vessels, but also substantial demand potential as larger vessels lift much more bunker quantity per operation.

Natural Gas and LNG in Türkiye
Türkiye's energy mix is dominated by fossil fuels and its share in the energy supply is approximately 85% (Kırlı & Fahrioğlu, 2019;Sigma, 2020). Due to lack of fossil fuel sources, Türkiye is a highly import-dependent country for energy which involves gas, oil, and coal 99.6%, 94.32%, 97.3%, respectively.
This dependency has significant effect on country's trade deficit. Energy imports in 2019 was 41.18 billion dollars and it takes 20,3% of the country's total import expenditure (Sigma, 2020). Oil takes the first place as primary energy source among other alternatives with 29%. The second energy source is coal (26%) and natural gas's share is 27% and other energy sources, renewables and hydro-electric followed natural gas with 11% and 7%, respectively.
Natural gas takes a critical part in Türkiye's energy strategy.
Its share in power generation is 24%, despite a significant decrease from 2018 to 2019. In addition to power generation; heating and industrial use of natural gas increased rapidly and now it accounted for more consumption than power generation (Topuz, 2019

Methodology
This study employs the interview method and the researchers can use the interviews to gather valid and reliable data that is relevant to the research questions (Saunders et al., 2009 The first contact with interviewees has been made through email or phone call and the means of the interview have been decided accordingly as online meeting, phone conversation or email. All interviews were conducted via online meetings and phone talks due to COVID-19 restrictions. Managers are less committed to doing remote interviews since they are not required to host the interviewer or see them at a specific time. Remote interviewing, however, does not always favour the researcher for these reasons. Face-to-face interviews provide November 2020 and 15th January 2021. The rigor of the study is established through Wallendorf & Belk (1989) protocol. In order to establish credibility, before each interview, the aim/scope of the research and the background of the interviewer were explained. A brief summary was made after each interview in order to confirm that the understanding of the interviewee is correct. The purpose sampling method was used to achieve transferability which is achieved through variation of participants in terms of title and segments. Dependability is ensured through not restricting sample size and the data collection process was completed once theoretical saturation was assured. In order to achieve confirmability; the responses of different participants were not shared with any other, and the findings were interpreted through quotes. The integrity of the research was assured through compliance with ethical principles. Names and company details were kept confidential.

Results and Discussion
This study aims to explore the views of the experts in Türkiye related to or potentially relating to LNG bunkering.

Challenges of LNG Bunkering Development in Türkiye
The use of LNG as ship fuel is seen as a positive development because it is a cleaner energy source and is economical compared to other fuels. LNG not only complies with today's emission limits but also offers various advantages over other alternatives in terms of available infrastructure and capacity.
• For this reason, LNG bunkering was considered a promising alternative marine fuel for the future by 14 participants out of 19. Two shipowners and 1 technical service provider participant do not see any future in LNG marine fuel.
Türkiye's LNG bunkering potential was evaluated in terms of transit via the Turkish Straits, large ports, the domestic fleet, the proximity to some main maritime trade routes, the existing LNG terminals and the LNG market.
• Suppliers and Technical service providers point out that Türkiye has significant potential for LNG bunkering based on the aforementioned criteria thus highlighting Türkiye's advantage. On the other hand, 2 shipowners and 1 supplier underlined that Türkiye is not in an advantageous condition due to market structure and geographical location.
The challenges for LNG bunkering in Türkiye were defined in parallel to global challenges. Its environmental advantage compared to other fossil fuels is important, but it is not sufficient to meet global targets.
• Commercial factors, LNG demand, LNG price and the LNG market were some of the keywords underlined by 19 participants.
• High capital expenditure is not affordable for shipowners is another finding that is highlighted by 19 participants.
• Infrastructure is developing rapidly but global coverage has not yet been established.
• Crew competency along with safety considerations are other key subjects that were highlighted by 6 shipowner participants. 2 of the TSP also underlined the same issue.
• Fleet type, such as container vessels in liner services, Ro-Ro fleet, and large carriers (either tankers or container vessels) were emphasised by shipowners highlighting some potential in LNG fuelled vessel applications in different segments.
Türkiye's LNG bunkering legislation and regulatory framework are important items which were emphasised by the supplier and regulatory body participants.
• To date, there is no legislation in place for LNG bunkering.
This is another factor that is slowing down the LNG bunkering infrastructure development process from the supplier side as • Collaboration was one of the keywords to advance LNG bunkering developments in Türkiye. It was emphasised by 4 suppliers.
• With regards to collaboration, 5 suppliers also highlighted government subsidies in order to encourage investment in infrastructure and develop the markets.
• Oil price, LNG price market structure and demand are the other keywords which were emphasised frequently by shipowners and suppliers. High capital expenditure and the pay-back time of the investment were defined as barriers to entering the market.

LNG Bunkering Case for Türkiye
Türkiye is an important ship-supply location in maritime traffic. The Istanbul area provides not only bunkering but also crew change, provisions, spare parts, water/oil supply and repair facilities which all contribute to Türkiye's economy.
Traffic density in the Istanbul and Çanakkale Straits makes this place one of the busiest shipping routes and the total tonnage of vessels passing through has been increasing gradually over the years. In addition to transit passage through the straits, the growing shipping activities at ports are crucial to the measure of bunkering potential. By the end of 2018, Türkiye's total bunkering volume reached 3 million tonnes (Shipandbunker, 2020 These arguments are similar to other shipowners' perspectives not only in Türkiye but also in the world.
The Turkish perspective on LNG as a marine fuel seems slightly less promising than the global context. Although environmental benefits are emphasised by all participants; 2 out of 4 shipowner participants did not view LNG to be important alternative fuel, taking into account high capital expenditure.
This is the primary reason why shipowners are reluctant to invest in alternative fuels. Unless forced by regulation, shipowners seek less risky and less costly alternatives in their operational and tactical decision-making processes.

Arkas Bunker signed an agreement with Sumitomo
Corporation for LNG bunkering (Arkas, 2021 for Norwegian shipowners so far (Tersan, 2021). Moreover, 3 battery powered passenger ships, 4 battery-driven fishing boats, 2 battery-driven renewable energy vessels were built in Cemre Shipyard. 2 fishing boats are LNG-battery driven under construction and are to be delivered in 2022 (Cemre, 2021).
Türkiye is also the only country in the world that built hybridpowered fishing boats (R2). Turkish shipbuilding industry is not only building vessels based on foreign designs; but also developing their own designs. Moreover, the Turkish shipbuilding industry is also exporting technology to Spain in electrical outfits to be used on the green concept ships (R1).
Recently, Sanmar shipyard signed an agreement with Canada to build LNG fuelled 5 tug boats (Sanmar, 2021b Renewing the coaster fleet with green concept vessels enlarges the market for the Turkish coaster fleet, particularly in EU ports (Cogea, 2017 (Wang & Notteboom, 2014, 2015Aymelek et al., 2015;Xu et al., 2015;Calderón et al., 2016;Ge & Wang, 2017;Jafarzadeh et al., 2017;Gucma et al., 2019;. This study encompasses different supply chain stakeholders through semistructured interviews and bring a holistic insight to the phenomenon. Moreover, the study also contributes to knowledge by bringing real-time practitioners' experience in bunkering into this relatively new issue in shipping and provides a comprehensive framework for further research.
This study also contributes to investment decisions in LNG bunkering for shipowners and suppliers. The ports are a vital part of the small-scale LNG supply chain. Not only regulatory pressure but also public pressure takes an important role over port management. Providing service for alternative fuels is critical for the sustainability targets of the ports. Therefore, port managements should consider investing in 'green' concepts.