(EnergyAsia, September 22, Tuesday) — Two Singapore companies, green energy R&D company Neftech Pte Ltd and container shipping operator APL, have agreed to work together to develop cleaner and more efficient fuel solutions for use in shipping fleets. They expect Neftech’s proprietary cavitation technology to deliver at least 10% in fuel cost saving for users in addition to reducing greenhouse gas emissions from ships.

Neftech has begun installing cavitation technology equipment on 20 ships owned and operated by APL, a wholly-owned subsidiary of global container shipping, terminals and logistics group Neptune Orient Lines Limited (NOL).

At a joint briefing last week, the companies said the technology, developed by Russian scientists, uses a fuel emulsification process that adds water to heavy fuel oil to produce a superior emulsified fuel for ships. HFO is the low-grade fuel used for powering the engines of ocean-going vessels.

They said that tests conducted on two APL container ships over a 12-month period showed “significant” fuel savings on generators and main engines, as well as substantial reductions in the ships’ carbon emissions.

Victor Levin, the Singapore-based Russian chairman of Neftech, said: “We believe we are the first in this industry to utilise this revolutionary Cavitation Technology for the fuel emulsification process.

“The cavitation effect (breaks) water clusters into smaller clusters or individual molecules, thereby achieving more complete fuel combustion. 

As such, there will be higher efficiency in fuel consumption as compared to the conventional HFO. In addition to substantial fuel cost savings for ship owners and operators, this application will also reduce the shipping industry’s continuing production of main greenhouse gases.”

Cheng Wai Keung, NOL chairman, said: “In today’s highly challenging business landscape, reducing costs, increasing efficiency and lessening the environmental impact of our operations are among the biggest challenges we face. Neftech offers a strong value proposition.”

Under the terms of the agreement, Neftech will bear the cost of installating its fuel-saving equipment on-board the 20 ships, with payment terms to be in the form of fuel savings and carbon credits to be shared with APL in an agreed ratio based on proven and documented cost savings. The installation programme is expected to be completed over the next 12 months.

Mr Levin said he expects Neftech, which has started marketing the technology to other shipping companies and the power industry, to make annual revenue of around US$1 billion.

Justifying this ambitious target, Lim How Teck, a Neftech shareholder and former NOL deputy CEO, said the company will make a strong case for fuel savings with the shipping industry which spends more than US$160 billion a year on fuel. This is based on their use of nearly 370 million tons of fuel a year at an average cost of US$450 per tonne.

Incorporated in Singapore in 2007, Neftech is a high tech company founded by Russian scientists with over 35 years of research and development expertise in the field of cavitation technology.

The company is 63%-owned by Russian interests with the remaining held by local shareholders including S.P. Quek, China Auto Corp chairman, former NOL director and deputy CEO Lim How Teck, GK Goh chairman Goh Geok Khim and former transport minister Yeo Cheow Tong.

APL is a global container shipping business offering more than 60 weekly services and more than 500 calls at more than 140 ports worldwide.