STAKEHOLDER INVOLVEMENT IN

DEVELOPING LNG AS A SHIP FUEL IN

THE BALTIC SEA REGION

Jörg Albrecht

University of Jyväskylä
School of Business and Economics
2015
ABSTRACT

New environmental regulations require the shipping industry to reduce its

sulphur emissions. The currently most environmentally friendly alternative for
ship owners to comply with the regulations is the switch to LNG fuelled vessels
which however also requires port developers to invest in the supply of LNG. In
order to successfully implement the creation of an LNG infrastructure, various
challenges have to be overcome.
This study looks at the challenges of LNG as a ship fuel from a
stakeholder perspective by conducting a port screening with the aim to assess
the current development status of LNG projects and the drivers and
impediments behind it. Furthermore, a qualitative research with expert
interviews of the most important stakeholder groups gives insight on how
stakeholders are involved in the various aspects of LNG development.
While several challenges have impeded the introduction of LNG as ship
fuel in the past years, by far the biggest issue in the soon future is the
development of the oil price that lowers the feasibility of LNG ship fuel
compared to oil-depending alternatives. The study also revealed that the
potential of local industries and cargo owners to influence the implementation
of LNG as ship fuel has been neglected so far. The successful creation of an
LNG infrastructure relies on public funding programs. Therefore, policy
makers need to have well-elaborated strategies and increase the general
perception of LNG among local industries and legal authorities by pointing out
the potential of LNG for the whole economy.
The results can support policy makers on EU level in their decision of
composing an LNG strategy and give interesting insight to involved actors
about the stakeholder network. The study was limited to the Baltic Sea region,
specifically Finnish and Swedish stakeholders. These might vary from other
geographical contexts.

Keywords: LNG, emission regulations, shipping industry, port projects,

stakeholder theory
Author’s address Jörg Albrecht
Corporate Environmental Management
School of Business and Economics
University of Jyväskylä
[email protected]

Supervisor Tiina Onkila, Ph.D.

Corporate Environmental Management
School of Business and Economics
University of Jyväskylä

Reviewer Hanna-Leena Pesonen, Professor

Dean, Corporate Environmental Management
School of Business and Economics
University of Jyväskylä
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CONTENTS

ABSTRACT.................................................................................................................................. 3

CONTENTS ................................................................................................................................. 5

LIST OF FIGURES ...................................................................................................................... 7

LIST OF TABLES ........................................................................................................................ 7

LIST OF APPENDICES.............................................................................................................. 7

1 INTRODUCTION.................................................................................................................... 9
1.1 Background Information ........................................................................................... 9
1.2 Motivation for the Research ................................................................................... 10
1.3 Research Problem ..................................................................................................... 11
1.4 Thesis Outline ........................................................................................................... 11

2 LITERATURE REVIEW ........................................................................................................ 13

2.1 LNG in the Baltic Sea ............................................................................................... 13
2.1.1 Regulatory Background ............................................................................. 13
2.1.2 Alternatives and Impact for the Shipping Industry............................... 15
2.1.3 Evaluation of Alternatives ......................................................................... 18
2.1.4 The Potential of LNG.................................................................................. 18
2.1.5 Challenges .................................................................................................... 20
2.1.6 Summary ...................................................................................................... 24
2.2 Stakeholder Theory .................................................................................................. 25
2.2.1 Introduction of Stakeholder Theory ......................................................... 25
2.2.2 Stakeholder Identification ......................................................................... 29
2.2.3 Stakeholder Management in Port Projects .............................................. 31

3 METHODOLOGY ................................................................................................................. 35
3.1 Research Method ...................................................................................................... 35
3.2 Limitations and Criticism ....................................................................................... 37
3.3 Data Collection ......................................................................................................... 38
3.3.1 Port Screening ............................................................................................. 39
3.3.2 Interviews .................................................................................................... 40
3.3.3 Selection of Interviewees ........................................................................... 40
3.3.4 Considerations Regarding the Selection of Interviews ......................... 42
3.4 Data Analysis ............................................................................................................ 44
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4 RESULTS ................................................................................................................................ 46
4.1 Stakeholder Involvement ........................................................................................ 46
4.2 Stakeholder Communication .................................................................................. 48
4.3 Regulatory Framework ........................................................................................... 50
4.4 LNG Supply Chain .................................................................................................. 52
4.5 Economic Viability ................................................................................................... 54
4.5.1 Economic Dynamics ................................................................................... 54
4.5.2 The Role of the Oil Price ............................................................................ 55
4.6 Public Funding and Awareness ............................................................................. 57
4.7 Current Development Status of LNG.................................................................... 58
4.8 Summary of Results ................................................................................................. 62

5 DISCUSSION ......................................................................................................................... 64
5.1 Stakeholder Involvement ........................................................................................ 66
5.2 Overcoming the Investment Dilemma .................................................................. 68

6 CONCLUSION ...................................................................................................................... 71
6.1 Contributions ............................................................................................................ 72
6.2 Limitations and Future Research ........................................................................... 73

7 REFERENCES ........................................................................................................................ 74
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LIST OF FIGURES

FIGURE 1 MARPOL Annex VI Timeline for Adoption of Sulphur Content ... 14

FIGURE 2 Pros and Cons of the Different Alternatives ...................................... 17
FIGURE 3 Chicken-Egg-Dilemma .......................................................................... 20
FIGURE 4 Power-Interest Grid ............................................................................... 30
FIGURE 5 Stakeholder Salience .............................................................................. 31
FIGURE 6 Map of LNG Development Status ....................................................... 61
FIGURE 8 Solution of the Investment Dilemma .................................................. 70

LIST OF TABLES

TABLE 1 Contribution of Research Functions to the Research ....................... 37

TABLE 2 Selection of Stakeholders ...................................................................... 43
TABLE 3 LNG Development Status in the Baltic Sea Region .......................... 59
TABLE 4 Aspects of LNG Absence ...................................................................... 62

LIST OF APPENDICES

ANNEX 1 Interview Structure ............................................................................... 82

ANNEX 2 Port Screening Questionnaire ............................................................. 84
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1 INTRODUCTION

The topic of implementing LNG as a ship fuel is a very new phenomenon that
has been triggered by new environmental regulations and the technical
innovations in LNG fuelled vessel engines. While LNG offers notable economic
and environmental opportunities, its successful implementation has some
threats to face. Many different actors have a considerable interest in the topic,
such as ship owners, ports, gas suppliers and policy makers. These stakeholders
are very important in the development process, therefore this research is
conducted from a stakeholder perspective. Research on the aspects of creating
an LNG infrastructure for ships is scarce, although publications on the topic
have tremendously increased in the past years which indicate the growing
relevance and potential of LNG. This chapter will introduce the topic of LNG as
ship fuel, explain the motivation for the research and present the research
problem and outline of the thesis.

1.1 Background Information

Transportation by ship is a very important transportation method globally and

regionally and its role is expected to increase even further, especially in the
Baltic Sea region (Lindfors 2014; Kadin 2008). While shipping is a relative
environmentally friendly means of transport compared to most other fossil
fuelled transportation, it still contributes critically to climate change. The
expected growth in volume and the slow rate of environmental improvement of
the industry sector lead to stricter environmental emission regulations that
target at a significant reduction of sulphur emissions which are typical for ships
and cause a lot of negative environmental and health impacts (MARPOL 73/78
Annex VI 2005) . This new legislation poses considerable challenges for the
shipping industry which require it to substantially alter their way of conduct
(Kehoe 2010). In order to comply with the new regulations, ship owners have to
choose between different abatement alternatives that all have their advantages
and disadvantages (Nielsen & Schack 2012). The most environmentally friendly
10

solution and due to low operational costs most cost-efficient solution is the
switch to LNG (Laugen 2013). This however necessitates high investments in
the building and retrofitting of LNG vessel engines. Furthermore, LNG is
currently not available at Finnish and Swedish ports. Port developers hence also
have to build LNG bunkering facilities that are quite expensive to build. This
results in an investment dilemma, as both ship owners and port developer have
individual benefits incentives to wait for the other side to act first and hence
have less investment risks (Semolinos et al. 2013). The potential of LNG is
however also recognized by the European Commission that therefore
composed an LNG strategy with the aim to have a core network of LNG
available by 2025 (EU 2014). The most significant support is the provision of
public funding programs that reduce the risks of investors and drive the further
development process.
Currently, there are several LNG projects under planning and
construction in the Baltic Sea region that in some cases have received
considerable financial support that can partly help the overcoming the
investment dilemma (TEM 2014). While these public funding schemes can
support the process remarkably, they do not ultimately reduce the perceived
uncertainties of investors (Wang & Notteboom 2013). The shipping and port
sector is characterized by many different actors who are all involved in the
development and have considerable influence on the development process
(Acciaro & Gritsenko 2014).

1.2 Motivation for the Research

The shipping and port sector is characterized by numerous different actors,

such as ports, ship owners, cargo owners, municipalities and a very complex
network of regional and interregional policy makings with varying
responsibilities. A lot of research points out the presence of numerous
stakeholders and the importance of their proactive participation in order to
create port projects (Weems & Hwang 2013). The topic of LNG as shipping fuel,
while being a major challenge to the industry, also affects the interests of many
different actors. The role of stakeholders is hence very important in the LNG
development process which has been acknowledged by various previous
studies (Danish Maritime Authority 2012a; Work & Lng 2013; Adamchak 2013).
Previous research is also very aware of the investment dilemma concerning the
introduction of LNG as ship fuel. However, no study has been made from the
specific stakeholder perspective, by taking into account the contribution of
stakeholder theorists. A study from this perspective could bring interesting
insights from a theoretical perspective that eventually could also be the basis of
considerations with practical impact.
The practical scope of the thesis is also a major motivation for the
research. This study is part of a joint industry project co-funded by the
European Commission between a cargo owner, a ship owner and an engine
manufacturer with the aim to investigate the environmental and economic
 11

impacts of operating an LNG vessel. This paper will therefore also be presented
to decision makers on EU level which further stresses the high practical
relevance of this research.

1.3 Research Problem

One major way of reducing the perceived investment risks of port developers
and ship owners is the provision of financial support. The dynamics of the
shipping and port sector however go beyond that. Port environments are very
complex environments with numerous stakeholders being involved in the
decision making process. Previous research mentions the importance of
stakeholders, does however not address their role specifically. The task of this
study is therefore to analyze how stakeholders are involved in the creation of a
bunkering infrastructure. In that perspective, it is of particular interest to
identify who the main stakeholders are and how they interact with each other.
By focusing on the stakeholders of LNG development, this study will further be
able to identify eventual neglected stakeholders in the development process. On
that account, the role of stakeholders will be analyzed from a perspective
considering the different aspects and challenges of LNG development.
Due to the complexity of port environments, which also differs from
region to region, this paper will focus on the development of the Baltic Sea
region, specifically the development in Finland and Sweden that have a very
transport routes, business contracts/deals and comparable policy maker
structures (Lindfors 2014).

1.4 Thesis Outline

Chapter 2 introduces the topic of LNG as ship fuel. A closer look on the legal
developments on emission regulations is necessary to understand the ongoing
changes in the industry. In this perspective, the different alternatives for ship
owners to comply with the regulations have to be mentioned as well, as the
LNG solution has to compete with them. There are several aspects and
challenges of implementing LNG as ship fuel which are described thereafter.
Since stakeholder theory is the theoretical framework of the research, the
stakeholder concept will be presented in chapter 2.2. Stakeholder theory has
become a very popular theory with various different contributions and
criticisms. By looking at the most important contributions of science to the
theory it will be justified why stakeholder theory was chosen as theoretical
angle of this research. Chapter 3 presents the methodological approach. In
order to answer the research question as best as possible, essential
considerations about the most suitable approach are discussed in chapter 3 with
a presentation of how the data collection and analysis was carried out. The
results are presented in chapter 4 with special focus on challenges of LNG
development and the involvement and communication of the various
stakeholders. Ultimately, the results are being discussed in chapter 5 by
12

comparing them to the current development status in the Baltic Sea region and
previous research findings. In that sense, an effort is also made to overcome the
investment dilemma and evaluate and classify the importance of the involved
stakeholders.
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2 LITERATURE REVIEW
The literature review is divided into two parts. At first, the topic of LNG is
introduced with a summary of legal developments and the various impacts and
challenges for the implementation of LNG. Since stakeholder theory is the
theoretical framework of this research, chapter 2.2 introduces the stakeholder
concept. By looking at the various contributions and criticisms of stakeholder
theory, it will also be argued why stakeholder theory was chosen as a
theoretical ankle.

2.1 LNG in the Baltic Sea

In order to understand the complexes around the development of LNG as a

ship fuel, it is important to take into account the legislative developments that
affected the shipping industry which will be given at first. The new legislations
require the ship owners to choose different abatement alternatives. These are
also taken into account in this chapter before the different challenges of the
implementation of LNG are described.

2.1.1 Regulatory Background

In the past decade, the global shipping industry has experienced several drastic
changes concerning shipping emissions from their most important regulating
authority, the International Maritime Organization (IMO). The IMO is a
specialized agency of the United Nations with the agenda to develop a
regulatory framework for shipping, including all aspects from ship design to
operational security and environmental impacts. One of its conventions is the
International Convention for the Prevention of the Pollution from Ships, also
known as MARPOL which is the most important international agreement
concerned with environmental issues of the maritime sector. All ships operating
in the Baltic Sea have to comply with the regulations set by the MARPOL
convention. Adopted in 1973, it has been amended several times since with the
prevention of air pollution from ships being the latest amendment elucidated in
Annex VI in 1997 which entered into force in 2005. In 2008, a revision of Annex
14

VI was adopted which entered into force on 1 July 2010. The revised Annex VI
provides a reduction of sulphur emissions in three tiers:
- Maximal 4,5% SOx emissions prior to 1 January 2012 (Tier I)
- Maximal 3,5% SOx emission effective from 1 January 2012 (Tier II)
- Maximal 0,5% SOx emissions effective from 1 January 2020 (Tier III)

The MARPOL convention also determined special areas where air pollution
protection measures are particularly important, based on high amount of ship
traffic or their oceanographical and ecological condition. Annex VI defines these
areas as Emission Control Areas (ECAs) (also known as Sulphur Emission
Control Areas (SECAs) which include the North American Coasts, the US
Caribbean Seas, the European North Sea and the Baltic Sea. The emission
thresholds of sulphur oxides, nitrogen oxygens and particulate matter follow
even stricter regulations in ECAs (MARPOL ANNEX VI) (FIGURE 1):

- Maximal 1,5% SOx emissions prior to 1 January 2010 (Tier I)

- Maximal 1% SOx emission effective from 1 January 2012 (Tier II)
- Maximal 0,1% SOx emissions effective from 1 January 2015 (Tier III)

FIGURE 1 MARPOL Annex VI Timeline for Adoption of Sulphur Content

The regulations of the MARPOL Annex VI have been incorporated into the
European Directive 2012/33/EU (EU 2012). The Baltic Sea is one of the biggest
maritime traffic regions, therefore a huge sector is affected by the new
regulations which pose great challenges for the shipping sector and its
stakeholders. Adoption measures could take time and negatively influence the
sectors economic efficiency by increased prices, for example. On the other hand,
the new regulations also pose great opportunities for the shipping sector in the
Baltic region in a longer perspective as actors’ early adaption to legal
requirements and more environmentally friendly products and services could
enable competitive advantages. Consequently, the new emission regulations are
a major topic for the shipping sector in these days that will shape and in some
circumstances reallocate old structures and conducts.
 15

The new regulations aim at significantly decreasing air pollution of the

shipping industry. Ship emissions have a huge negative impact on the
environment (Ng & Song 2010) and the economic development in the past
decades has steadily increased ship traffic and hence also the emissions from
the shipping industry (IMO 2009). The increased ship traffic has also resulted in
increased air emissions in the Baltic Sea (Jalkanen et al. 2009). Compared to
other sectors, the maritime sector lacks behind in environmental innovations
(Lai et al. 2011). The air quality in port cities is highly affected by shipping with
sulphate and nitrate concentrations of up to 50% ascribing to the shipping
industry (Matthias et al. 2010). These high concentrations of SOx, NOx and
particulate matter pose considerate negative impacts on the ecosystem and
human health conditions in port cities. Ship emissions are estimated to
contribute to 60 000 pre-mature deaths globally, a number which is expected to
increase considering the growing industry (Corbett et al. 2007). The regulations
of the IMO have been adopted by the European Union in the Maritime Strategy
Framework Directive 2008/56/EC, where the reduction of emissions from ships
is a specifically mentioned directive with the objective to improve the
ecosystem and health conditions in port areas (Blasco et al. 2014).

2.1.2 Alternatives and Impact for the Shipping Industry

Currently, heavy fuel oil (HFO) is the most common used ship fuel. While being
cost effective, it is also very damaging for the environment with high amounts
of carbon dioxides (CO2), sulphur dioxides (SO2), nitrogen oxygens (NOX) and
particulate matter (PM). The concentrations exceed the requirements of the new
emission regulations which hence necessitate a substantial shift of common
practices in order reduce air pollution (Burel et al. 2013). Ship owners have
three alternatives to comply with the new legislation (FIGURE 2):

2.1.2.1 Low Sulphur Fuels

The shift from HFO to marine grade oil (MGO) or marine diesel oil (MDO) is
the most viable option for ship owners. Instead of combusting HFO, vessels
could run on MGO with sufficiently low sulphur concentrations when
trafficking through ECAs. The shift would require investments in a fuel cooler
for the MGO and training of the ship crew in the safe operating of MGO as both
fuels have different burning temperatures and viscosities that bear the risk of
damaging the engine. These adaption costs amount to roughly 30,000-50,000 €
and can therefore be considered neglectable (Nielsen & Schack 2012). The
biggest financial impact derives from higher fuel prices for MGO that could
negatively affect the economic efficiency in the long run. Since the switch to low
sulphur fuel is the most attractive option in terms of initial investments, it can
be expected that most ship owners choose this solution until the financial
uncertainties of the other alternatives and price developments of MGO are
sorted out (DNV 2014).
16

2.1.2.2 Scrubber Technology

A scrubber system could be installed on the vessel that removes most of the
SOx emissions and depending on the scrubber technology also reduces
particulate matter and NOx emissions to some extent. However, the scrubber
solution creates other negative environmental impacts. The exhaust gases are
absorbed by water which has to be discharged off as sludge at the ports.
Furthermore, the scrubbing technology increases fuel consumption by 1-3%.
The installation of a scrubber also requires training of the vessel crew in
scrubber operation and new structure and equipment has to be installed on the
ship which reduces storage capacity. In general, scrubbers are not installed on
ships yet, so the installation would require considerate investment costs. The
necessary investments amount to 2-4M €, depending on the applied scrubbing
technology, the scrubber manufacturer and the ship type. The retrofitting of
vessels is about 50% more expensive than the installation of a scrubber on a
new build vessel, which is another crucial point the ship owners have to
consider (EMSA 2010; Nielsen & Schack 2012).

2.1.2.3 LNG

The currently most environmentally friendly alternative is the shift to LNG

fuelled vessels. LNG is natural gas that is removed from acid gases such as CO2
and H2S and cooled down to -162 °C at which it becomes liquid and reduces its
volume by 600 times. Natural gas consists almost entirely out of methane and
compared to other fuels generates very low amounts of sulphur oxides,
nitrogen oxygens and particulate matter when combusted. LNG therefore not
only easily complies with the sulphur emission caps but also meets the
requirements for upcoming regulations on NOx reduction. The exact benefits of
LNG compared to HFO are:
- SOx emission reduction by nearly 100%
- NOx emission reduction by 80-85%
- Particulate matter emission reduction by 98%
- CO2 emission reduction by 20-30%
- Increase in energy efficiency by circa 33% (Laugen 2013).

LNG is odorless and has no toxic or carcinogenic attributes and poses no health
hazards. With a density of 0,4-0,5 kg/l in liquid form, it flows on top of water
where it evaporates quickly. However, LNG spills should be avoided at all
events as the evaporating methane is a critical greenhouse gas. Potential
hazards also arise when LNG is ignited which in the event of handling large
LNG amounts could lead to explosions and flash fires (Kumar, Kwon, Choi,
Lim, et al. 2011). There are thus certain environmental and safety threats that
have to be taken into account when handling LNG. The biggest safety concerns
happen in the event of an LNG spill, whose risk should therefore be limited and
monitored at all costs (Vandebroek & Berghmans 2012). LNG has been used
since the 1960s, hence a lot of research on the safety risks of LNG has been done
 17

in the past. Current literature is predominantly concerned about new usage

methods for LNG as ship fuel and observes the operational safety of LNG ships
and terminals (Bernatik et al. 2011; Licari & Weimer 2011). As a result, almost
all potential hazards have been identified in order to guarantee a safe design,
construction and operation of LNG equipment and handling. So far no major
accidents can be recorded, although the extensive use of LNG in bunkers and
ships requires still clear guidelines in the safe handling from authorities
(Aneziris et al. 2014; Woodward & Pitblado 2010; Foss 2003; Cleaver et al. 2007).
Concluding, safety aspects should be considered, but they do not influence the
decision to switch to LNG as ship propellant.
Besides the significantly lower sulphur levels another advantage of LNG
is its low price compared to other marine fuels. Depending on price
developments, LNG has significant potential to increase the economic efficiency
of shipping. The biggest impediment to this point is the absence of an extensive
LNG infrastructure. Currently, LNG is still a niche sector with only a small
number of LNG vessels operating in the Baltic Sea/global oceans. An intact
LNG refueling infrastructure is however a basic prerequisite for ship owners to
switch to LNG. Therefore, ports need to ensure sufficient supply of LNG and
invest in LNG refueling stations. While ship owners need to make significant
investments in the retrofitting of vessel engines, they also need to have the
certainty that ports can provide LNG at their refueling stations. The ports on
the other hand need to be sure of sufficient demand from the ship owners in
order to invest in also rather costly LNG bunkering stations (Adamchak 2013).
This circumstance poses a major challenge for LNG which will be addressed
more thoroughly in chapter 2.1.5

FIGURE 2 Pros and Cons of the Different Alternative

18

2.1.3 Evaluation of Alternatives

Several studies highlight the benefits of LNG over scrubbers and low sulphur
oils (Burel et al. 2013). A life cycle assessment of marine fuels concluded that
LNG has lower global warming potential and is contributing significantly less
to acidification and eutrophication (Bengtsson et al. 2011). Furthermore, the
technological prerequisites to equip vessels with LNG engines are available for
most ship types. Their efficiency is guaranteed and will be supported even
more by a presumable growing market in LNG engines that will most likely
reduce prices for LNG engines and equipment in the future which will make
the shift to LNG more affordable (Stenersen 2011). The costs for retrofitting an
existing vessel with an LNG engine are significantly higher than the costs to
build a new LNG vessel. This makes LNG especially attractive for new built
ships. A new LNG vessel is however still 20-25% more expensive compared to
an oil vessel, even though prices might decrease once the demand for LNG
vessels increases (Baumgart & Olsen 2010). The economic efficiency is also
ensured by a thorough study of the Danish Maritime Authority that estimated
the average payback time of a new LNG vessel to two years more compared to
the low initial investment alternative of MGO. The payback time depends on
the LNG price, but even in the worst case scenario, it was found to be four years
which still outcompetes the scrubber solution (Danish Maritime Authority
2012a). Another benefit of LNG as ship propellant is the more secure supply of
natural gas. Natural gas reserves are more dispersed and their availability more
ensured in the long run. Additionally, the availability of LNG benefits from
decreasing investment costs in the creation of LNG supply chains (liquefaction
of natural gas and shipping) which further promotes the creation of an LNG
infrastructure (Maxwell & Zhu 2011).
From a scientific point of view, LNG appears to be the most favorable
alternative to meet the new legal requirements for ship owners. However, the
success of LNG is highly depending on the various factors such as actors’
communication and commitment. Therefore the main challenge is to find
concepts to encourage all stakeholder groups to promote LNG.

2.1.4 The Potential of LNG

Since low sulphur fuels do not require initial investments and are easy to adapt
to it can be expected that most ship owners choose MGO in the early stages.
Low sulphur fuels are more expensive than HFO and an increased demand for
MGO is very likely to even increase this price gap. Higher prices for MGO in
turn make the shift to LNG more attractive. The degree of adaption of LNG is
hence not only depending on the price development of LNG, but also their
relation to low sulphur fuels. Higher fuel prices on the other hand will increase
the shipping costs which will result in a significant increase in freight prices
(Ministry & Transport 2009). Several studies confirm the threat of increased
prices for shipping due to the new emission regulations (EMSA 2010, Lemper
2010). This could be a threat for ship transport that is also competing with other
 19

means of transport. A study of the German Baltic Sea ports estimated that
depending on the increased fuel prices, up to 22% of transported shipped
volume of German ports into the Baltic Sea could switch to land routes (Lemper
2010).
In the same study, the option of more subsidiaries for the shipping
industry is addressed. The lack of availability of funds is discussed as a main
cause for failure and it is also pointed out that subsidiaries would merely
prevent a shift to other means of transport, thereby questioning their economic
necessity (Lemper 2010). However, the study does not mention how a specific
funding of an LNG infrastructure could not only prevent the shift of transport
but also improve the environmental performance and long-term efficiency of
the shipping industry. Specific funding programs that promote the expansion of
LNG bunkering networks could have great potential to promote the
environmental performance of the maritime transport sector along with
ensuring its compliance to current and future regulations and guarantee cheap
shipping costs especially in the medium to long run that prevents a major shift
of transport from shipping to land routes.
While fuel prices of MGO are a determining factor in the ship owners
decision to switch to LNG (Aagesen et al. 2012), the supply of LNG also plays a
significant role. Currently, LNG fuel supply is marginal and it is estimated that
LNG demand will triple from 2011 to 2030. According to natural gas supply
studies, this increased demand can however be met by natural gas suppliers
(Kumar, Kwon, Choi, Hyun Cho, et al., 2011 B) A comprehensive LNG
bunkering infrastructure would also increase demand for natural gas (Aagesen
et al. 2012). The critical issue is hence mainly to ensure the LNG availability at
the ports. The success of LNG bunkering strategies is therefore depending on
the developments of the LNG prices and the price dynamics of natural gas and
also the price trends on the low sulphur fuel market.
A study on the ship owners’ perspective concluded that most ship
owners considered MGO as the best short-term solution while LNG was found
to be the most promising long-term alternative. Many ship owners appeared to
be unsure of how to deal with the emission regulations. The vague outline of
goals and guidelines for LNG supply contributed to the uncertainty of some
ship owners. This furthermore might show the necessity for thorough
communication between the various actors in order to decrease the risk
perceived by ship owners concerning LNG (Aagesen et al. 2012).
Even when the price developments encourage ship owners to switch to
LNG, they have to be certain that their demand is met from the suppliers’ side.
An LNG fuelled vessel only makes sense if its fuel supply is ensured at the
ports. Therefore, LNG refueling opportunities have to be in place along the
ship’s trade routes. On the other hand, ensuring the availability of LNG at ports
is dependent on sufficient demand from the ship owners. The creation of a
bunkering infrastructure requires high investments all along the value chain
and can only be materialized with the participation and commitment of
predominantly port authorities and gas suppliers but also the many stakeholder
20

groups that can either impede or facilitate the process. The demand from ship
owners is therefore one of the main drivers for the decision to build an LNG
bunkering facility.
A survey on the ports’ drivers to provide LNG found that demand from
ship owners is the most important driver, followed by LNG pricing compared
to other fuels, positive public perception and inter-port competition. The price
development of LNG is hence another key factor for the ports’ decision on
providing LNG (Aagesen et al. 2012).

2.1.5 Challenges

As discussed above, the switch to LNG is beneficial environmentally and from

an economic perspective in the long run for both ship owners and ports. The
main challenge is hence to overcome the investment dilemma and reduce the
perceived risks for both sides. This can be achieved by extensive
communication between all stakeholders involved and long term vision and
commitment of all relevant stakeholders (Semolinos et al. 2013) Both ship
owners and port actors have reason to hesitate with their investment decision
until the other side to take action. This stalemate situation is commonly referred
to by many authors as a “Chicken-and-Egg-Dilemma” (Semolinos et al. 2013;
Wang & Notteboom 2013; Danish Maritime Authority 2012a) (FIGURE 3).

FIGURE 3 Chicken-Egg-Dilemma (Adamchak 2013)

Numerous studies have been conducted on LNG as a ship fuel whose results
help to investigate the main aspects that have to be addressed in order to
facilitate the creation of an LNG infrastructure and to overcome the investment
 21

dilemma (Wang & Notteboom 2013). All the relevant aspects have been
identified and classified into four categories, LNG supply chain, regulatory
framework, economic viability and public perception and awareness.
Understanding the features of each challenge is necessary in order to create
measures of improvement for the LNG development.

2.1.5.1 LNG Supply

The availability of LNG has to be ensured by gas suppliers. Natural gas is

abundant in the Baltic Sea region, a shortage of LNG can therefore most likely
only occur if the liquefaction or LNG transport and storage capacities are
exceeded. A study on Europe’s LNG import terminal capacities revealed that in
2014, less than 20% of the LNG storage capacities in import terminal has been
used. Considering that several new import terminals are planned along the
Swedish Finnish coast line, for example in Pori, Tornio and Gothenburg it can
be expected that the LNG capacities are sufficient (Standaert 2014). In order to
get LNG available for ships in the form of LNG, a couple of issues have to be
considered. The supply of LNG to the ports can be ensured by two different
sources. Natural gas from national pipelines can be used and by liquefaction be
converted to LNG. This method would require the creation of local small-scale
liquefaction plants that are very costly and therefore only in some
circumstances where access to the natural gas pipeline is close and sufficient
demand would make on-site liquefaction feasible.
The second option is to supply bunkers from large import terminals.
LNG is brought to the terminal in vast amounts by LNG carriers. The
liquefaction of natural gas in these cases usually took place already on the
natural gas extraction site. The import terminal then serves as a hub and
provides other ports with LNG. In the past, natural gas was mainly converted
to LNG in order to transport the natural gas by ship instead of land pipelines.
Once the LNG arrives at the import terminal, it is regasified and fed into the
national gas network (Foss 2003). The new possibility to use LNG as ship fuel
requires the creation of a feeder distribution system that manages the refueling
of ships with LNG. The refueling can take place by different methods. The ships
can be refilled either directly from the LNG storage tank. This implies that an
LNG storage tank is installed at the port with the specific task to refuel ships.
Trucks can also be used to feed the ships, this option is attractive if LNG has to
be transported from further away and direct shore-to-ship bunkering is not
feasible. The third option is to use feeder vessels that take the LNG from the
storage tank and then refill the ships. This option is the most viable due to its
flexibility to access sites where jetties are not installed or at ports where LNG
bunkering sites are not installed yet.
By using LNG as ship propellant a new market is emerging that has to be
seen separated from the existing natural gas market. The LNG ship fuel market
has its own infrastructure, new end users (ship owners) and will develop its
own pricing mechanism. The new market can create opportunities and attract
new players from existing gas and oil markets. Obviously, uncertainty
22

characterizes the initial phases in the LNG supply market that could pose an
invest barrier, however once the dynamics settled down the market is likely to
become more transparent which could contribute to steady price developments
(PWC 2013).

2.1.5.2 Regulatory Framework

While there is a framework for the maritime transport of LNG cargo and the
LNG on shore facilities, such as liquefaction, regasification and LNG storage
operations, there have not been any clear existing regulations for the LNG
bunkering operations (ship refueling) and the use of LNG as a ship fuel in
general (Wang & Notteboom 2013). There are three different methods on how
ships can be refueled. The tank-to-ship refueling takes place at the jetty with the
vessel approaching the LNG tank and getting the LNG straight from there. The
second method is by Truck-to-ship. LNG can be loaded on a truck and then this
truck refuels the vessel. This method is more flexible as the vessel does not have
to be next to the LNG tank but can be refueled further away, for example at
ports where there is no LNG bunker terminal. The third method is by a bunker
vessel. A specifically designed LNG bunker vessel takes the LNG from the
storage tank and then refuels the ships. This method is also very flexible. The
absence of clear established standards for bunkering procedures, requirements
for equipment and staff training has been a key barrier in the past years. The
IMO has meanwhile created a draft of a code that deals with the use of LNG for
ships, however it still being further developed (IMO 2014). The International
Standardization Organization (ISO) also created a working group to discuss the
technical specifications of LNG bunkering operations. The working group is
consisting of a technical committee that can set guidelines that even though not
binding, could become mandatory if regulatory authorities implement them. In
January 2015, the working group formulated guidelines, mentioned in ISO/TS
18683:2015 (ISO 2015). The guidelines include guidance to requirements on
LNG bunkering design and operations and list recommendations for crew
training. The recently published guidelines will certainly help decrease the
absence of a regulatory framework and certainly support decision makers to
invest in LNG, although it should be mentioned that the final legal
implementation is still pending from legislative authorities. The exact impact of
the lack of regulations on the development is however unclear. Stakeholder
might be hesitant to go ahead with plans as long as a regulatory framework is
missing.

2.1.5.3 Public Funding and Awareness

Although LNG has excellent safety records it is still perceived as dangerous.

The public, media, local and regional authorities have been showing relatively
low interest in LNG as a ship fuel. This circumstance could slow down the
adoption of measures from public actors. Better communication of the project
developers and port authorities could improve the image of LNG. A study of
 23

TENT-T found that higher rates of public acceptance could shorten the permit
process in the development of LNG projects (Danish Maritime Authority 2012)
Public and government involvement play a crucial role in the promotion of
LNG. A lot of studies agree that the investment dilemma can best be overcome
if public funding schemes are in place. In an analysis of 33 studies on LNG as
ship fuel, Notteboom and Wang concluded that the vast majority of studies
identify a lack of public awareness on LNG and a lack of public financial
support concerning the support of LNG infrastructure (Wang & Notteboom
2013). Currently, there is only a small amount of. local government funding
programs that can be used to initiate the funding of an LNG bunkering
infrastructure. The funding project of TENT-T can be mentioned at this point
for example. Its aim is among others to increase public awareness of LNG. Once
the public stakeholders such as media, local governments, municipalities and
the general public become aware of LNG’s better environmental performance
and its economic potential it should eventually create incentives for further
public financial support. The switch to LNG for example results in better health
conditions at port cities which could be of interest for the local governments
and municipalities (Work & Lng 2013). Furthermore, as mentioned above, the
new market opportunities of LNG availability at different sites has other market
potentials. An LNG bunkering facility could also serve the local demand for
natural gas and thus contribute to the inland economy. So far there are several
public funding programs in place from EU level for both ship owners and port
developers.

2.1.5.4 Economic Viability

The fourth aspect that should be addressed is the economic viability. As

mentioned earlier, LNG engines and LNG fuel tanks onboard the ships require
significant financial investments for the ship owners. Although the payback
time has been identified to be in reasonable periods even for the worse
scenarios of higher LNG prices and retrofitting of vessels, ship owners might
still be reluctant to invest in the initial phases. On the other hand, LNG fuel is
cheaper so the operational costs are lower which in the long run amortizes the
ship owners expenses. In general, ship owners spend 50% of their total costs on
ship fuel (Lindstad et al. 2013), so cheaper bunkering prices significantly impact
the ship owners’ budgets. Potential incentive programs could be considered at
this place. The port of Gothenburg for example announced a special tariff
discount for LNG-fuelled vessels at their ports (Greenport 2014). These kind of
incentives bear a huge potential to motivate ship owners to switch to LNG.
From the supply side perspective the LNG bunkering facility developers,
namely the ports and gas supplying companies face similar problems. An LNG
refueling station is estimated to cost 1 000 000 -1 500 000 EUR depending on the
specific circumstances. Gas suppliers are the predominant investors since they
can benefit the most from LNG sales. Port authorities however could also
participate in the financing (PWC 2013). LNG availability after all ensures the
ports’ competitiveness and reputation. Municipalities and local governments
24

could theoretically also be a possible investor. Their investment drivers are

among others improved health and environmental conditions and contribution
to the local economic development. In this perspective certain local industries
should also be considered. A specific industry with a lot of natural gas demand
might use an LNG terminal for reliable and cost-efficient energy supply. The
LNG terminal in Tornio for example is carried out mainly privately by a local
company (Manga LNG 2014). The last possible investor group is public funding
programs. As mentioned earlier, these have a huge potential to facilitate the
creation of new LNG projects.
The recent drop of the oil price has resulted in a drop of shipping fuels to
almost 50% which eliminates a lot of initial concerns about increased prices for
shipping. The current low oil prices however pose a threat to LNG. Although
natural gas prices are historically sort of attached to oil prices a drop in natural
gas and hence LNG prices cannot be expected in this scale in the future.
Eventually, most ship owners now switch to low sulphur fuels as this option
does not necessitate any initial investments and with low fuel prices
outcompetes LNG in the short to medium turn. The oil price drop therefore
poses a considerate threat to the development of LNG. The speed of the
creation of an LNG infrastructure could be slowed down but it is uncertain how
the recent oil price will actually affect the various decision makers (Wang &
Notteboom 2013).

2.1.6 Summary

Concluding, the creation of an extensive LNG infrastructure provides a lot of

benefits for the shipping industry. It ensures the compliance with current and
upcoming regulations and the competitiveness of the whole industry compared
to other means of transport. Furthermore it improves the environmental
performance of shipping and improves health conditions along ports and trade
routes. Both ship owners and ports have thus interest in a shift to LNG as an
alternative fuel. Its successful implementation is however depending on the
regulative framework, secure LNG supply, the investment and operation costs
of LNG compared to alternative fuels and public funding programs. In order to
manage possible threats of these aspects it requires all involved actors to
cooperate and communicate thoroughly. Regulatory authorities from local to
international levels need to set clear guidelines for the creation of LNG shipping
and bunkering operations. Ship owners need to invest in LNG fuelled ships and
have the security to have LNG available for their fleet. Ports can facilitate the
creation of bunkering terminals by participating in investments, and can with
close communication with municipalities and local governments increase the
public awareness of LNG. The local industry can benefit from local LNG
availability and thus also be a driving force. National governments and the EU
can promote development process significantly with public funding programs
and gas supply companies develop the creation of LNG projects and thus have
to interact with the other actors as well.
 25

This complex environment is characterized by a remarkable number of different

stakeholders. The successful creation of an LNG infrastructure requires the
cooperation of all above mentioned actors. In order to identify how the creation
of an LNG infrastructure can be improved, this paper therefore analyses the
challenges of LNG from a stakeholder perspective. While many research articles
address the various challenges of LNG as ship fuel and stress the complexity of
the different stakeholders, no study has yet been done specifically from the
stakeholder theory framework.

2.2 Stakeholder Theory

In chapter 2.1, the issues of implementing LNG as a ship fuel have been
presented. It has been shown that the role of stakeholders is of great importance
for the successful LNG development. Therefore, stakeholder theory was chosen
as a theoretical framework of this research. The following chapter presents the
stakeholder theory with its main ideas. The theory has also received criticisms
from different theoretical considerations which are also addressed and by
confronting them with previous literature and the specific issue of LNG serve as
a further basis for the justification of this theory. Lastly, the role of stakeholders
in port projects is presented.

2.2.1 Introduction of Stakeholder Theory

Stakeholder theory was elaborated as a new approach to strategic management

in the 1980s. Existing management theories were not sufficient anymore to
explain the complex business environment with various external actors and
forces influencing the organization’s performance. Freeman concluded that an
organization needs to “take into account all of those groups and individuals
that can affect, or are affected by, the accomplishment of the business
enterprise”(Freeman, 1984:25). He then defined “any group or individual who
can affect or is affected by the achievement of the organization’s objectives”
(Freeman, 1984:46) as stakeholders. This is the classic definition that is most
commonly agreed upon and served as a base for further interpretations on
stakeholder theory. Accordingly, the realization of business objectives is only
possible if the interests of stakeholders are taken into account and managed
appropriately. The objective of the introduction of LNG as ship fuel is its
successful implementation which depends on the actions of a wide range of
different organizations that all fit into the definition of stakeholders. In 2.3 the
identification of stakeholders are addressed in detail which enable a
comprehensive overview of the stakeholders involved in LNG infrastructures.
The formulation of the stakeholder theory has opened a new
management concept of organizations that has been discussed extensively in
science. Different approaches to stakeholder theory and management have led
to an unclear network of the theory that has caused a lot of contradictions,
discrepancies and confusions (Jones & Wicks 1999; Stieb 2009) This controversy
26

can be explained by the many different scientific fields the theory became
subject to over the course of years. While in the early stages stakeholder theory
was particularly a concept of strategic management, it is meanwhile also
discussed thoroughly in organizational theory, business ethics and sustainable
development (Stieb 2009).
Donaldson therefore divided the stakeholder concept into three different
aspects: descriptive/empirical -, instrumental – and normative stakeholder
theory (Donaldson et al. 1995). The descriptive/empirical approach describes the
structure and characteristics of the organization and aims at explaining the
attitudes and behavior of managers from a stakeholder theory perspective. The
objective is thereby to prove that the stakeholder concept can be used to
describe the observed reality of how corporations are managed. The
instrumental aspect on the other hand examines the relation between
stakeholder management and traditional corporate objectives such as economic
growth, competitiveness and profitability of the firm. In many cases the
perspective even lies on those traditional management aspects and stakeholder
management is considered as an instrument that contributes to an improvement
of the business objectives (Jones 1995). Lastly, the normative stakeholder theory
deals with the functioning of organizations within society. It comprehends the
moral responsibilities and philosophical interpretations of how organizations
should be operated and what ethical values should be regarded (Donaldson et
al. 1995). The fact that the three approaches take different perspectives and have
different focuses hence explains why there is such a variety of different
definitions, interpretations and concepts in stakeholder theory. The authors
however clarify that the normative justification is the underlining principle of
the stakeholder theory as its presumption of the moral values and ethical
responsibilities of organization and stakeholders forms the fundamental
normative base for the instrumental and normative approaches.
Using Donaldson’s findings, the perspective of this paper can be ascribed
to the instrumental justification of stakeholder management. The main purpose
of the study is to explain how stakeholder management can improve the
business objective, which in this case is the successful creation of an LNG. In
order to properly conduct this approach the core values of the stakeholder
concept ascribed to the normative approach will nevertheless be acknowledged.
Usually, successful stakeholder management is considered essential for
the organization’s performance, so stakeholder theory explains how an
organization, namely its top managers should deal with their stakeholders
(Agle et al. 1999). As has been shown in 2.1, the creation of an LNG
infrastructure is not managed and carried out by a single organization but a
cooperating network of different organizations that all possess highly
significant levels of legitimacy and influential power. While stakeholder theory
is an instrument of strategic management that ultimately aims at increasing the
prosperity of the organization, the goal of the LNG infrastructure is the success
of its successful implementation. The performance of a single organization
within the LNG network is not the field of attention of this study. The focal
 27

point is therefore not on a single organization within the LNG network but a
holistic perspective is taken where every actor is considered a stakeholder.
This approach is in line with published articles in the 2000s that shift the
management perspective from the organization to the stakeholders themselves.
The role of stakeholders is thus highlighted as they can decide on the
organization’s performance with their actions. This principle is known as the
“stakeholder recourse” (Friedman & Miles, 2006:2) and also defines the
normative perspective with the absence of one single organization that is
managing its stakeholders but a network of stakeholders that all aim for the
common objective which is the successful implementation of LNG as ship fuel
(Donaldson et al. 1995).
Stakeholder theory has become a popular concept for the explanation of
how organizations are or should be managed. However, the theory also
receives some criticism, especially from some of the traditional business school
of thoughts. Some of the critics are also dealt with as they help to further justify
why the stakeholder approach is a valid perspective for LNG strategies. One of
the most important critics is Jensen who argues that an organization that adopts
stakeholder theory is likely to be less successful in the long run. The traditional
goal of organizations is to create value maximization, which according to the
general thinking in economics equaled social value and hence also maximized
social welfare. Concluding, the conventional approach of focusing on value
maximization of an organization accomplishes all the goals that stakeholder
theory aims at (Jensen 2002).
The stakeholder framework on the other hand takes the perspective that
the corporate objective is to satisfy and balance all stakeholder interests instead
of aiming for value maximization which is the single corporate goal of
traditional business models (Sundaram & Inkpen 2004). This approach impedes
a proper performance measurement of the organization and leaves it to the
managers to decide how the resources are used without any guidelines, which
also empowers the managers to follow their own preferences. The author points
out that there is no criterion for the managers to decide what stakeholder
interests should be privileged or how the trade-off of any stakeholder group
could be justified. However, they still acknowledge that stakeholders should be
included in the considerations of business actions using a combination of the
traditional value maximization and the stakeholder model (Jensen 2002).
Concluding, organizations should aim for value maximization as their single
corporate goal in the long run, however focusing on balancing the stakeholder
interests in the short term. The consideration of stakeholders is however still
acknowledged, although they should be put under the general principle of
value maximization.
The main purpose of an LNG infrastructure is not predominantly to
create more economic value for its key stakeholders. As has been shown in 2.1,
environmental improvements and compliance with regulations (which are
traditional stakeholder interests) were main drivers for LNG. Even if the
creation of an LNG infrastructure focused on pure value maximization for its
28

developers, its realization still remains only possible if all necessary

stakeholders are addressed and participating in the different development
stages.
The criticism of the mislead objective of an organization is further carried
out by Sternberg who points out that the definitions and identification models
that have been developed in the past of stakeholder theorists do not allow for a
successful operating of an organization (Sternberg 2001). In the early stages, a
stakeholder was defined as any group that the organization has an economic
interest in (Fassin 2009). Traditional stakeholders were consequently
shareowners, employees, society or customers. Freeman expanded this
definition by including all the groups and individuals that might not be of
interest for the organization itself but in turn might have an interest in the
organization and its operations (Freeman et al. 2004). This radically increased
the number of stakeholders and also included more indirectly affected or even
hostile groups such as terrorists, competitors, unborn generations or the
environment. Aligning the corporate objective to also satisfy these groups
would thus not be in the interest of the organization’s long term prosperity that
could even threaten its survival. Another critic is the assumption that the
stakeholder groups themselves do not adjust their interests to stakeholder
theory. An environmental NGO for example is not necessarily interested in the
organization’s other stakeholders and will hence not adjust their claims to them.
As a result, all stakeholders have somehow more egoistic claims rather than
adjusting them to other stakeholder groups (Sternberg 2001).
The barriers to implement LNG are not so much opposition from certain
stakeholder groups. There are indeed a huge number of stakeholders involved
in LNG as ship fuel but as has been shown earlier it is in the common interest of
all key stakeholders to promote LNG. The main challenges for LNG are external
and structural barriers not opposition from a certain stakeholder group. It has
even been shown that including less significant stakeholders such as the media
and general public in order to increase public awareness can trigger more
important stakeholders such as governments to provide public financial
support. The main criticisms to stakeholder theory hence do not hold ground
for the application in this study.
The criticism and interpretations brought up against stakeholder theory
have nevertheless resulted in a disputed reputation of its applicability in
business and organization management. Freeman et al. addressed these issues
and aimed at clarifying the concept of stakeholder theory and how it should be
applied in organizations. Freeman referred the critics of Sternberg and Jensen
and argues that if shareholder maximization is the core value of an organization
rather than successful stakeholder management, the shareholder value
maximization can still only be achieved by addressing the stakeholders. These
approaches hence are merely using an instrumental theory perspective with
shareholder value maximization as core business objective (Phillips et al. 2003).
 29

2.2.2 Stakeholder Identification

This study focuses on how stakeholders are involved in the implementation of

LNG as ship fuel and how their participation can be improved in order to
promote the successful introduction of LNG. Therefore it is necessary to have a
clear theoretical guideline on how stakeholders are identified. Furthermore, it
has been shown that not all stakeholders have the same level of importance,
hence, once the stakeholders have been identified, they also need to be
classified. This step is necessary as not all stakeholders can be interviewed. By
classifying the key stakeholders, it can be assured that the most relevant
concerns and issues are addressed.
To analyze who should be involved in a stakeholder analysis is a key
strategic concept which applies especially for the case of LNG with its expected
vast amount of stakeholders. Identification of stakeholders is a central question
of any stakeholder analysis (Parent & Deephouse 2007). As a general rule,
Donaldson defined that all groups that possess information that makes their
position unique in the organization’s network should be included in an
analysis. Logically, this is highly depending on the level of information that the
stakeholder group possesses. This concept is very attractive for the stakeholder
analysis of the creation of an LNG bunkering strategy where communication,
and hence information sharing seems to be of exceptional relevance (Donaldson
et al. 1995).
Bryson created a model for the identification of stakeholders.
Accordingly, stakeholders are selected by the planning group or researcher in a
preliminary stakeholder analysis. The stakeholders can then be mapped in a
“Power-interest”- grid. This grid defines the level of power a stakeholder has
on the organization and its level of interest. As a result, the matrix shows four
categories of stakeholders: players that have high amounts of power and
interest, subjects who have low power but high interest, context setters with little
power but high interest and crowds who have low levels of power and influence
(FIGURE 4) (Bryson 2004).
Once the stakeholders have been identified using the power-interest-grid
they can be ranked according to their importance to the organization. Bryson
therefore suggests complementing the matrix with Mitchell and Wood’s model
of stakeholder classification that allows for a distinction of stakeholders that is
highly adhered to Freeman’s definition of groups that affect or affected by the
organization.
30

FIGURE 4 Power-Interest Grid

Mitchell and Wood also developed a stakeholder salience theory. Not every
interest and claims of every identified stakeholder can be addressed by the
organization, therefore the level of salience of the stakeholders needs to be
analyzed which enables a concept of what stakeholder issues should actually
receive attention. Therefore, the stakeholder groups are assessed in three
different categories:

- The legitimacy of the stakeholder relationship which consists of the

justified claims of the stakeholder bases on the cause’s definition and
commonly shared morals and values. The legitimacy is defined by
the normative core of why a stakeholder has claim to clarify his
concerns.
- The power of the stakeholder to exert influence: This comprehends the
ability of one actor to bring about the outcome he desires and impose
its will upon other actors either by using normative (symbolic) or
material resources.
- The urgency of the stakeholder’s claims defines the awareness of the
stakeholders’ interests in the organization and willingness to exert
influence.

Based on the evaluation of these three categories, each stakeholder group can be
classified and the ones with the highest level of salience can be selected. The
stakeholder management between these identified stakeholders should then be
the main focus on LNG developments and their claims and perspectives should
be analyzed and coordinated in order to improve the stakeholder cooperation
in LNG projects.
 31

It is important to understand that the three different categories are variable and
might change over the time, depending for example on the development stage
of LNG projects. Furthermore, the evaluation of these attributes for each
stakeholder group is done subjectively based on own socially constructed
perceptions (Mitchell & Wood 1997). The different stakeholder types can
subsequently be classified in a model (FIGURE 5).

FIGURE 5 Stakeholder Salience (Friedman & Miles 2006; based on Mitchell et al. 2007)

Stakeholder groups that only have one attribute are defined as latent
stakeholders (areas 1-3), stakeholder that possess two attributes but are missing
the third are expectant stakeholders (areas 4-6) and stakeholders that fulfill all
three categories are definitive stakeholders (area 7). (Friedman & Miles 2006)
Obviously, there might be differences between the levels of one attribute, one
stakeholder might for example have more power than another one. The
determination of one attribute is hence slightly blurry; nevertheless this model
gives a theoretical based assessment and justification of the key stakeholders
that will be defined later on.

2.2.3 Stakeholder Management in Port Projects

The main feature of a managerial stakeholder theory is to acknowledge that an

organization should do more than just maximizing shareholder wealth
(Schmidt & Weiß 2009). In a joint industry project with different participants,
this becomes obvious as the success of the shareholder maximization is directly
linked to the success of the project which is only possible through extensive
stakeholder participation and communication. Port construction projects are in
most cases carried out by joint-industry projects. The specific ownership
structure of ports often automatically involves a wide range of actors (de
32

Langen 2006). Usually, the municipality owns the port authority that manages
the land and is in charge for the infrastructure development such as long term
plans like access roads or berths. The cargo handling operations are carried out
by private companies who either possess their own equipment or rent it from
the port authority. The port authority in turn, although mostly financially
independent, is accountable to the municipality, which means any major
infrastructure project also involves decisions made by the municipality. Ports
are also of great economic value for the municipal economic network, so the
interest of municipalities in ports is usually exceptionally high (Nokkala 2011).
Complex regulatory structures concerning land planning issues and maritime
issues are often managed by different authorities which further increases the
complexity of construction innovations. Hall et al. consequently underline the
high importance of stakeholder involvement and collaboration in port
innovation projects (Hall et al. 2013).
De Langen investigates port innovation projects by examining conflicting
interests of stakeholders. He concludes that among others port development
mainly clashes with interests of environmental protection, residence interests
that concern safety and health issues and the overall economic development. As
elaborated earlier, LNG projects are however promoting environmental
protection issues, can improve the economic competitiveness of the port and
reduce health hazards by less air pollution in the surrounding area.
Stakeholders in LNG projects are thus expected to have less conflicting interest
compared to other port development projects (de Langen 2006).
Special attention should also be paid to the public authority actors.
Studies have shown that they are the most effective actor in terms of driving an
innovation, especially in the early stages. Public policy actions can on the one
hand side ease “soft dimensions” barriers such as regulatory obstacles and one
the other hand side can substantially support the innovation by providing
“hard dimension” support, in other words contribute to the materialization by
financial funding programs (Arduino et al. 2013).
Concluding, the maritime transport section is characterized by a multi-
stakeholder environment. Numerous actors at different places and
jurisdictional levels with different positions and characteristics coexist and
often possess significant decision-making power. For example, every port
authority has to comply with a number of local, national and global guidelines
represented by various institutions and is closely linked and affected by
decisions made by port operators or the municipality. Gritsenko and Yliskylä-
Peuralahti describe the governance of ports as interactive and stress its
polycentricity (Gritsenko & Yliskylä-Peuralahti 2013; Aligica & Tarko 2012). This
nested hierarchy poses complex problems for the implementation of
environment-related projects that involve a great number of actors and
institutions at many different hierarchical levels and hence complicate the
creation of effective environmental policies. In many cases accountability of
environmental topics is furthermore not allocated clearly which could reduce
the commitment of actors to take measures (Marsden & Rye 2010). This effect
 33

however might be contradicted by the shared interest of many stakeholders in

the successful implementation of an LNG bunkering infrastructure.
Changing requirements and increased economic activity are the major
challenges ports have to face. In many cases, adaption measures require new
investments in the development of new infrastructures (Taneja et al. 2011). Due
to the specific ownership and management characteristics of ports, any
constructional changes to the infrastructure require the involvement of several
concerned actors. The creation of an LNG bunkering infrastructure hence also
requires the inclusion of several key groups/stakeholders to the planning and
project management. These different groups, for example port operators,
terminal operators, construction companies, LNG suppliers etc. have to be
involved in the project planning. Referring to the stakeholder theory approach,
all of these groups can be defined as stakeholders due to their ability to affect
and being affected by the port authority’s actions.
The actors involved in LNG planning phase are presented shortly in this
section. They have been identified and characterized by Gritsenko and Yliskylä-
Peuralahti. Accordingly, there is a distinction between intergovernmental
organizations and EU-level (supranational) private and public organizations
that often have overlapping but partly also contradicting agendas.
The complexity of policy makers goes up to the highest levels. The
European Union enacts new laws and regulations that have to be implemented
into national law by the member states. The directive to reduce sulphur
emissions was legislated by the European Union according to the IMO
regulations. This directive is the biggest driver for most LNG
shipping/bunkering projects. There is a range of intergovernmental
organizations in the European maritime transport sector that discuss and align
their interests and actions and form recommendations on how to stay
economically competitive while still complying with legal regulations. The
International Maritime Organization (IMO) and the Helsinki Commission
(HELCOM - Baltic Marine Environment Protection Commission) can be listed
here. While the IMO is a specialized agency of the United Nations and operates
globally, HELCOM is a governing body that only concerns the Baltic Sea region.
Both organizations have regulatory functions but also develop new
recommendations and measures and have coordination bodies to facilitate
shipping procedures. However, the interests of the different nations often differ
which makes it tough for the IGO (International Government Organization) to
align the agendas of the states. (Knutsen & Hassler 2011). In this regard, it
might helpful and more accurate that this study focuses on Finland and
Sweden, rather than taking into account all countries in the Baltic Sea region.
Both IGOs and the EU also interact with each other, in the creation of new laws
for example. Typically, NGOs are a significant actor in legislative procedures.
However, their presence and influence on environment-related issues in the
European maritime sector is rather low, which can be explained by the general
relative low interest in the shipping industry’s environmental performance
(Skovgaard 2012). Nation states hence are a crucial actor as they enact national
34

laws directed by the EU but also regulate the environmental and economic
effects of the shipping industry through their participation in
intergovernmental organizations. Hence they have enormous influence on the
performance of their national maritime industry.
The private actors such as ship owners, cargo owners and ports are the
ones who are mostly affected by the regulations. Their main concern regarding
the new regulations is increased vessel operation costs due to the adaption
measures of the ship owners who for example have to invest in retrofitting or
purchasing new vessels However, not all reaction was negative. Some ship
owners identified competitive advantages if they act early and adapt to the new
legislation, for example by switching to LNG. The cargo and vessel owners
align their interests by participating in the Clean Shipping Index (CSI) for
example. This cooperation not only improves their environmental performance
but facilitates innovation measures directed by policy makers.
All those actors have significant influence on the creation of an LNG
bunkering project. The above analyses mentions some of the actors involved in
the creation of an LNG bunkering project. However, a detailed analysis using
Bryson’s and Mitchell and Wood’s models will give a detailed overview of the
involved stakeholders. A mapping of stakeholders will justify what
stakeholders should be interviewed based on their importance and interest on
in the issue. This allows the validity and relevance of the stakeholder analysis
that will enable the unfolding of potential improvement measures.
 35

3 METHODOLOGY

In chapter 2, the topic of introducing LNG as a ship fuel in the Baltic Sea region
has been explained and the various challenges concerning its successful
implementation have been presented. It has been shown that numerous
stakeholders are involved in the creation of an LNG infrastructure. This study
examines how exactly these stakeholders are involved in this process by
investigating how stakeholders evaluate their importance and mutual
communication. It will also be of particular interest to find out how
stakeholders are influencing the different challenges of introducing LNG as
these determine the reason why stakeholders are that important. Therefore, the
methodological tools have been chosen regarding their suitability to answer the
research question.
This chapter presents the methodological choices for the study. At first,
the research method is presented with an explanation of why this method was
preferred compared to other approaches. Thereafter, the tools of data collection
and data analysis are explained with an overview of how the method was used
to answer the research question.

3.1 Research Method

Qualitative research has been found to be the best method to answer the
research question as it “[…] examines events or experiences in context from the
perspective of the individuals experiencing the phenomena” (Thompson &
Walker 1998). One of the key motifs is to understand how people “[…] perceive
and interpret their reality (Bryman 1988, p.8; Lewis & Ritchie 2003). This is
especially true for research that addresses questions about events and
experiences for which little is known. Qualitative research is in general the most
appropriate approach to examine such events and contribute to the creation of a
holistic picture with a better understanding of the complexity of the subject of
the research and the relationship of its components (Lewis & Ritchie, 2003:32;
Thompson & Walker, 1998). The creation of an LNG bunkering infrastructure
fulfills these conditions as it is an unprecedented phenomenon for the shipping
36

industry that requires all actors to proactively cooperate in order to successfully

introduce LNG as a ship fuel.
Qualitative research methods are most commonly used in the field of
social sciences. While traditionally very popular among sociology, its
contribution specifically to business and management research has also been
acknowledged by several authors (Cassell et al. 2006) among others especially
its potential for market research is worth mentioning (Walker 1985). This poses
a further justification of using the qualitative method since the creation of an
LNG infrastructure is a very management oriented issue that leads to the
creation of a new market of LNG as ship fuel that requires the understanding of
future actors in the market and its dynamics.
Qualitative research is exploratory. It enables the gathering of
information in areas where previous knowledge is scarce and therefore is part
of the interpretive paradigm (Dickson-Swift et al. 2007). This interpretive and
exploratory nature of the qualitative research is even considered “[…] highly
appropriate in the case of business and management research” (Bahari 2010)
due to its social structure that is governed by human behavior rather than law-
like regularities (Lewis & Ritchie 2003, p.17; Bahari 2010).
While the theoretical justification of using the qualitative research
methods is given, it is also important to acknowledge what kind of results a
qualitative research can create and if those results are in line with the aim of the
research. Lewis and Ritchie classify four different functions of qualitative
research methods:
 Contextual - The contextual function seeks to describe and display a
phenomenon (subject of the research) that is experienced by the study
participants. This type of research allows a conclusion to describe what
exists based on the understanding of the study participants. This aspect
is also referred to as descriptive and exploratory
 Explanatory –The explanatory function is concerned with answering the
why of a phenomenon and therefore investigates the forces and
influences that lead to the existence of the phenomenon.
 Evaluating – The evaluating function explains the processes and
outcomes of a phenomenon and therefore is looking at how it operates.
This is rather complex as there is an almost endless number of possible
questions that can target the evaluation of a phenomenon.
 Generative – This function is concerned with contributing an idea or
solution to the problem of the phenomenon. It can develop a new
understanding based on the research and produce a strategy with new
ideas and recommendations for actions.

A qualitative research is expedient, if the research aims at answering at least

one issue of a research function. As can be seen in TABLE 1, it is even possible
to apply all four research functions in order to answer the research question of
this paper. This circumstance can be affiliated to the complex topic of
implementing LNG as a ship fuel and the absence of previous studies in the
 37

field, especially concerning stakeholder involvement. This again shows that the
use of qualitative research methods is the most suitable for this study.

TABLE 1 Contribution of Research Functions to the Research ((Own illustration

based on Lewis & Ritchie 2003, p. 23)

Functions of research Qualitative methods to explore

What is the role of stakeholders in the

Contextual
creation of an LNG infrastructure?

Why is stakeholder involvement

Explanatory
necessary?

How are stakeholders influencing the

Evaluative
process?

Strategies / suggestions for

Generative
improvement

3.2 Limitations and Criticism

Some problems of qualitative interviews are the artificiality of the interview

situation, the intrusiveness of the interviewer or lack of trust between
interviewer and interviewee, for example. All of these issues could influence
the interview and alter the reliability and completeness of the data (Myers &
Newman 2007). While most of those practical problems might be of importance
for sensitive personal topics, their importance for this particular research is
neglectable as the interviewees are not asked sensitive questions but merely
about their professional perspective on LNG development. However, those
limitations were still taken into account and efforts were taken to ensure that
the interviewees felt comfortable during the interview.
A criticism of the qualitative approach could be its interpretive and
exploratory nature (Mansourian, 2008; Gummesson, 2003). It relies on human
behavior and their perception of reality as a social construct whose entities and
processes are not experimentally examined and can usually not be measured in
numbers (Denzin & Lincoln 2006). Therefore, qualitative research is often put in
contrast to quantitative research which emphasizes the “[…]measurement and
analysis of causal relationships between variables, not processes” (Denzin &
Lincoln 2006). Researchers have been arguing a lot about the difference of
qualitative and quantitative research (Bahari 2010; Mahoney & Goerts 2006).
Qualitative research is interpretive (Fossey et al. 2002) and therefore considered
“soft science” compared to the “hard science” of positivist quantitative research
methods (Denzin & Lincoln 2006; Michell 2003). While the positivist
perspective assumes that there is only one version of reality, the interpretivist
perspective advocates the idea that there are multiple versions of reality (King
38

& Horrocks 2010, p.16). Therefore, qualitative research has often been
considered “unscientific” (Denzin & Lincoln 2006; Lewis & Ritchie 2003, p.22).
The debate between the interpretivist and positivist rationales is sometimes
even referred to as the “paradigm war” (Bryman 2006). The critique of
interpretivism has been countered by many authors, proving the value and
importance of interpretivist qualitative research (Glaser & Strauss 1967; Taylor
& Bogdan 1985; Guba & Lincoln 1994; Cohen & Crabtree 2006). In the case of a
stakeholder analysis on the LNG development, where little knowledge is
available, a quantitative research would not be able to answer the research
question as profoundly. By interviewing different stakeholders and assessing
their uniquely perceived reality, it is possible to create an understanding of the
complexity of the topic, which is exactly the purpose of this paper. Considering
the diversity of stakeholders and the complexity of the topic, stakeholder
analyses are usually relying more on qualitative methods (Varvasovszky 2000).
A case study on one specific port project was also considered. Case
studies offer a multiplicity of perspectives (Lewis & Ritchie 2003, p.52) which is
among others what this stakeholder analysis contemplates. The approach is
“[…] particularly useful to employ when there is a need to obtain an in-depth
appreciation of an issue, event or phenomenon of interest, in its natural real-life
context” (Crowe et al. 2011). While the in-depth and multi-faceted
understanding of a case study would certainly be of benefit for this study, there
are also some downsides of this approach. The focus of a case study is often on
a small geographic area (Zainal 2007). The same would be the case if this
research focused on only one specific LNG project. It would be difficult to give
a broad overview of LNG development in the whole Baltic Sea region if only
the project of one port was examined. This is further backed by the fact that
little is known so far on how LNG projects are carried out. Every single port is
unique in its geographical, strategic, economic and social context and it would
be difficult to generalize the results that were gathered on only one single
project. This problem is also acknowledged as one of the main
misunderstandings of the case study approach to scientific development
(Flyvbjerg 2006). Considering that part of this research is also to give an
overview of the current development status on LNG in the region, a broader
approach that included stakeholders of the whole region is more logical.
Concluding, it can be stated that while other approaches have their
advantages in terms of in-depth analyses or scientific contribution, the
qualitative research approach with individual interviews of the different
stakeholders is the best method to answer the research question of this paper.

3.3 Data Collection

In order to interview the appropriate stakeholders and identify the main issues
that needed to be addressed in the interviews, it was necessary to divide the
data collection in two parts. The first part consisted of collecting general data on
the development status of LNG projects in the Baltic Sea region and assessing
 39

the ports’ position on main drivers, impediments and the role of stakeholders
by screening the ports. As mentioned earlier, the creation of an LNG bunkering
infrastructure is a new phenomenon where previous experience is lacking. By
identifying the current state of the art and the rough stakeholder dynamics in
the field in a first step, it was ensured that the research not only has theoretical
justification, but can also contribute to practical implementation of the research
findings. The second part of the data collection consisted of qualitative
interviews and was conducted after the initial data collection.

3.3.1 Port Screening

The current development status of LNG projects was assessed by sending out a
questionnaire to all ports in Finland and Sweden. The questionnaire consisted
of various multiple choice questions regarding measures of the development
status and the scope of the project. Open questions were asked in the end
concerning the role and communication of stakeholders, main drivers and
impediments (ANNEX 2). It was made sure that the questionnaire fulfills all
necessary scientific requirements in order to guarantee its accuracy (Baker 2003;
Bowling 2005; Marshall 2005). Since the research is part of a joint industry
project co-funded by the European Union, a list of all the relevant ports was
provided for internally. The questionnaire was sent to the port authorities,
whose addresses were either also provided for in advance or researched online.
The questionnaire was sent in October 2014 and two times later, in case
the port hasn’t replied. This approach lead to 8 ports filling out the
questionnaire out of 24 contacted ports (33% response rate). In order to get a
clear overview of the development status, it was decided to also contact the
ports directly by phone. It seemed that ports that do not have LNG plans have
less interest in filling out the questionnaire which might lead to incomplete
results. Therefore, the ports were questioned spontaneously by phone. In the
phone calls, the port authorities were asked the most important questions of the
questionnaire and in case they did not have plans for LNG projects, they were
asked for the specific reasons, main issues and opinions. The interviewees were
hence asked mainly about the status of the port’s LNG development process,
the main drivers and inhibitors of its implementation and their opinion on
which stakeholders are relevant in the process. Since the phone calls lasted only
around five minutes, excessive preparation and focus on interview style was
not needed, although the basic guidelines of phone interviews were taken into
account (Burke & Miller 2001). All the remaining ports authorities have been
interviewed in this manner which led to a complete analysis of the current state
of the art. By addressing the first survey specifically to port authorities, the
results are also able to give a good overview of the port authorities’ perspective
who after all are one of the main stakeholders. The data was completely
collected and analyzed by January 2015 and could hence be used in the
preparation for the in-depth interviews of the stakeholders.
40

3.3.2 Interviews

The individual interviews of the stakeholders were conducted using a semi-

structured interview style. In semi-structured and unstructured interviews, the
participation of the interviewee is increased. He is able to talk freely and can
contribute with his expression of opinion (DiCicco-Bloom & Crabtree 2006).
This technique is well suited for the exploration of perspectives regarding
complex issues and it allows for the interviewees to clarify issues that are
relevant for them (Barriball & While 1994). Furthermore, new unexpected
information can be gathered, which is of interest especially for topics where
little knowledge is yet available (Hohl 2000). The semi-structured technique
was preferred to the unstructured technique as some degree of structure
enhances the interview as it gives it guidance to what questions to ask and how
to evaluate the responses (Campion et al. 1997).
Nevertheless, in the course of conducting the interviews, some questions
ended up being more unstructured than planned, mainly due to the different
background of the various stakeholders who had different levels of interest and
knowledge concerning the questions. Also, in order to guarantee a smooth flow
of the interview, the questions were sometimes asked in rather arbitrary order.
The main asked in the interviews were how the creation of an LNG
infrastructure can be improved, based on the interviewee’s perspective and
how they see the role of stakeholders in this process in general. Those main
questions were elaborated further by questions concerning drivers,
impediments and assessments of other stakeholders’ participations (see
ANNEX 1).
It has been tried to conduct every interview in a face-to-face meeting
which is the dominant interview technique in qualitative research and allows
the inclusion of social cues, such as body language, body language and
intonation that can support the researcher’s analysis. However, these social cues
become less important if the interviewee is questioned about issues that have
nothing to do with the interviewee himself (Opdenakker 2006). A total of eight
interviews were held, consisting of representatives of the most important
stakeholder groups. The preparation of the interviews was guided by the eight
principles McNamara applies: (1) Choose a section with little distraction, (2)
Explain the purpose of the interview, (3) Address terms of confidentiality, (4)
Explain the format of the interview, (5) Indicate how long the interview usually
takes, (6) Tell them how to get in touch later if they want to, (7) ask them if they
have any questions prior to the interview and (8) Don’t count on memory to
recall the answers but use a recording tool (Turner 2010; McNamara 2009).

3.3.3 Selection of Interviewees

The interviewees were chosen based on the analysis of the literature review and
stakeholder theory. In order to get a clear understanding of the issue of
introducing LNG, stakeholders were chosen considering their importance and
knowledge on the topic. As the importance and level of influence of each
 41

stakeholder is not exactly known in advance, the selection of the stakeholder

groups to be interviewed took place subjectively based on previous research.
This approach of researchers selecting the stakeholders is very common for
stakeholder analyses (Varvasovszky 2000; Parent & Deephouse 2007). As the
aim of the paper is to identify the involvement of stakeholders in the LNG
development, it can be expected that the results indicate an improved mapping
of stakeholder groups around the issue. Accordingly the following stakeholders
have been selected for interviews (The organizations have been anonymized
due to confidentiality reasons):

1) Port authority with a planned LNG bunkering project (Port Authority 1): The
port authority was represented by the vice president of operations. The port
is one of the first to create an LNG bunkering project in the Baltic Sea region.
The port therefore possesses a lot of experience and knowledge on project
planning and implementation.
2) Port authority without a planned LNG bunkering project (Port Authority 2):
The port authority is representing ports that do not have concrete projects
planned considering LNG bunkering terminals. Their perspective
concerning the competitiveness and eventual downsides of not being able to
have LNG available will be of special interest. The interview was conducted
by phone with the marketing manager. They are therefore not a main
stakeholder in the sense that they actively plan a project, but their opinion is
significant in comparison to the port authority with an LNG project in order
to get a clear understanding of the ports’ positions.
3) Gas supply company that develops several LNG bunkering terminals (Project
Developer 1): This stakeholder represents gas suppliers that develop and
carry out LNG projects. They have the technical knowledge of LNG
bunkering operations and carry the majority of financial investments in
bunkering facilities. The business development manager was interviewed
by phone.
4) Local energy company that develops an LNG bunkering terminal (Project
Developer 2): The local energy company was represented by the energy
business director who could not only also present the perspective of the
project developer, but also give insight on how the inland industry is
affected by the LNG project.
5) Municipality of a planned LNG bunkering project (Municipality): The
director of economic and business development was interviewed. The
municipality owns the land on and around the port. In this interview, the
perspective of the local community and general public is also taken into
account.
6) Governmental authority (Governmental Authority): The government
counsellor attended by the interview. The authority draws up policies for
42

the investment aids for LNG project and allocates financial resources. It will
therefore represent the public authority and governmental perspective.
7) Ship owner (Ship Owner): The representative of the ship owner is a company
that owns a fleet mainly running in the Baltic Sea and has already decided to
order some LNG vessels. The interview was scheduled with the financial
manager but was then spontaneously also attended by the vice chairman.
8) Cargo owner (Cargo Owner): The cargo owners were represented by the
shipping manager of a company that charters vessels and transports their
cargo mostly within the Baltic Sea region. Their contribution concerning the
economic impact of the introduction of LNG on their operations will be of
special interest.

All interviews were held in January and February of 2015. Six interviews were
conducted face-to-face on site at the stakeholders’ premises, while two
interviews had to be made using phone calls due to geographic distances. The
interviews lasted between 50 and 70 minutes, with the exception of the
interview of the Port Authority 2 for which only 35 minutes were available due
to another meeting of the participant. However, the limited time was known
shortly in advance, therefore the most important questions could be answered
nevertheless.

3.3.4 Considerations Regarding the Selection of Interviews

All eight stakeholders are representatives of their specific stakeholder group. As

mentioned in chapter 2.2.3, many different stakeholders are involved in the
creation of an LNG infrastructure. The selection of stakeholders for the
interviews has therefore focused on the most important ones with regard to
indirectly also including less relevant stakeholders. The local community for
example is certainly a stakeholder that might partly have different interests
than the administration of the municipality. However, the local community is
not directly involved in LNG projects and the literature review has not led to
the conclusion that the local community is a group with definite high interest in
the issue. Therefore it was decided to not interview this stakeholder specifically
but include it, along with the general public, to the municipality and consider
their eventual concerns in that interview. Similar considerations concern the
regulatory authorities. As mentioned previously, many different regulatory
authorities with different responsibilities on local, regional, national and
international level are included in LNG development. The governmental
authority that was interviewed was therefore interviewed taking into account a
broader perspective on how regulatory authorities are involved in general.
Local industry enterprises are a further stakeholder group that could have been
interviewed on its own. They are represented by the energy company that also
develops an LNG project. Possibly, they could bring a slightly different insight
as their interests and functions in the LNG development might vary from the
 43

interviewed energy company. Finally, the shipping and port sector is

characterized by a huge presence of industry cooperations, such as port and
ship owner associations who possess significant levels of influence. They were
however not specifically targeted as stakeholders in that sense as they are
already represented by ship owners or port authorities. TABLE 2 gives an
overview of all interviewed stakeholders and their main functions and interests
concerning LNG development.

TABLE 2 Selection of Stakeholders

Stakeholder Function Main concerns

o Plan the project with
municipality, ship o Port’s competitiveness
Port authority with an LNG
owners and gas supplier o Provide LNG to its
project
o Providing external customers
infrastructure
o Check if LNG project is
o Port’s competitiveness
Port authority without LNG feasible
o Attract investors in a
project o Develop a plan with
project
project developer
o Enter the market and
sell LNG
o Develop and invest in o Demand for LNG from
Gas supplier
the LNG project customers
o Public funding for the
projects
o Demand for LNG from
o Develop and invest in
Energy company customers
the LNG project
o Energy security
o Owns the port o Local economic
o Approves and development
Municipality
coordinates the LNG o Contentment of local
project communities
o Allocates public
funding programs o Economic development
Governmental authority o Coordinates and o Compliance with
monitors LNG regulations
development financially
o Compliance with
o Purchase of LNG
regulations
Ship owners vessels
o Reliable LNG
o Customers of LNG
availability
o Chartering and
Cargo owners o Cheap transportation
Transport of cargo
44

3.4 Data Analysis

Both data collection measures were designed taking into account that the
content of the questionnaires and interviews has to be in line with the research
question. For the initial data collection of the port screening that gathered data
on the development status of LNG projects, the ports were classified as either
“having plans”, “having no plans (yet)” or “internally discussing” the initiation
of a project. The data on the drivers and concerns of the ports were combined
with the in-depth interviews that were recorded and transcribed.
The researcher has to interpret the data and make “sense” out of what
was uncovered (Turner 2010). Since the data is analyzed individually by the
researcher, his judgement is very critical for the results (Varvasovszky 2000).
Therefore, it is necessary to have a well-structured plan when analyzing the
data. Based on Schwandt’s suggestion, the data was reduced in an initial step,
which means that all the relevant data of the transcripts and written notes
during the interview were selected and abstracted. This step helps to exclude
off-topic talks during the interview, for example. Afterwards the data was
displayed, which means all relevant data from the transcripts and notes during
the phone and in-depth interviews was assembled which allows for its
profound analysis (Schwandt 1996, p.11). Considering that each interviewee
had a different background in knowledge and perceptions about the topic, not
all questions could be fully answered by every participant. Some interviewees
can contribute a better input on some questions than others. These
circumstances were considered already during the conduct of the interviews
and should also be taken into account when analyzing the data. As a result, the
collected data might show differences in patterns and structures and require a
very intense analysis (Zhang & Wildemuth 2009).
Thematic Analysis was chosen as analytical method. It is a widely used
approach in qualitative data analysis because it offers an accessible and
theoretically flexible method to analyze qualitative data (Boyatzis 1998; Braun &
Clark 2006). The focus of thematic analysis is on identifying and examining
themes within the data (Daly et al. 2007). These themes or patterns are coded to
better describe and explain the researched phenomenon. Braun and Clark
distinguish six phases in which the data is coded: familiarization with data,
generating initial codes, searching for themes among codes, reviewing themes,
defining and naming themes, and producing the final report (Braun & Clark
2006). These six steps have served as a guideline for the data analysis of this
paper. Constructivism was used as a research paradigm as it “denies the
existence of an objective reality” (Mills et al. 2006) and concludes that
knowledge is only created in a relative sense based on the formations of the
individually socially constructed realities. Therefore, multiple social realities
exist that are apprehended differently and sometimes even conflict with each
other (Guba & Lincoln 1994) which can easily be combined with stakeholder
theory and the differing interests of stakeholder groups (Mainardes et al. 2011).
In order to support the data analysis, it was decided to use a computer-assisted
 45

qualitative data analysis software (CAQDAS). Using a CAQDAS software can

bring more rigour into the research (Rambaree 2007). The QDA Miner Lite
software was chosen as CAQDAS to support the analysis.