NEW YORK, March 27 (Reuters) - Volvo Trucks will collaborate with oil major Royal Dutch Shell to use liquefied natural gas (LNG) as a transport fuel focused on North America and Europe, the two companies said on Wednesday.
The loose agreement aimed at powering more of Volvo's heavy-duty commercial trucks with LNG comes as production of natural gas hits record highs in the United States, prompting a string of deals between engine makers and fuel providers.
Natural gas offers savings at the pump versus diesel and gasoline in the United States where new technologies have unlocked vast reserves of gas in shale rock formations. Proponents of natural gas in transport say the low cost of the fuel more than makes up for the greater expense of an LNG-powered truck.
"Customer interest in natural gas as a heavy-duty truck fuel will only continue to grow," said Göran Nyberg, president of Volvo Trucks North American Sales & Marketing.
Volvo aims to have a new 13-litre LNG engine for its long-haul trucking fleet by next year.
Shell, which is one of the world's biggest producers of LNG, has already made moves to build LNG refuelling stations in Canada and recently announced a decision to build two small-scale liquefaction plants that will form the basis of two transport corridors in North America, the company said.