World
Autumn 2011
Autumn 2011
Bunkering
World BUNKERING
Bunkering in the Black Sea On course for expansion
l ARA Report l IBIA Convention Preview l Scrubbers - a viable option?
THE ONLY OFFICIAL MAGAZINE OF
WHEN IT COMES TO THE ENVIRONMENT WE ALL HAVE A LOAD TO CARRY ROSNEFT MARINE UK SUPPLIES HIGH QUALITY 1% LOW SULPHUR FUEL IN RUSSIAN PORTS Arkhangelsk / Kozmino / Murmansk / Nakhodka St. Petersburg / Tuapse / Vanino Vladivostok / Vostochny
World
AUTUMN 2011
Bunkering Publisher: W H Robinson Editor: David Hughes (editor@mar-media.com) Deputy Editor: Sandra Speares (sandra.speares@mar-media.com) Sales Manager: Taj Oberai (taj.oberai@mar-media.com) Project Manager: Dawn Barley (dawn.barley@mar-media.com) Project Consultant: Alex Corboude (alex.corboude@mar-media.com)
The views expressed in World Bunkering are not necessarily those of IBIA, or the publishers unless expressly stated to be such. IBIA disclaims any responsibility for advertisements contained in this magazine and has no legal responsibility to deal with them. The responsibility for advertisements rests solely with the publisher. World Bunkering is published by Maritime Media Ltd on behalf of IBIA and is supplied to members as part of their annual membership package. Published by:
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132, Verhne-Morskaya str., Nakhodka 692917 Primorskiy, Krai, Russia Tel/Fax: +7 4236 629626 Tel/Fax: +7 4236 697060 Tel/Fax: +7 4236 645852 E-mail: tsetan@yandex.ru
Bunkering in the southern ports of Primorskiy Krai: • Vostochny • Vladivostok • Nakhodka • • Slavyanka • Zarubino •
Editor’s Letter
I
am writing this in what is often regarded as the industry’s quiet time – the Northern Summer. In reality, of course, the bunker industry’s front line carries on as normal but there tend to be more empty seats in offices at this time of the year. It becomes a bit more difficult to get hold of the person you need straight away. And the lawmakers and administrators who set the regulations we all live by generally take a break. The European Commission quietens down. There are also no major IMO meetings during August. This lull does not last long, of course, and come September the frenetic pace is resumed once more. But for now perhaps there is a chance to catch up on what has been happening and I hope this issue will help achieve that. As ever we have been keeping an eye on developments on the environmental front and the big news is IMO’s agreement to mandatory measures to reduce emissions of greenhouse gases (GHGs) from international shipping. This is the first ever mandatory global greenhouse gas reduction regime for an international industry sector and IMO and the industry should be commended. In fact of course the real world does not work like that and once the autumn comes and the officials start meeting again and the lobbyists resume lobbying it is inevitable that shipping will once again be attacked for not doing enough and come under pressure to do more. And World Bunkering will be on hand to note what is happening. Meanwhile, this issue carries features on a number of themes. Our deputy editor Sandra Speares takes a look at the fierce competition to be found in the market for independent bunker suppliers. Our other thematic features cover more technical topics: Fuel Quality, Lubricants and Scrubbers. All of these are areas of change for the bunker industry, and once again, reflect how the industry is having to adapt. Quality issues are arising due to the need to use low sulphur fuels, and ‘grey areas’ are emerging. Switching to and from low-sulphur fuels is making new demands of the lubricant manufacturers, as does the liner shipping industry’s move to slow steaming. With very low sulphur limits looming up, owners are now looking seriously at the viability of using abatement technology – or scrubbers – and, as Don Gregory tells us, the technology is just about ready in time. Geographically we roam particularly widely this issue, from the Middle East to ARA, from the Black Sea to Scandinavia & Baltic. These areas are very different from each other but there seems to be a common thread: fierce competition leading to intense pressure on margins. In fact that seems to be pretty much the story for the global bunkering industry right now. Just how tough the current market is will no doubt be one of the big topics for conversation at the IBIA Convention to be held in Barcelona 2-4 November. In this issue we provide details of an event filled with innovations. The World Bunkering team is looking forward to meeting IBIA members at what promises to be an informative and exciting few days.
World Bunkering Autumn 2011
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Contact: Shazmeer Jiwan Alba Petroleum Ltd PO Box 97155 Mombasa, Kenya Tel: +254 41 2317001/2/7/8/9 Fax: +254 41 2317006 +254 41 2317010 Mobile: +254 720 630000 or +254 721 786310 E-mail: sales@albapetroleum.com
World
AUTUMN 2011
Bunkering 19
28 31
IBIA Reports Editor’s Letter 3 Chairman’s Introduction 7 Industry News 9 Chief Executive’s Report 15 IBIA Elections 19 Noticeboard 21 New Members 22 Membership Application 23 Environment 25 Singapore Update Testing Risk Management Independents Technical Fuel Quality Lubricants Scrubbers Interview Letter to Editor
Special Features 30 32 34 36 38 39 43 48 54 56
Geographical Focus Middle East 57 ARA 62 Black Sea 67 Scandinavia and The Baltic 71 Preview: IBIA Convention Barcelona 75 Review: Istanbul Bunker Conference 76 Book Review 77 Russian Update
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Legal News Equipment and Services
89 90
Diary
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www.ciinternationalfuels.com
No. CO232317
REPORTS
Chairman’s introduction
F
or this, my second contribution to World Bunkering as IBIA’s Chairman, I have succeeded in maintaining the tradition of publisher’s deadline dodging. To be absolutely fair, though, I did receive some help on this occasion. I’m happy to report that IBIA’s new board continues to comprise a good industry cross section and that it is truly international. Perhaps even more important, it is a good mix of personalities, providing for interesting and lively debate. We all wish that you would take time to consider any issues which are of interest to you or give you cause for concern and let us know your thoughts and opinions. We are open for discussion on new ideas, challenges, encouragement, criticism – in fact anything related to our industry that you would like to address. Your participation in our Organisation is critical to IBIA presenting an Industry point of view to legislators.
Greenhouse gases
In my previous introductory note, I sought to balance the membership of our organisation by encouraging more ship owners and operators to join our ranks. As regulation and legislation to limit shipping’s contribution to greenhouse gases increases, the need for your board to hear what owners and operators think grows. This is the segment of our industry presently most likely to be affected by legislation and the group upon which non-compliance penalties are most likely to be imposed.
World Bunkering Autumn 2011
For your Board to represent you adequately in the various forums in which IBIA is involved, we must understand your views, your concerns and, most importantly, be given the opportunity to evaluate any constructive alternative suggestions you may have. I’m pleased to see exchanges of opinions on Linkedin, the most recent concerning bunkering in Singapore. May I again encourage you to use IBIA’s website at www.ibia.net and our Twitter and Linkedin accounts to contact us and make your views known.
Bob Lintott
As you know, our convention this year will be at the Hotel Juan Carlos 1 in Barcelona from Wednesday 2nd to Friday 4th November. Our team in Southampton advises me that we already have eight times more bookings than we had at this stage last year for our Connecticut convention. Barcelona is clearly going to be an excellent gathering and the programme has features that will appeal to all members. We’re aiming for our biggest convention yet. Our team has worked hard to arrange this event and your thanks for their efforts will be your participation. We look forward to seeing you there.
Coming closer
It is encouraging to see the European Union (EU) and the International Maritime Organisation (IMO) coming closer together with their regulatory requirements. It is also interesting to note that here in US, most US flagged inter-coastal and intra-coastal shipping burns Gasoil and that the Sulphur levels now generally available are below European ECA requirements. From January 2012, Fuel Oils will be restricted to a maximum of 3.5% Sulphur Worldwide and from August 2012, a maximum of 1% Sulphur within 200 miles of the coast of both USA and Canada. The most extreme emissions control legislation in US remains California with its Air Resources Board (CARB). In June, CARB extended the area in which only distillates can be burned from 24 to 40 miles off the California coast.
Volcanic eruption
I’d like to leave you with this thought: according to Professor Ian Plimmer of the University of Adelaide, “The emissions from Iceland’s Grimsvötn Volcano during the first four days of its eruption in May this year negated every single effort made during the past five years to control carbon dioxide (CO2) on our planet. “If this is so, perhaps we should also be campaigning for re-forestation on a massive scale to increase the amount of oxygen in our atmosphere.” I wish you well.
Bob Lintott
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Reliable, efficient service in ARA and beyond Quick and timely delivery of a wide range of grades WE HAVE MOVED TO A NEW OFFICE! Our contact information: New office address: Wilhelminakade 85, Building “De Maastoren�, 36th floor, 3072 AP Rotterdam, the Netherlands New post address: PO Box 24065, 3007 DB Rotterdam, the Netherlands Tel. (24/7): +31 10 264 27 00 E-mail: Bunkers@lukoil.nl
Industry news
Global round up Bunker costs hit confidence
The latest shipping confidence survey from shipping accountant and adviser Moore Stephens, shows a two-year low as concern mounts over rising fuel costs and overtonnaging. While the threat posed by overtonnaging was the biggest concern according to the survey, worries about continuing rises in the cost of marine fuels came second. “Increases in the price of diesel have a very negative influence on our trades,” said one respondent, “and if they continue the consequences will be catastrophic.” Another emphasised, “Freight rates are low and fuel costs are high, so confidence is low.” Moore Stephens shipping partner, Richard Greiner, says, “It is disappointing to find that confidence in the shipping sector has dropped to a two-year low. The dip in confidence can be attributed to both external factors and to industry concerns. Externally, we are seeing a reaction to political unrest in various parts of the world, and to a number of natural disasters. The full impact takes a little time to feed through into our findings. The rise in fuel prices was a major factor in influencing the thoughts of our respondents. Depending on which reports you read, and where in the world you bunker your ships, fuel prices have gone up by around 50% over recent months. It will take a lot of slow steaming – if indeed that is the answer – to address this particular issue.”
about fuel quality, bunkering procedures or proper fuel handling. Very few of them have seen how contaminated bunkers can cause ship engines to break down suddenly and threaten the safety of everyone onboard, especially in rough weather conditions.” Besides safety considerations, Mr Stamatopoulos says shipboard personnel must manage strict fuel regulations as well as the economic imperative of ensuring the right quality and quantity of fuel is received, given today’s high bunker prices. Mr Stamatopoulos warns: “It’s vitally important for the ship crew to know how to get the most out of their fuel – safely and without contravening the applicable fuel regulations. Training and competence development in bunker management must start in school, not on the vessel.” He adds: “Upon entering the industry, shipboard personnel should undergo regular competence assessment and continual training to keep abreast of changes in the operating environment. Most important of all, their employers – the shipping companies – must invest in a strong safety culture.” In a move to share its knowledge and expertise in marine fuel, DNVPS has been providing pro bono training to maritime academies in Greece, Norway, Russia and Singapore. Mr Stamatopoulos and his team this year have conducted courses for graduating students from the Merchant Marine Academy of Makedonias in Thessaloniki and the Merchant Marine Academy of Aspropyrgos in Athens.
Officers need bunker training
DNV Petroleum Services (DNVPS) says that all officers should receive specific training in bunker operations as part of the shorebased courses and that on-the-job training is not sufficient. The Singapore-based testing agency says that crew competence is failing to keep pace with the development in ship operations, even as advances in technology and design are resulting in progressively sophisticated vessels with greater efficiency and more environmentally friendly features. DNVPS says it believes this is an important cause of the reverse trend in ship safety today. The company’s European regional manager, Bill Stamatopoulos, says: “We see a major problem with young seafarers working on a big ship and not knowing enough
World Bunkering Autumn 2011
YCO Group sells World Fuel Services its Yacht Fuel Services arm for $2.8m
World Fuel Services Europe, part of the US-based World Fuel Services (WFS) group of companies, is buying specialist supplier Yacht Fuel Services from its parent company YCO Group for £1.75m (US$2.80), in cash. WFS plans to keep the Yacht Fuel Services brand and its key personnel. YCO Group is following a strategy of focusing on, and investing in, its core services of superyacht brokerage and management. It set up Yacht Fuel Services more than 20 years ago as a global fuel provider for privately owned superyachts. Yacht Fuel Services is a major player in the yacht fuelling business and is able to provide fuel
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in remote cruising areas worldwide. WFS says it plans to keep Yacht Fuel Services brand and its key personnel. YCO Group intends to use the net proceeds of the sale as working capital to expand and upgrade its operations globally, Last month WFS reported a first quarter net income of $41.1m. The company’s marine operation generated a gross profit of $40.2m, down 3% on the previous quarter but 2% on the same quarter last year. Chairman and chief executive Paul Stebbins said: “During the quarter, we continued to demonstrate our ability to leverage our risk management disciplines, while profitably growing the business.” Heavy fuel oil ban hits Antarctic cruises
The International Association of Antarctica Tour Operators (IAATO) expects International Maritime Organization’s (IMO’s) ban on the use and carriage of heavy fuel oil (HFO), which comes into force this August, to lead to a decrease in the number of voyages by 500-plus passenger vessels from 12 this past season to just five in 2011–12. Passenger numbers on these categories will drop from 14,373 to less than 5,000 for the 2011–12 season. As a result of this and the lingering effects of the slow economy, the overall number of visitors travelling with IAATO operators next season is projected at 25,319, a 25 percent decline from the season just ended. “Antarctic tourism numbers have been trending downward since the 2007–08 season when IAATO members carried a total of 46,265 visitors to Antarctica,” noted Steve Wellmeier, Executive Director of IAATO. “The decline to date has largely been the result of the effects of the economic slowdown worldwide. While we expect this to continue playing a role, there is little question that the more significant factor in next year’s lower numbers is the consequence of the HFO ban. The result will be visitor numbers overall that mirror those of a decade ago.” Mr Wellmeier adds that the priority for IAATO is to remain focused on its mission of safe, environmentally responsible travel, regardless of the number of visitors or upward or downward trends.
Americas Pacific island fuel surcharges rise
US-based container line Matson Navigation Company has increased fuel surcharges on its Pacific island services. From 12 June the surcharge rose from 43.5% to 47.5% on its Hawaii service and from 45.0% to 49.0% for its Guam, the Commonwealth of the Northern Marianas Islands (CNMI) and Micronesia service, effective from June 12 onwards. The company said the move was driven by increasing bunker prices. The company’s senior vice president Dave Hoppes said: “Since announcing our last increase on 31 March, fuel prices not only failed to stabilise, but continued to rise. Matson recognises that energy costs are a major concern for all businesses, as well as consumers. Unfortunately, transportation companies are especially hard hit, with fuel consumption an unavoidable and significant component of operating costs.” He said that the previous increase had allowed the company to begin recovering “some of the extraordinary fuel related costs.” He added: “We will continue to monitor fuel prices and adjust the surcharge accordingly.” Local press reports in Hawaii put the additional charge as equating to a quarter of a US cent on the shipping cost of a can of drink, about three quarters of a cent on lettuce and just under four cents on a 20lb bag of rice.
Europe Aegean’s profits dip
Greek-based Aegean Marine Petroleum Network Inc made a Q1 net income of US$4.0m, down from $14.1m in the same quarter last year. Total revenues for the three months increased by 91.1% to $1,611.9m compared to $843.4m for the same period in 2010. Bunker sales increased by 91.2% to $1,605.4 million compared to $839.8m for the year-earlier period. The company’s president, E Nikolas Tavlarios said: “During the first quarter, Aegean increased sales volumes by 58.5% compared to the year-earlier period and posted net income of $4.0 million as market conditions improved. We remain focused on implementing management’s strategy to enhance future performance and have achieved notable progress to date. “During the quarter, we commenced operations in Cape Verde, located off the coast of Western Africa. This new start-up market provides an opportunity to increase our Company’s fleet utilization and expand its earnings potential without incrementally increasing capital expenditures. “To further strengthen our geographic presence in strategic locations, we announced plans to launch physical supply operations at both ends of the Panama Canal by the end of the current quarter.“ He continued: “We expect to realize benefits from the Panama Canal’s projected expansion, which is expected to dramatically increase the amount of ship traffic. “In addition, we were awarded a long-term concession to operate two onshore storage facilities in Panama on an exclusive basis. Including Panama, we have expanded our global network to 18 markets covering over 50 ports, compared to five service centres at the time of our IPO. “While overall market conditions across the global marine fuel supply industry remain challenging, we believe our growing integrated marine fuel logistics chain combined with our balance sheet strength positions Aegean well for the remainder of 2011, and beyond.” Gibraltar explosion
Bunkering operations at Gibraltar were disrupted for two days following an explosion that blew the top off a sullage tank on 31 May. Two workers believed to have been carrying out welding working at the time were injured, while 12 passengers on the cruiseship Independence of the Seas also suffered mainly, minor injuries. One of the welders, a 40 year old Spaniard, suffered serious injuries. The explosion caused a fire which later spread to an adjoining tank, forcing land-based fire fighters to withdraw. The fire then had to be tackled from the sea, with the operation continuing through the night. The local news service Panorama reported: “The smoke could be seen from different parts of Gibraltar – and it was still so as dusk fell.” The Gibraltar government issued a statement saying: “At 15.35 this afternoon a sullage tank on the North Mole exploded and caught fire. The tank contained a mixture of water and used oil. Initial reports indicate that at the time of the explosion two workers were carrying out welding operations on top of the tank that exploded. The precise cause of the accident remains under investigation.” It later added: “The investigation will now focus on the causes of the fire. In addition, the Gibraltar Port Authority will carry out a full analysis and review of the incident to assess port operational aspects of the matter, and whether there is need for changes to be made.” continued on p14
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World Bunkering Autumn 2011
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Industry news
Asia Korea funds GHG action in East Asia
The International Maritime Organization (IMO) and the Korea International Co-operation Agency (KOICA) have signed a cooperation agreement covering the implementation of a “pioneering” technical co-operation project on building capacities in East Asian countries to address greenhouse gas emissions (GHGs) from ships. KOICA is to make some US$700,000 available to fund 10 activities to be implemented by IMO over a two-year period. The selected activities will focus on enhancing the capacities of developing countries in East Asia to develop and implement, at a national level, appropriate action on CO2 emissions from shipping, whilst at the same time promoting sustainable development. The announcement comes in the run up to the crucial July Marine Environment Protection Committee (MEPC 62) which may make mandatory, under MARPOL Annex VI, a package of technical and operational measures, which include an Energy Efficiency Design Index (EEDI) for new ships; a Ship Energy Efficiency Management Plan (SEEMP) for all ships; and an Energy Efficiency Operational Indicator (EEOI) for all ships. In a statement, IMO says that giving priority to technical assistance programmes that focus on human resources development and institutional capacity building to help developing countries improve their ability to comply with impending international rules and standards to address GHG emissions from ships, can make a significant contribution to limiting or reducing GHG emissions from international shipping. KOICA is a South Korean government agency set up to implement the country’s grant aid programmes for developing countries. South Republic of Korea – the East Asia Climate Partnerships – which aims to support the Republic of Korea’s efforts to take a lead in reducing carbon emissions and to move towards a low-carbon society, thereby setting a milestone for green growth and in this process to assist the developing countries in the region.
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World Bunkering Autumn 2011
News from the Secretariat
I
n England and indeed across most of Europe, we are in the middle of the summer holiday period, known by journalists as the silly season because, in the absence of serious news stories, newspapers traditionally were reduced to filling their papers by printing stories that at other times would not have seen the light of day. In fact, for many businesses August is anything but a silly season; it can be a time to pause for breath and perhaps catch up with some of the less urgent but nevertheless important tasks that have accumulated. Even here in the Secretariat, there is a superficial air of calm, but do not be fooled; there is a great deal going on as we prepare for the resumption of business as usual in September, and as we put the finishing touches to the November Convention in Barcelona.
Annual Convention
We would be delighted to see every single one of our members at the IBIA Annual Convention this year. We have never had a poor turnout and do not anticipate one this year, particularly as we are back in Europe for the first time in five years. The Convention is being held in Barcelona,
World Bunkering Autumn 2011
Spain at the Hotel Rey Juan Carlos I, 2-4 November 2011. There are plenty of good reasons to attend. In the first place it is a great opportunity to support your Association. It is also an opportunity to discuss the issues that affect you and your day to day business. It is the only conference where your views can be discussed and listened to by the IBIA Board and where you can influence the policies of the Association. IBIA has the opportunity to influence regulators and legislators, and it is important that we understand the needs of our members. Prior to the Conference opening there will be meetings of the various committees; these will be open to all comers. We will also hold a Board meeting just prior to the Conference, although this will be a closed session. There are also many and varied networking opportunities in an exciting and innovative social agenda. It is vitally important that you all, as members, contribute to the debates and discussions. Even if a topic is not the subject of a committee or on the agenda of the Conference, it can still be raised with a member of the Board or Secretariat.
Trevor Harrison as Acting Chief Executive Tel: +44(0) 23 8022 6555 Fax: +44(0) 23 8022 1777
We look forward to welcoming many old friends to Barcelona and hopefully many new faces, too. For more information about the Convention and to view the Conference agenda please visit our website www.ibia.net International Maritime Organization (IMO)
Things have been relatively quiet at IMO. We attended the Intersessional meeting of the Working Group on Greenhouse Emissions from Ships. This was held from 28 March to 1 April during which the issue of Market Based Measures (MBM) was discussed. There are currently a number of MBMs on the table but since (although not because of) the IMO meeting, the International Chamber of Shipping has come out in favour of a simple levy scheme. We will continue to monitor events and keep members updated on any developments. The Marine Environment Protection Committee also met in July and a report of the session can be found on p27. The Maritime Safety Committee has met since the last issue and IBIA made a very important intervention. The Netherlands
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presented their paper 89/11/1, proposing that blending of cargoes on board to produce a new cargo should be banned. IBIA intervened and expressed concern that this should not be applied to bunkers, which are of course a cargo whilst on board the bunker barge. The delegation of the Netherlands concurred that this was the case and that there was no intention of including bunkers, the proposal being aimed at oil cargoes carried on board tankers. The exception was generally acknowledged and the whole subject will be dealt with, hopefully satisfactorily, at BLG 16 next year. IBIA (Asia) events
Many of you will be aware (and have played in) the Annual IBIA Golf Challenge. This year the tournament is being held at the Warren Golf and Country Club on Friday 2 September 2011. The same day also sees the inaugural IBIA Asia Gala Dinner. Details of both events are available on the events pages of the website. IBIA Chairman, Bob Lintott, will be flying in specially, and as he is not a golfer, it will be a good opportunity to bend his ear in the clubhouse whilst everyone else is out on the course.
World Bunkering Autumn 2011
Board elections
It is once again time for the annual call for nominations for candidates to stand for election to IBIA’s Board of Directors. This is an opportunity for new people to join the Board and have a say in how IBIA runs. If you would like to know more, please feel free to contact the Secretariat and we will tell you more about what is involved. Alternatively, see details on how to be nominated on p19 and on the website. And finally ‌
The entire Secretariat would like to record its collective thanks to Mr Chong Kam Wah who, as recorded later in this edition, has decided to retire after six years with IBIA. His hard work on behalf of IBIA in Asia is greatly appreciated. We all wish him a happy retirement, comfortable in knowing that he will not be far away whenever we need the benefit of his wisdom and experience.
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Singapore Premium Bunkering Hub
Searights Maritime Services Pte Ltd Certificate of Accreditation: MPA/AS 04 001 80 Marine Parade Road #13-05/06 Parkway Parade Singapore 449269
Tel: +65 6344 1108 Fax: +65 6344 1128 email: bunkers@searights.com.sg www.searights.com.sg
ELECTIONS TO THE IBIA BOARD OF DIRECTORS
A
t the Annual General Meeting (AGM) on Monday, 20 February 2012 there will be three members of the Board whose term of office has expired and who will therefore, stand down with effect from 1 April 2012. These elections are an opportunity for new people with new ideas to join the Board and take part in the running of the Association. In the same way as the officers of the Association change, so should the Board Members. By order of the Board, the Administration is therefore requesting the Members of the International Bunker Industry Association (IBIA) to put forward names of candidates who are willing to stand for election to the Board and who they think will make a contribution to the running of the Association. Prospective Board Members should be aware that being a Board Member is not just a titular position – they will be expected to take an active part in the direction of the Association. A copy of Guidelines for Board Members is available on request and on the website www.ibia.net. Candidates for election to the Board must: • • • •
Consent to stand for election Be paid up Members of the Association Be proposed and seconded by paid up Members of the Association Complete and return the Nomination Form
THIS NOMINATION FORM MUST BE DELIVERED TO THE SECRETARIAT on or before 21 OCTOBER 2011 AT:
IBIA LTD, Ground Floor, Latimer House, 5–7 Cumberland Place, Southampton, Hampshire, SO15 2BH United Kingdom Nominations received after the closing date will be declared invalid.
Yours sincerely, IBIA ADMINISTRATION
World Bunkering Autumn 2011
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REPORTS
IBIA Noticeboard Benefits to members as at 1 August 2011
THE IBIA COURSES:
IBIA Guide to Avoiding and Resolving Bunker Disputes
One Day Basic Bunkering Course
IBIA Members receive their personal copy free, but the report is offered for sale to non Members at £50.
The charge for the Basic Bunkering Course is £200 per head for Members and £300 for non Members
IBIA Annual Report
The 2009/2010 report is now available. All Members will have already received their copy. The report is available free of charge to Members and non Members. Please ask IBIA administration for a copy.
IBIA Guide to Bunker Samplers Advanced Courses
These Courses are intended for those who already have at least 1 years experience in the bunker industry. £425 per head for Members and £625 for non Members
IBIA PUBLICATIONS IBIA World Bunkering Magazine - Free copies for Members of IBIA
Please note non-Members are requested to subscribe to the magazine at a cost of Pounds Sterling £45.00, £60.00 or £80.00 depending on location. Up to 20 additional free copies of the magazine are offered to buyer Members of IBIA for forwarding to their vessels. IBIA World Bunkering Magazine Discounts on Advertising
Discounted advertising rates are available for Members representing savings of between £600-800 per advertisement, depending on the advertisement size. Please contact the Advertising Sales Team at Maritime Media London on + 44 (0) 207 7386 6100
Sale price to non-Members £50.00. IBIA Guide to Arbitration.
A loose leaf book giving Arbitration procedures in thirteen countries written by lawyers. This is now available free to IBIA Members. Non Members may purchase at a price of £50.00 + postage
BOOK OFFERS
Informa Group is offering IBIA Members a discount of 10% on the following publication. Please order, adding your IBIA Membership number, from Customer Services at Informa Group, Tel +44 (0)1206 772 223, Fax +44 (0)1206 772 771 Email professional.enquiries@informa.com
Evaluate the Merits of a Bunker Claim
Interpretation of specifications for bunker fuels and a guide to the question of repeatability. For sale to non Members at £35.
IBIA Logo
Free PDF supplied for use by Corporate Members only.
IBIA Glossary of Bunker and Lubricating Oil Terminology
A comprehensive guide to all those complicated terms which are in daily use in the bunkering industry. For sale to non Members at £45. IBIA Guide to Good Commercial Practice
On sale to non Members at £50.00 per copy. IBIA Fuel and Lube Oil Training CD
This CD is available on request. Members – please contact administration for your free copy/copies.
IBIA List of Members
If your details are not correct then please let the IBIA Administration know at ibia@ ibia.net. This publication is only available to Members.
World Bunkering Autumn 2011
IBIA Safety Cards for Vessel’s crews
IBIA buyer Members receive copies of the IBIA Safety Cards for distribution to their ships, giving basic, plain English advice about safe handling of bunker fuels
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New Members
Corporate
PRIMAX S.A. Bunker Supplier Paul Bottger Av. Nicolas Arriola 740, La Victoria LIMA 13 Peru Tel: +011 51 1203 7423 E-mail: pbottgerp@primax.com.pe
BOUNTY MARINE SERVICES
Wajdi Abdmessih
Bunker Supplier Hatem Al Amoudi Office 303 Garhoud Star Building Dubai 118577 UAE E-mail: alamoudi@bountymarine.ae
Service OILTEST MARINE SERVICES 100 Grove Road Paulsboro 8066 USA E-mail: wajdi@oiltest.com
individual
BROOKES BELL LLP
Andrew McEwen
Service Chris Fisher Martins Building Water Street Liverpool L2 3SX UK Tel: +44 12 7340 0360 E-mail: chris.fisher@brookesbell.com
Service GUARDIAN MARINE TESTING LTD The Wilton Centre Redcar TS10 4RF UK Tel: +44 16 4244 0991 E-mail: ajm@gmtlab.com
INFINEUM UK LTD
Bunker Trader NL TRANSOIL 32 Akti Themistokleous Voudouri Street Piraeus 18537 GREECE Tel: +3021 0428 6960 E-mail: ladis12@otenet.gr
Bunker Supplier Peter Gilbert P.O. Box 1 Milton Hill Abingdon Oxfordshire OX13 6BB UK Tel: +44 12 3554 9828 E-mail: peter.gilbert@Infineum.com
INCARGO SL Bunker Trader Jaime Pastor Ghelfi C/O ‘Donnell 18, 1H Madrid 28009 SPAIN Tel: +34 9 1436 4640 E-mail: jpastor@incargo.es
22
Nikolaos Ladis
John Clark Service ACM SHIPPING LTD Kinnaird House 1 Pall Mall London SW1Y 5AU UK Tel: +4420 7484 6393 E-mail: jclark@acmshipping.co.uk
Jonathan Daniels Service WEBBER WENTZEL 15th Floor Convention Tower Cape Town South Africa E-mail: jonathan.daniels@webberwentzel.com
Daniel Nunoo Bunker Supplier LUBCONSULT & MARKETING LTD 9 Dakar Avenue P.O. Box 30456 KIA ACCRA GHANA E-mail: daniel.nunoo@finnexx.com
World Bunkering Summer 2011
REPORTS
The International Bunker Industry Association Ltd The Aims of the Association
this category does not allow delegation.
• To provide an international forum to
• Corporate membership: open to com-
address the concerns of all sectors of the bunker industry; To improve and clarify industry practices and documentation; To represent the industry in discussion with relevant governmental and nongovernmental bodies and to make the concerns of the industry known to such bodies; To assist members in the event of disputes by identifying the options and exploring the alternatives open to them and eventually to provide a panel of experienced mediators and arbitrators; To increase the professional understanding and competence of those working in the industry.
panies and associations with an interest in bunkering, whether they are involved in the day-to-day business of bunkering ships or have an interest in the industry. Each member has one vote in association business, but corporate membership has the advantage of allowing companies to delegate different members of their company to participate in different working groups. • Corporate sponsor: this is the newest category and allows a company to contribute any sum they see fit to the association. In return they receive the same benefits as a corporate member but in addition have their logo printed on all IBIA publications and are offered further sponsorship opportunities ahead of other members.
• •
•
•
In the beginning
Eight members of the industry conceived the International Bunker Industry in October 1992, and the association was formally registered on 29 January 1993. Since then it has expanded steadily with a worldwide membership comprising shipowners, charterers, bunker suppliers, traders, brokers, barging companies, storage companies, surveyors, port authorities, credit reporting companies, lawyers, P&I Clubs, equipment manufacturers, shipping journalists and marine consultants. In 2008, our membership stands at over 500 and is spread over 67 countries. There are three categories of membership, namely: • Individual membership: open to all people with an interest in bunkering, whether they are involved in the day-today business of bunkering ships or have an interest in the industry. Each member has one vote in association business, but
World Bunkering Autumn 2011
Education • Run further IBIA Basic Bunkering courses
worldwide; • Implement the running of IBIA’s two-day
Intermediate Bunkering courses; • Run further IBIA half day Ships Agents
courses. Safety • Investigate the issue of Safe Access; • Produce a best practice for pre-delivery
checklists. Operational Standards and Procedures • Looking at turning ISO(TR)13739 into a
bunkering procedure. Technical • Continue to provide answers to technical
enquiries from members; • Report on the latest technical issues to
the members. The board
The board is constrained to have a balance of members from each sector of the industry in order to preserve the industry-wide representation and approach of the association. The board regulates the association and is elected by the membership to perform that role. The working groups
Because IBIA is an association dedicated to its membership, it must reflect members’ wishes and react to their needs. In the past this has been achieved by the formation of Working Groups. These groups reported back via IBIA’s official magazine, World Bunkering, or through special circulars where appropriate. There were six Working Groups, as listed below, with the issues that they each addressed.
Environmental • Discuss IBIA approach to EC initiatives; • Develop environmental policy.
Commercial Working Group • Has been responsible for the production
of the IBIA Guide to Good Commercial Practice; • Cooperated with BIMCO on the Standard Bunker Contract.
23
Membership application
PLEASE PRINT VERY CLEARLY Applicants must fill out all appropriate sections including method of payment. Corporate members must give the name of the individual contact.
Name of individual
Title (eg Mr, Mrs, Miss, Dr, Capt)
Company name Address
Zip (Postal) code
Country
Tel No
Fax No
Cell/Mobile
E-mail Please indicate your company’s principal business activity: (please mark one only) Owner/Charterer/Buyer Supplier
Trader
Port Operations/Storage/Delivery Broker
Services (eg Legal/Financial/Analytical)
Please indicate the type of membership being applied for: Individual Member £110 Free (please state reason)
Corporate Member £550
Corporate Additional £
Please state amount being remitted to us in Sterling £ Individual members must provide the following information: Home address
Zip (Postal) Code
Country
Payment instructions
Payment must be made free of all charges at both the paying bank and its overseas correspondent where applicable.
Amex Telegraphic Remittance
Cheque
UK Sterling
Visa
Amex
Switch
1. Credit card payment. Please complete following details: PLEASE PRINT VERY CLEARLY
Cardholder’s name
Card number
Billing address
Zip (Postal) code
Country
Signature
Date
Expiry date
/
2. Telegraphic remittance Clydesdale Bank plc, Mountbatten House, Grosvenor Square, Southampton SO15 2JU, England
IBAN SWIFTBIC GB£ Sort Code Sterling Account Number Account Name
GB95 CLYD 8260 0410 247 629 CLYD GB2S 82-60-04 1024762 IBIA Ltd
3. Cheque: Made payable to The International Bunker Industry Association Ltd. Application forms must be sent by mail or by fax to the
IBIA Administration Office. ALL APPLICANTS MUST SIGN AND DATE HERE:
Signature
Date
The Administrator, The IBIA Ltd, Ground Floor, Latimer House, 5-7 Cumberland Place, Southampton, Hampshire SO15 2BH, United Kingdom. Tel: +44 (0) 2380 226555 Fax: +44 (0) 2380 221777.
environment
GL’s future ships
H
amburg-based classification society Germanischer Lloyd (GL) has unveiled two very different designs: one for a tanker which brings together the best of existing technology and another, for a “zero-emission” container ship, that is a much bolder leap into the future. The crude oil tanker concept features improved energy efficiency, reduced CO2 emissions, increased cargo capacity and minimised oil outflow in case of an accident. The design concept, the Aframax BEST-Plus design, aims to maximise profitability by optimising the hull’s hydrodynamic performance, taking into account long-term freight rate levels and projected bunker costs. GL says the proposed vessel meets future EEDI requirements due to its speed and cargo capacity. The attained EEDI value is 83% of the latest published reference-line value for this ship size. The vessel would be in compliance with EEDI regulations, if they were made mandatory today. The regulations are expected to come into force at the beginning of 2015 at the earliest. GL says that while newbuildings, contracted before the EEDI has entered into force, do not have to comply they will nevertheless have to compete with more energy efficient vessels entering the market after the introduction of EEDI. GL says it has focused on a design concept for a crude oil tanker, because of the potential efficiency gains. It says that, since the introduction of the double hull concept, oil tanker design has not evolved, and changes have been driven primarily by improving production at the ship yards. Little attention has been paid to performance over the life cycle and, in particular, the fuel-efficiency – as
World Bunkering Autumn 2011
measured by the EEDI – has not improved in the last 20 years, despite the general improvement in systems. While much has been made recently of the prospects for using LNG as a fuel, GL has gone further down the environmentally friendly route with a design concept for a hydrogen-powered ship. The zero-emission container feeder vessel is intended for Northern European feeder services and uses liquid hydrogen (LH2) as fuel to generate power with a combined fuel cell and battery system. GL executive Pierre Sames told a recent seminar that the concept involves producing LH2 offshore close to a wind farm. Surplus energy from the wind farm would be used for LH2 production. A 500 MW wind farm could produce LH2 for up to five container feeder vessels, according to Dr Sames. He said that the cost for LH2 produced offshore is several times higher than currently used marine gas oil (MGO). However costs for MGO could be similar to costs for LH2 after 2025 if emission surcharges are introduced. The design concept addresses typical feeder services with a full open-hatch 1,000 TEU capacity and 160 reefer slots, with a service speed of 15 knots. The vessel is powered by a fuel cell system which delivers up to 5 MW to two podded propulsors. A battery system provides peak power. Multiple type C tanks hold 920m3 of LH2 to facilitate a round-trip equivalent to ten full operating days. Crude oil tanker design concept improves energy efficiency, reduces CO2 emissions, increases cargo capacity and minimises oil outflow in case of an accident
25
20
T E S T E D 40.078
TITRATION
5
10.811
EXPLANATION
19
39.098
STANDARDISATION
20
40.078
TRANSITION
5
10.811
EVALUATION
4
9.0122
DEDICATION
TESTING THE SHIPPING INDUSTRY WITH SGS MARINE SERVICES SGS provides innovative services and solutions for every part of the Oil, Gas and Chemicals industry. Our extensive range of services incorporates marine fuel services such as bunker analyses and sludge and slop disposal monitoring, marine lubricant testing, on/off hire plus other specialist surveys, and environmental services. Our comprehensive global network ensures that wherever your vessels are in the world and whatever service you need, our team of experts is on hand to provide you with all the assistance and analysis required. We are there to ensure your fleet delivers optimum performance and reliability. For more information about Marine Services, contact ogc@sgs.com, or visit www.sgs.com/ogc.
© SGS SA 2011. ALL RIGHTS RESERVED.
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WWW.SGS.COM
environment
IMO agrees GHG measures, but lobbyists want more
I
MO’s Marine Environment Protection Committee (MEPC 62), meeting in July, agreed mandatory measures to reduce emissions of greenhouse gases (GHGs) from international shipping. IMO says this is the first ever mandatory global greenhouse gas reduction regime for an international industry sector. Amendments to MARPOL Annex VI Regulations for the prevention of air pollution from ships, add a new chapter 4 to Annex VI on Regulations on energy efficiency for ships to make mandatory the Energy Efficiency Design Index (EEDI), for new ships, and the Ship Energy Efficiency Management Plan (SEEMP) for all ships. Other amendments to Annex VI add new definitions and the requirements for survey and certification, including the format for the International Energy Efficiency Certificate. However, the Richard Branson-founded Carbon War Room said it would deliver a letter to IMO delegates calling for the mandatory use of energy efficiency ratings across the entire fleet, signed by 50 organisations, including owner-operators of 60 million tons-worth of vessels. Signatories include Denmark’s Maersk Line (containers) and TORM, Canada’s Teekay, America’s Heidmar (tankers) and Wallenius Wilhelmsen Logistics (ro-ro) of Norway/Sweden. German consumer electronics company Schneider Electric has also signed, along with the Port of Los Angeles and the NGO Forum for the Future. Peter Boyd, Carbon War Room’s COO, said: “Today’s new standards if applied to all ships, not just newbuilds, would save the industry more than 220m tons of CO2 and USD50bn a year. This is an historic move by the IMO but there’s a bigger environmental and economic opportunity out there that’s too good to miss.” The regulations apply to all ships of 400 gross tonnage and above and are expected to enter into force on 1 January 2013. However, under regulation 19, the Administration may waive the requirement for new ships of 400 gross tonnage and above from complying with the EEDI requirements. This waiver may not be applied to ships above 400 gross tonnage for which the building contract is placed four years after the entry into force date of chapter 4; the keel of which is laid or which is at a similar stage of construction four years and six months after the entry into force; the delivery of which is after six years and six months after the entry into force; or in cases of the major conversion of a new
World Bunkering Autumn 2011
or existing ship, four years after the entry into force date. IMO stresses that the EEDI is a non-prescriptive, performancebased mechanism that leaves the choice of technologies to use in a specific ship design to the industry. As long as the required energyefficiency level is attained, ship designers and builders would be free to use the most cost-efficient solutions for the ship to comply with the regulations. The SEEMP establishes a mechanism for operators to improve the energy efficiency of ships. MARPOL also now includes a regulation on promotion of technical cooperation and transfer of technology relating to the improvement of energy efficiency of ships, which requires governments, in cooperation with IMO and other international bodies, to promote and provide, as appropriate, support directly or through IMO to States, especially developing States, that request technical assistance. EC proposes changes to Sulphur Directive
The European Commission has a proposal for amendments to the Sulphur Directive to bring it in line with MARPOL Annex VI as agreed in 2008. The proposals, however, go further than MARPOL and to that extent are being opposed by the European Communities Shipowners Association (ECSA). An ECSA statement says: “During the consultation period prior to the adoption by the Commission, ECSA stressed that no new elements going beyond MARPOL Annex VI should be included. Regretfully the draft proposal includes a new requirement of 0.1% sulphur limit in 2020 for passenger ships in non-ECA areas.” ECSA also complains that the fuel availability clause in MARPOL Annex VI on the protection afforded in the event of non-availability of compliant fuel has not been incorporated in the proposal. In addition, ECSA notes: “The by now well known problem with the application of 0.1% sulphur content in the three ECAs (Baltic, North Sea, English Channel) has not been taken into account.” European shipowners fear a modal shift from sea to land. The proposal is now going through the process of discussions with EU member states and the European Parliament, and ECSA is lobbying for changes to the proposals.
27
environment
Owners opt for levy International Chamber of Shipping calls for opposition to EU emissions trading system for shipping
A
fter a lengthy period of consultation the International Chamber of Shipping (ICS) decided in May that if market based mechanisms (MBMs) to reduce greenhouse gas (GHG), and specifically CO2, emissions are developed by governments that it had a “definite preference for a mechanism that is levy/compensation fund-based rather than an emissions trading scheme”. The move sparked a hostile response from the Global Shippers Council which interpreted it as an attempt to push costs onto shippers. ICS followed up its decision on (MBMs) with a statement saying that it is strongly opposed to the application of any regional GHG scheme to international shipping. It says it believes that CO2 emissions from international shipping cannot be reduced effectively and meaningfully through the incorporation of shipping into any regional financial instrument. It singles out the EU emission trading system saying: “In particular, the incorporation of international shipping in the European Union Emission Trading Scheme (EU ETS) is most definitely not suitable for the shipping industry and is to be strongly opposed.” ICS says that the future efficiency of the world’s fleet can best be ensured, in the first instance, by the adoption of legislation at the UN International Maritime Organization (IMO) on technical and operational measures for the reduction of CO2 emissions from international shipping. The global owners’ body said that a levy-based system is the one that most shipping companies can live with in order to ensure a level playing field and the avoidance of serious market distortion. ICS has concluded that a levy-based system will be simpler to manage and more transparent. ICS Chairman, Spyros Polemis, said: “The shipping industry has an instinctive dislike of unnecessary complication which will be the result of a system based on emissions trading.”
28
Spyros Polemis
He added: “Governments are looking for leadership from the shipping industry about the market based measures we prefer to help reduce CO2, and to raise money for any environmental compensation fund that might be developed by governments. The meeting of our member national associations agreed on an MBM which is levy-based. Such a system should be developed by IMO.” The Global Shippers’ Forum accused the ICS of wanting to impose a bunker levy on shippers in order to fund an environmental compensation scheme to meet shipowners’ climate change responsibilities. GSF Secretary General Chris Welsh said: “Merely passing on shipping carbon costs to their customers via a bunker levy not only removes shipowner accountability but also will not reduce carbon emissions.” The ICS responded that it was not a case of the ICS proposing anything but rather expressing a preference relating to proposals put forward by governments. They pointed out also that, far from just passing on the levy to shippers, shipowners had every incentive to cut their energy consumption and thus carbon emissions. There was no guarantee that shipowners could in case recover the cost for levy from shipowners; that would be determined by the market. Another shipping industry body, The Baltic and International Maritime Council (BIMCO), expressed its preference for a levy system back in 2009, as its deputy secretary general Lars Robert Pedersen wrote in a letter to Lloyd’s List. Mr Pedersen stressed however that his organisation “felt it was more important to focus on the energy efficiency design index (EEDI) discussions within IMO, before re-addressing or expressing preferences for any particular MBM. Without a technical measuring formula, it is not possible to document improvement in energy efficiency of ships.”
World Bunkering Autumn 2011
California study backs low sulphur fuel drive
The California Air Resources Board (ARB) says that data collected during 2010 in a joint state and federal atmospheric research project reveal, show California’s laws requiring ocean-going vessels to use low sulphur fuel when near the state’s coast have been extremely effective in reducing sulphur dioxide pollution from ships. The data was gathered during the CalNex 2010 field study organized by the ARB and the National Oceanic and Atmospheric Administration (NOAA). “These scientific findings clearly demonstrate that ships off our coast are now emitting significantly less sulphur pollution than in the past,” said ARB Chairman Mary Nichols. “This is good news for California, and for the nation. In 2015, when the federal regulations kick in for ships to use low-sulphur fuel, communities throughout America that live near shipping lanes and next to ports will see clean air benefits.” The California data was compared to ship-plume measurements made by NOAA near the Port of Houston, Texas in 2006. One finding was that container ships encountered off the Port of Houston, where no clean-fuel use is required, emitted four times as much sulphur dioxide. CalNex 2010, the first field study to investigate air quality, climate change and their nexus in California involved years of preparation,
World Bunkering Autumn 2011
and was supported by three aircraft, a research vessel and dozens of researchers on the ground to measure atmospheric pollution levels. NOAA staff on the research ship Atlantis focused on various sources of emissions, air quality and meteorology along the California coast and in the San Francisco Bay. The Atlantis was equipped with state-of-the-art instruments and examined the composition of emissions from more than 70 passing ships over 24 days. The researchers also found that every ship in California waters whose emissions were measured, was using low-sulphur fuel. The controversial 2008 ocean-going vessel fuel-use regulation requires all ocean-going vessels within 24 nautical miles of California’s coastline to use marine gas oil (MGO) with a maximum sulphur content of 1.50%, or marine diesel oil (MDO) with a maximum 0.50% sulphur. ARB has however delayed the planned introduction of a regulation requiring ships to burn distillate fuel with a sulphur content of just 0.10% from next year to 2014. Meanwhile environmental groups are lobbying for a new law imposing speed on merchant ships off the California coast. Campaign group Coalition for Clean Air says that cutting vessel speeds would limit pollution, optimise fuel use and cut GHG emissions. It has emerged that ARB is considering the issue and intends to issue a technical report later in the year. But ARB officials appear to concede limiting vessel speed is a difficult and complex area.
29
SINGAPORE UPDATE
Goodbye to KW
A
fter six years as IBIA’s Singapore-based regional manager Chong Kam Wah has retired. In recent months he has been overseeing the transition to the recently appointed regional manager, Kwok Fook Sing, but will now no longer be involved in the day to day running of the association’s Singapore branch. He remains a non-executive director of the board of IBIA (Asia). One of the architects of the International Bunker Industry Association’s (IBIA) Asian expansion, Kam Wah has been an integral part of the growth and success of the Asia branch. In particular he was instrumental in setting up the Bunker Cargo Officers course, as well as running numerous seminars in the region on topics such as the revision of ISO 8217 (2010) and MARPOL Annex VI. In the six years that Kam Wah worked for IBIA he showed dedication to the Association which went beyond the call of duty. He contributed greatly to the raising of IBIA’s profile, both with potential members and with the authorities. As a result, the regional membership has grown from 39 members in 2005 to 97 today. Fortunately for IBIA, his unquestionable skills will not be lost as he will remain a non-executive director of IBIA Asia. Kam Wah said: “I was privileged to have the advice and support of my colleagues in the secretariat in the UK and I would like, to each and every one of the committee members past and present, including Mr Douglas Raitt (immediate past chair), Mr Simon Neo (current chair), and Mr Daniel Phua (vice chair), to record my personal appreciation for their valuable contributions and counsel.” He added: “I am also thankful to industry leaders who have enabled IBIA, through their support and generosity, amongst other things, to set up a bursary fund for eligible students to undertake industry-centric and IBIA approved training programmes. I am also very grateful to the Maritime and Port Authority of Singapore for their readiness to hear out and address issues and consider suggestions for business improvements from the industry through IBIA.” He added: “Moving forward we continue to grow our regional presence, connect with other industry stakeholders and port authori-
30
Chong Kam Wah
ties, develop and implement training and professional development programmes and organise networking events to better serve members and the industry workforce. I am confident that Kwok Fook Sing will continue to receive the same degree of support from all stakeholders that was extended to me. I have no doubt that he, together with the executive committee, will be able to bring IBIA Asia to the next level of performance in the region. I remain passionate about the industry and as a non-executive director of IBIA Asia I will continue to contribute in the branch executive committee and other industry-level committees, albeit, at a more informal pace.”
World Bunkering Autumn 2011
Forum success More than 70 participants from 46 different companies, including representatives from Maritime Port Authority of Singapore attended a forum jointly organised by IBIA and IMarEST on 10 June. IBIA Asia, took the opportunity to welcome Eirik Andreassen of DNV Petroleum Services who is taking over from Tore Morten Wetterhus as managing director of the Singapore-based testing company. In his opening address the chairman of IBIA’s Asia Branch’s executive committee Simon Neo explained that last year’s upgrade of the local office to a whollyowned IBIA company means the branch is able to better support the membership both locally and regionally within Asia here by developing more and more varied programmes for the industry. He added that, moving forward, the branch committee would focus increasingly on training and development programmes to enhance and upgrade the competencies and proficiency skill sets of the workforce and, equally importantly, to attract people, particularly students, to consider jobs in the bunker industry as a career option. In this regard the branch has set up a fund of S$80,000 (US$65,356) to be disbursed as bursary to eligible students who may wish to enrol in industry-centric training programmes approved by IBIA. Following an opening address by David Kinrade, President, IMarEST South East Asia Division, the forum chairman, a wide range of topics were covered. Douglas Raitt, Global FOBAS Manager, Lloyd’s Register Asia was the moderator. Rahul Choudhuri, DNVPS’s regional manager, Asia Pacific, spoke on Quality Update and Supply Challenges of LSFO. Arun Kr Dev, Director, Newcastle University Marine International, Singapore, looked to the future with a presentation on the Nuclear Option for Merchant Ships. Returning to more immediate concerns of ensuring accuracy in measuring deliveries Seah Khen Hee, the chairman of the Technical Committee – Bunkering and convenor, Work Group on Mass Flow Metering, for the standards body SPRING Singapore, provided an update on the Mass Flow Meter Project. Finally, James Ashworth, chairman of the Singapore Joint Branch of The RINA & IMarEST, spoke on Maritime Opportunities in Renewable Energy.
World Bunkering Autumn 2011
31
testing
DNVPS to continue “aggressive R&D investment”
New boss takes over at Singapore-based testing company but strategy is to stay the same.
E
irik Andreassen, who has taken over as managing director of DNV Petroleum Services (DNVPS) from Tore Morten Wetterhus, says he will follow his predecessor’s strategy. Mr Andreassen, 45, took over on 1 June – he was previously DNV’s director of international affairs and has an extensive background in maritime legislation and policy-making. Following his appointment Mr Andreassen said: “I am excited about the opportunity to lead DNVPS into the future. With our industry network and broad expertise, we can facilitate a more collaborative approach to the sale, purchase and use of marine fuels. I believe all parties in the supply chain can achieve better outcomes by working closer to manage common issues, such as increased regulatory demands, rising costs and operational constraints.” He added that he expected to continue his predecessor’s strategy of aggressive R&D investment and active engagement with DNVPS’ stakeholders to develop effective fuel management practices in the maritime industry. As Mr Andreassen was taking over the top job at DNVPS the company launched an new data analytics product for bunker fuel, providing real-time information on deliveries around the world. DNVPS says Fuel Insight is an aid for effective procurement and benchmarking. The subscription-based web application uses the company’s live bunker quality database and distils complex data on fuel prices, *ISO 8217 quality parameters and regulatory compliance
32
into accurate insights for supplier evaluation and purchase decisionmaking, helping ship charterers, operators and owners optimise costs and reduce risks. The testing firm points out that bunkers now make up a large fraction of a vessel’s operational costs. It says that, as fuel prices continue to soar, many shipping companies are now facing considerable pressure on their bottom lines. Moreover, volatile fuel quality trends, supply chain developments and increasingly stricter environmental regulations are also complicating the fuel management function. Mr Wetterhus said: “The launch of Fuel Insight is therefore a very timely one. At today’s extremely high bunker prices, getting the best value in fuel purchases is a must, especially for shipping companies struggling to stay afloat. Fuel Insight can help bunker buyers and fleet operators decide on sources that yield optimum value, based on the test results of delivered bunkers captured in our database.” Fuel Insight benchmarks various bunker performance indicators of individual vessels and fleets against industry averages. By integrating this data analytics tool into their overall fuel management process, ship operators may, DNVPS claims, identify significant improvement opportunities that translate to substantial cost savings. Besides fuel buyers, Mr Wetterhus says, bunker traders, brokers and suppliers can also use Fuel Insight as a quality control tool to monitor their own products.
World Bunkering Autumn 2011
testing
Quicker detection
New Performance Quality instrument may reduce measurement time and improve accuracy for ferrous debris levels
R
eporting ferrous debris levels is an essential part of used oil analysis and, critically, can prevent potential significant downtime and expensive capital equipment replacement in case of the catastrophic failure of machinery. Performance Quality (PQ) testing is used extensively in used oil analysis laboratories serving the marine market to assess scrape-down oils for ships. The time frame from submitting samples for testing to receiving results can typically span several weeks – however UK-based Kittiwake Developments has launched a new PQ
World Bunkering Autumn 2011
instrument that is claimed halves measurement time and maximises accuracy when testing for ferrous wear debris. Designed specifically for used oil analysis laboratories, the widely used pqM and pqA instruments will be replaced with Kittiwake’s ANALEXpqL Ferrous Debris Monitor. Developed with new hardware and upgraded software, the ANALEXpqL is said to incorporate the most accurate means of detecting and measuring ferrous wear debris in lubricating oils, hydraulic oils and greases.
33
RISK MANAGEMENT
Unpredictable times
Dennis Andersen Global Risk Management
Sandra Speares looks at how companies can minimise risk as changing sulphur regulations increase uncertainty.
M
itigating risk of market fluctuations in fuel prices is an essential part of the task of every owner and operator. As bunker fuel prices have been continuing to fluctuate, those that fail to take some action to protect themselves risk unpleasant effects on their bottom line. While the bunker price trend has been upward, the decision by the International Energy Agency (IEA) in June to release 60m barrels of oil over the following month was expected to push down bunker prices by 5–7% according to shipbrokers and consultants Lorentzen & Stemoco – a move that would provide some relief for shipowners. Many bunker suppliers and traders provide risk management services for their clients. One such is Global Risk Management which helps clients understand their exposure in terms of fuel price risk and which tools are available to mitigate those risks. According to oil risk manager Dennis Andersen “our focus on the subject of risk is the financial risk aspects facing ship owners.” With the introduction of emission control areas, one principal area of concern relates to the availability and the cost of low sulphur fuels in the future. Mr Andersen says: “In relation to the changing sulphur regulations, the main fuel price risk a ship owner is facing comes from the uncertainty over how the pricing difference between traditional fuels, high-sulphur, versus the alternative fuels.” “For example,” he observes, “a ship owner considering a range of different technology investments wants to be able to know how oil prices can be controlled in the future, and potentially lock or hedge the forward prices at a level so budgets are secured.The chickenand-egg situation where no leading alternative-fuel has emerged
34
only makes the decision for ship owners more complicated – and the forward fuel structure more unpredictable.” From 2020, due to tightening emission regulations, the whole world will have to run on light low-sulphur products such as diesel, gasoline and jet fuel and consequently the heavy residual fuel oil will decrease in price as fewer players ask for it. According to the refiners themselves, refiners will simply be unable to squeeze enough lowsulphur fuel out of the crude oil, so in all likelihood the light products will increase significantly in price, Anderson believes. But of course nobody knows how the price on distillates will behave compared to heavy fuel. It depends on a variety of factors, of which the most significant (besides the lack of supply) will be the development of new technologies such as scrubbers, enabling the shipping industry to utilise the residual fuels and still meet the environmental regulations. “What is key for the ship owner is a tool to lock this unpredictable future price difference – and this is where risk management comes in,” says Andersen. “Historically, the price triggers have more often come from increased demand, but recently supply shortages have also played an important role. One far more important factor we saw in the past was the increasing demand for distillates in early 2008. This demand phenomenon saw the cracks between high sulphur and low sulphur fuel surge. The Chinese particularly were big consumers of diesel and it hit the low sulphur consumers while the heavy-fuel users had a relative advantage in the duration. Then, as the financial crisis struck in autumn 2008, the demand fell and the cracks tightened. Low sulphur prices fell faster than high sulphur.” he explains. The same pattern recently emerged after the earthquake in Japan with demand for fuels due to lack of nuclear power and the sudden
World Bunkering Autumn 2011
Vooolatile oil prices can be controlled Is your business sensitive to the ups and downs of oil prices? Ask us to minimise the impact of price volatility. We offer customised hedging of your fuel price risk. Kick start your fuel risk strategy at global-riskmanagement.com A/S Global Risk Management Ltd. · Strandvejen 5, 5500 Middelfart, Denmark · Phone: +45 88 38 00 00 · Fax: +45 88 38 00 09 · hedging@global-riskmanagement.com
lack of sweet Libyan Crude due to supply shortage, Mr Andersen says. Looking ahead, the rule changes coming in 2020 are expected to have a dramatic effect. “We believe both the supply and demand side of the market will be unable to cope with the regulatory changes without a noticeable distortion of the fuel price pattern.” “Whilst the industry has had ample time to adjust – and we are running out of time – it is a fact that no clear alternative fuel has emerged yet, nor has any leading technology upgrade. For a ship owner, changing to a new and relatively unproven technology is a drastic step and could have fatal consequences if the investment rests on the wrong assumptions, be they technical, financial or operational (supply) issues. Owners need to lock the fuel price forward in order to ensure that it performs in the way they anticipate.” If owners make expensive investments in scrubbing technology which enable them to continue using heavy fuel oil and still meet the regulations, they could find that the price of Heavy Fuel Oil (HFO) will rise as well, resulting in a “double whammy”. The point is that meeting these challenges requires huge development investments and even the largest ship owners are too small to have a leading role in finding the right solution and (contrary to popular belief) the oil suppliers are also quite fragmented and reluctant to invest in alternative fuels unless the shipping industry wants it. Global Risk Management is a leading provider of customised hedging solutions for the management of price risk on fuel expenses. Combining in-depth knowledge of the oil market, finance and transport, Global helps clients protect their margins from the risk posed by notoriously volatile fuel prices. Their primary client base
World Bunkering Autumn 2011
is within the segments of shipping, oil supply, aviation and industry. The company is part of the United Shipping and Trading Company (USTC), one of Denmark’s largest companies. Other operators to provide risk management expertise include Peninsular Petroleum who offer fixed price agreement and financial swaps. The service, the company said is “tailored to the client’s requirements and their risk appetite”. With fixed price contracts, the client specifies how long he wants the agreement to last, ports for delivery and the cost of the bunker, and Peninsular ensures that the fuel is delivered. Balancing risk is the key as bunker traders and suppliers have to be very careful with whom they deal. Due diligence, always a key issue is all the more important now as bunker companies have to assess whether their clients are financially sound. Taking into consideration the cost of bunkers in the current climate versus the margins traders earn on selling the bunkers, “means it takes a hell of a lot of business to cover one loss from one owner,” according to one major player in the market. Bunker traders spend a lot of time and money on due diligence, either employing third parties to manage this or doing the job in-house. As one trader put it, in-house operations offered the benefit of ensuring that the company’s traders were involved in any transaction and could use their knowledge of the customer involved to ask the right questions. Research and information on the client are key. Big independent operations like Chemoil offer risk management services to their clients as well as using hedging techniques to cover themselves in a fluctuating bunker market.
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independents
Crowded scene
As Sandra Speares reports, competition among the independents is intensifying.
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he market for independent bunker suppliers is currently quite saturated, with several new entrants in the year 2010 and 2011 according to Singapore-based Seabridge Bunkering. “Market conditions are so competitive now that margins are being slashed tremendously and suppliers / traders are feeling the heat to stay in the industry,” the company says. “Sound and reliable suppliers with strong fundamentals are more likely to survive in these tough and already saturated markets, whilst weaker suppliers maybe forced out of the industry. With market conditions and the situation constantly changing, we could see some form of alliance between suppliers themselves or between suppliers and traders, thus moving towards some form of consolidation between these two stakeholders in the bunker industry”. In announcing its first quarter results in May, leading fuel supplier Chemoil was upbeat about market conditions, saying it had recorded its strongest profit for shareholders since its Initial Public Offering (IPO) in 2006. It showed first quarter figures of US $23.2m and gross contribution per metric ton up to $14.4 per metric ton compared to $1.7 per metric ton for the same period last year. Sales volumes were 4.6 million metric tons as compared to 3.7 million metric tons in the first quarter of 2010, representing an increase of 25% – partly as a result of the acquisition of OceanConnect Marine bunker trading group in January 2011, coupled with increased ex-wharf and cargo sales in Europe and Asia, the company said. Chemoil’s Chief Operating Officer (COO) and Chief Financial Officer (CFO), Mats Berglund explained, “The company’s performance is strongly influenced by improving market conditions coupled with restructuring initiatives, which have allowed us to record the best quarterly profits in the company’s history since IPO in 2006. The recovery highlights the competitive advantage inherent in Chemoil’s business model which allows the company to gain greater control of its entire supply chain.” Chemoil’s Chief Executive Officer (CEO) Tom Reilly said, “I am very proud to see the company’s streamlining initiatives translating into
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a profitable bottom line and shareholder value creation. 2011 started on a positive note in many ways – the margin environment improving, the stable income stream from our optimized logistics assets, and our joint ventures and associates’ continued positive contributions as can be seen in this quarter’s results. We are invigorated by the many potential new business opportunities on the horizon, and we aim to seize the opportunities to reach new milestones for the company when the time is ripe.” Gibunco subsidiary Peninsular Petroleum also produced a strong performance last year, with turnover up 33% as bunker fuel prices rose. Another company to register strong profits last year was OW Bunker, with volume up 15% and pre-tax profits on un-audited account rising to $48m from $32m the previous year. On announcing the results the company said they had been achieved by the “controlled development of global operations; adjusting to the changing dynamics of the market and global economy and focusing on regions of growth and opportunity, as well as widespread customer retention and new client acquisition by providing quality products and services that meet demand”, although it acknowledged that the physical market remained tough. Morten Skou, CFO, OW Bunker, said in a statement when the results were announced that: “These latest results clearly highlight the strength of our business model, which has proven to provide stability and sustainable growth in a volatile market and global economy.” The company remains confident that it will continue to prosper in 2011. According to Mr Skou: “The time that we have spent investing in our infrastructure and global operations in order to enable the business to capitalise on areas of growth has been validated. While we expect 2011 to be another precarious year for the global economy and shipping industry as it continues to recover, we remain confident that we have the financial strength, the right strategy, and the right people to meet our ambitious growth targets.” The fact that companies are keeping tight controls on costs were emphasised by recent reports that North Sea Group (NSG) and
World Bunkering Autumn 2011
Associated Bunkeroil Contractors BV were planning to restrict credit terms to 21 days. Energy supplier NSG is currently in talks with Argos Oil over a possible merger, which if it goes ahead will create the largest independent player in the North-West European market. According to NSG Chief Executive Ben Vree: “After the recent strategic reorientation, NSG has brought its core activities and future growth ambitions into sharper focus. It wants to become an integrated provider of logistic services in the energy field. Beside storage, transfer and distribution, these services include trading and bunkering activities for seagoing and inland ships. Sustainability also has a high priority at NSG – merging with Argos will enable us to realise all our ambitions better and more quickly and will give us a platform for further growth.” The company says that “Because of a difference of opinion about the long-term growth strategy of NSG, the Van der Sluijs family has decided to sell its share in NSG to the other shareholders – Reggeborgh, Atlas Invest and Romo Holding. With this transaction, these shareholders realise a further increase of their holdings in the energy sector. “In line with its strategic focus, NSG has decided to dispose of its inland shipping activities Interstream Barging (ISB). NSG will sell 70% of the shares in ISB’s inland shipping activities to the Van der Sluijs family before the intended merger with Argos. NSG will retain a 30% strategic minority interest in ISB in order to guarantee the availability of the fleet.” The financial crisis has meant that ship owners have a big challenge to run their ships at low costs, with poor freight rates. Prospects are certainly not good for this year, according to some traders and perhaps for next year as well although there may be segments that will improve in the coming years. The fact that ship valuations
World Bunkering Autumn 2011
have dropped as much as 50% has been a difficult pill to swallow for owners who invested in new tonnage in China and elsewhere during the boom years. As one trader put it, the market will be a “dangerous” one over the next few years. “We will be seeing a lot of companies who won’t be able to make it,” he said. “Costs on ships will be high and payments on trades will be low. We see a lot of small coasters which are having tremendous problems at the moment and I think it is just a question of time before we see Singapore and Piraeus and all the normal ports where people lay up ships full. “Perhaps one of the benefits of independent companies, in particular the larger ones, is that they don’t have a pistol to their heads telling them they have to sell product because of the market situation. “It is more a question of choosing the right moment and the right people to sell to and also a question of clients questioning whether the company from which they are buying bunkers has a sound financial background. Owners are asking themselves if they can afford to do a deal with a smaller company as opposed to a larger one, with a name in the market and the benefit of buying bigger volumes in the market. “Although some companies have been cutting down credit to 15 or 21 days, others are not going down that route but will be flexible in their dealings with customers to support the client relationship though thick and thin.” And so what is the advantage of the independent trader? No gun at his head , no need to run a risk. Selling to the right owner at the right price is the name of the game. “Being independent,” the independents say means that they can guide the owner to the port that offers him the greatest advantage. “I’m providing a service and I consider myself to be a much more flexible player than a physical supplier”, says one commentator.
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TECHNICAL
Bunkering in the Thames Estuary Cockett Marine Oil’s general manager, supply and business developement, explains the technical background to setting up a new bunkering operation in UK waters.
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he London Queens Channel is conveniently located at the entrance to the River Thames. Situated on 51 deg 28 min North/ 001 deg 20 min East the anchorage offers a very minimal deviation from the main shipping lanes of the English Channel, one or two hours depending on direction of transit. The bunkers-only fuel operation in the Thames Estuary has been developed in response to the UK government’s ‘Merchant Shipping (Ship-to-Ship Transfer) Regulations’. The new legislation will ban all unregulated refuelling in UK waters unless it takes place in areas controlled and supervised by a port authority, in this case the Port of London Authority (PLA). The project draws on the resources of a number of businesses with Cockett’s South African parent company, The Grindrod Group, including Unicorn Shipping and Rotterdam based Associated Bunker-oil Contractors. The London Queens Channel comprises three anchorages located within the Port of London governed waters, each able to host a variety of vessels; combined they can service the larger deep draft vessels. The anchorages sit in deep and unobstructed waters, well sheltered from the prevailing weather by the South Eastern Hook of the Kent coast. The anchorages are serviced by a modern vessel specifically adapted to perform bunkering operations. The 8,672 dwt LS Christine can carry 10,290m3 in its cargo tanks. A full range of fuel oils, including low/high-sulphur fuel variants, as well as gas oil, are delivered, loading both directly from Rotterdam and localised dedicated Thames-based storage facilities. The vessel is fully equipped with a wide range of hoses and flanges suitable for all combination of customer manifold locations, with the added option of a stern manifold to accommodate the split fuel oil and gas oil manifold locations present on some vessels. Large
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Yokohama fenders are fitted to both sides of the vessel to ensure good protection throughout the ship-to-ship operation. In addition to this a full Tier 1 oil response kit is carried aboard with a fast craft ready for prompt deployment if necessary. The crew has been fully trained in the provision of bunkering services and as a ships compliment provide peace of mind in providing a first-class quality service. As well as the Tier 1 response equipment on-board the vessel Cockett has also heavily invested in a comprehensive shore-based Tier 2 set-up. The UK Spill Association (UK Spill), which is recognised by the UK environmental and maritime regulators as the national industry body, has accredited the spill response equipment and congratulated Cockett Marine Oil for the development of its local partnership concept. The spill response set-up has worked closely with inshore fishermen, each an expert on estuary and coastal waters. This has led to the adaptation of 10 fishing vessels to act as additional oil spill response vessels. As well as making changes to the vessels, funding has been provided to facilitate the training of 30 local fishermen in oil spill response and pollution control. This Tier 1 equipment is also used to cover Cocketts’ existing Thames river bunker service, which has been in operation since 2009. The 1,500 dwt barge Beringzee currently services vessels on the Thames and Medway being able to supply the same range of fuel oils and gas oil as the LS Christine. With both the Thames and London Queens Channel operations now in full swing Cockett Marine Oil are able to offer the location as a serious bunker hub, providing a bunkers only service in the right place at the right price. The commercial advantage of its location and ability to take advantage of cheaper fuel prices from Rotterdam makes the case a compelling one for owners and operators, especially in the current economic climate.”
World Bunkering Autumn 2011
Fuel quality
Grey area for low sulphur fuels
F
rom July 1, 2010, in line with the revised marine pollution (MARPOL) Annex VI, the maximum permitted sulphur content of fuels for use in Sulphur Emission Control Areas (SECAs) was been reduced from 1.5% to 1.0%. This has also resulted in the change of terminology for these areas from SECA to ECA-SOx (Emission Control Area established for SOx and particulate patter control – Baltic and North Sea as defined in the Annex). Since the introduction of revised sulphur limit, Lloyd’s Register Fuel Oil Bunkering Analysis and Advisory Services (FOBAS) has observed a particular trend in the sulphur content of low sulphur fuel oils (LSFOs) supplied in the ARA (Amsterdam-Rotterdam-Antwerp) region. A substantial amount of LSFO samples have been tested by FOBAS where the sulphur content was measured in the range of 1.01% to 1.06% m/m often termed as “grey area” or “off limit”. Since the introduction of SECA (now ECA-SOx) five years ago, there has been uncertainty among different industry stakeholders on the interpretation and implementation of MARPOL regulation 14.4.2 which deals with the control of sulphur content in the fuel. According to ISO 4259 which deals with the determination and application of precision data in relation to test methods, any tested sulphur figure in the range of 1.01% to 1.06% m/m falls within the 95% confidence limit based on a single test result. Like any other fuel
Percentage of LSFO samples
60% 50% 40% 30% 20% 10% 0%
parameter tested under ISO 8217 protocol, sulphur falling within the 95% confidence limit should not be considered to be off specification and in terms of statutory requirements may still be considered compliant based on a single test result. The ambiguity with regards to the interpretation of sulphur results in “grey area” partly originates from the fact that different port state controls might interpret and subsequently enforce the use of off-limit LSFOs within ECA-SOx differently. It should be noted that compliance verification procedure is stipulated in MARPOL Annex VI regulation 18.8.2 (Appendix VI) for the exact compliance with the limit, in this case 1.00 % m/m, however due to the possibility of any unpredicted approach taken by a particular port state control it is recommended that visiting port state and vessel’s flag state are consulted for guidance on this issue to avoid any unnecessary delay to the vessel operations. Figure 1 illustrates the comparative figures for off-limit and noncompliant fuels from selected EU countries tested by FOBAS. From Netherlands 52% and Belgium 43% low sulphur fuel oils were tested to be off-limit. These figures are considerably higher when compared against fuel stems bunkered in UK or Germany. Moreover, in the last six months, at least 77% of “grey area” LSFO samples tested by FOBAS from EU countries are observed to have originated from the ARA region. The ARA region is a strategically important LSFO samples from Selected EU Countries shipping and transportation hub for mainland Off-limit (Sulphur Content = 1.01~1.06% m/m) Non-compliant (Sulphur Content >1.06% m/m) Europe which lies within ECA-SOx and majority of the LSFOs supplied there being in “grey area” is obviously a cause of concern. It may be difficult to predict the exact cause(s) of this particular phenomenon, however one of the contributing factors could be the high LSFO demands in this region putting extra pressure on the supply chain and refineries to produce large LSFO quantities and in doing so they tend to produce fuels very close to the limits with Netherlands Belgium Germany United Kingdom only limited margin for error.
Figure 1: Comparative Statistics (Dec 2010 – May 2011)
World Bunkering Autumn 2011
Continued on p42
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M ARINE
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26.982
MOTIVATION
FUELS, LUBRICANTS, SPECIALIST & ENVIRONMENTAL SERVICES TO TEST OPERATIONAL EFFICIENCY AND ENVIRONMENTAL CONCERNS
When you are managing a marine shipping fleet, you need to feel confident your vessels are operating efficiently, are protected against breakdown and that all processes are being effectively managed. Whether you are considering fuel sourcing and the subsequent waste disposal; the condition of the vessel, either in general or specifically the engine; or the resulting environmental impact from its use, reliable and accurate analysis allows you to make the right decisions. Having information you can depend on means you can protect the safety of the cargo, crew and passengers, managing risks, protecting profits and limiting costs while ensuring no harm is being caused to the environment and any related regulations are being met. SGS offers a service that covers all areas of marine fleet management. Our comprehensive global service ensures that wherever your vessels are in the world and whatever service you need, our team of experts is on hand to provide you with all the assistance and analysis required. We are there to ensure your fleet delivers optimum performance and reliability.
MARINE FUEL SERVICES If you are buying fuel you need to know the amount the ship receives is the quantity you purchased and that it is neither contaminated nor of a quality that could negatively impact on the ship’s fuel system, engine or environmental performance. If there are any issues that arise you also need support, advice and guidance in resolving them. Once the fuel has been burned you need to be sure that the waste slops and sludge are being disposed of properly, in accordance with regulations and unadulterated. By providing you with bunker quantity surveys and routine quality analysis, as well as further specialised analyses SGS supports you through the procurement, delivery and use of fuel. We are also able to ensure waste slops and sludge are properly removed by your vessels contractors and disposed of appropriately.
MARINE LUBRICANT SERVICES SGS offers a range of lubricant testing services, both routine and specialist that will inform you about the performance, wear, additive content and presence of water and coolant in the engine of each of your marine vessels. This invaluable information can help you to prevent unnecessary damage to machinery, ensuring that it is always properly lubricated and running without resistance. Our service also informs you about degradation and the service life of your engine. By referring to our extensive engine database of more than 15,000 engines and accompanying information that has been collated over five decades we can detail the condition of your machinery and give you explicit cost effective maintenance advice. Keeping a close eye on a vessel’s lubricant, ensuring it is the right match for the engine and other equipment’s operational needs can help to avoid the costs associated with engine failure and the subsequent repair and downtime. As with fuel analysis, if there are any issues, you need support addressing them and preventing costs from being incurred. SGS can ensure you identify and use the best lubricant for your vessels’ engines. Should you experience any problems with your purchased lubricants we can perform extensive analyses and support you through any claim processes.
SPECIALIST MARINE SERVICES If you are responsible for chartering ships, you need to be sure that the condition at the point of charter matches the ship’s condition upon return. Even if the ship is not being hired, a full awareness of its condition at all times is essential to protect both the crew and the profit. Such condition assessments are also required when seeking insurance for vessels or when it comes to making claims on existing insurance policies. SGS’ specialist marine services offer you a full package of vessel condition reporting and should any disputes arise can also provide you with the technical support and assistance needed to ensure the issue is quickly and effectively resolved. Our team of experts can readily perform inspections and help you find the answers to your vessel condition related questions.
MARINE ENVIRONMENTAL SERVICES Each year, protecting the environment is of growing importance to every industry. With many thousands of ships delivering cargo across the world at any one time, each dependent on oil-based fuel, it is no wonder that concerns over emissions, waste product disposal and other factors are of primary importance. The International Marine Organisation (IMO) is continually reviewing and updating requirements with regards to marine pollution such as dumping, oil and exhausts. The related regulations come from the International Convention for the Prevention of Pollution from Ships, and are abbreviated from Marine Pollution to MARPOL. The MARPOL regulations are regularly updated, with the latest revisions relating to Annex VI Air Pollution effective as of July 2010. SGS’s Marine Environmental Services can assess your vessels’ compliance with the current MARPOL regulations. As part of this, we provide sampling and testing of the ballast water to assess efficiency of abatement system and assess and monitor the ship’s stack for emissions also during navigation. Our global service ensures that whenever you need confirmation your vessels are adhering to environmental requirements we can be on-hand to provide you with the reassurance you need.
THE BENEFITS Through the services that SGS offers, you can feel assured that every aspect of your fleet’s performance, safety and effects on the environmental are being tested, assessed and reported. This means you can take action whenever it is needed. With so much to consider, having one supplier that you can trust to perform all these services, at every harbour across the world and along all key-shipping routes, gives you the reassurance you need. Our global network of laboratories supports our in port experts and together they alleviate the pressure of maintaining the necessary standards across your entire fleet. When it comes to critical inspections for which you need guaranteed, reliable answers our team draws on their extensive industrial, minerals and agricultural knowledge alongside their oil, gas and chemicals expertise to provide you with the analyses. By working with SGS you not only have access to our global service and critical testing at all major harbours, but you will also be able to view the performance of your fleet via our live web portal. Any testing, certification and reporting is provided to you electronically and reports are stored on our servers for your future user-protected access. Our all-
encompassing marine services are in place to support you and your operations, to help you deliver exceptional services to your customers while managing costs, generating profits and ensuring goodwill through your care and attention.
WHY SGS? Our industry knowledge, alongside our experience and recognition allows us to offer you our advice and to share with you our expertise. Our full Oil, Gas and Chemicals (OGC) programme covers upstream, midstream and downstream as well as LNG. We have been the established leading industry player in the sampling, measurement, analysis and certification of bulk liquids since the 1950s as a unified Group and for many decades before that in the form of the individual international companies who were merged to form what is today’s OGC division. Our Environmental Services support all industries and governments in developing sustainable solutions, complying with environmental regulations and assessing environmental performance. Our team of experienced consultants guide and assist customers through a comprehensive range of specialised environmental services ranging from impact assessments to air and water quality testing and a wide variety of climate change related services.
A WORLDWIDE COMPANY WITH GLOBAL SOLUTIONS SGS is the world’s leading inspection, verification, testing and certification company. Recognised as the global benchmark for quality and integrity, we employ over 64 000 people and operate a network of more than 1 250 offices and laboratories around the world. We provide innovative services and solutions for every part of the oil, gas and chemicals industry and environmental services when and where they are needed. Our global network of offices and laboratories, alongside our dedicated team, allows us to respond to your needs, when and where they occur. Our reputation for independence, excellence and innovation has established us as the market leader in providing services that improve efficiency, reduce risk and deliver competitive advantage for you.
FOR MORE INFORMATION ABOUT MARINE SERVICES, CONTACT OGC@SGS.COM, OR VISIT WWW.SGS.COM/OGC
testing
Setting new standards
I
t will take time for the new ISO8217 fuel standard to be implemented by shipping companies and for them to start using fuel which complies with the new specifications, according to Chevron fuel technologist Monique Vermeire, who recently took over the chairmanship of the International Organization for Standardization (ISO) working group responsible for formulating the standard – introduced last year – from Wanda Fabriek of Intertek. Engine builders, suppliers and users, testing services are all represented in the working group. The standards were developed in a very short period of time because of the request by the International Maritime Organization (IMO) to develop fuel specifications while addressing air quality, ship safety, engine performance and crew health. Also the impact of specification limits on fuel oil availability, and technical developments on board were considered, Vermeire explained. “The ISO standard published in June 2010 only has legal standing when it is part of the bunker quality clause of the purchase contract agreement and is therefore, unlike the sulphur legislation as outlined in MARPOL Annex VI not mandatory. The customer and the supplier agree in the commercial contract to a fuel to be delivered that is fit for purpose and they also may agree to specifications which deviate from the ISO8217 specifications – for example the customer may request a vanadium content lower than what is specified in the standard,” she said. “The standard has revised the categories of fuel oil and the working group considered current needs and introduced a new grade of distillate fuel oil, DMZ, which has a higher minimum viscosity than the normal DMA marine gasoil, this to guarantee the minimum required viscosity at engine inlet. “When the Californian rulemaking to use DMA or DMB with maximum 0.5% entered into force, incidents were reported that were attributed to too low viscosity at engine inlet (higher temperatures in the engine room can affect viscosity of the on-spec fuel such that it does not meet the engine manufacturer’s at engine inlet specifications) and /or reduced lubricity (fuel pump scuffing)”. As sulphur regulations will get tighter over the next years, and demand for lower sulphur distillates will increase, a lubricity specification has also been included for distillate fuels with less than 500 mg/ kg sulphur. “There have also been issues like compatibility problems or fuel leakages relating to switching from heavy fuel oil to distillate fuel oil to comply with regulations on sulphur content l”, Vermeire said. “However the number of incidents has reduced significantly. Customers are getting used to the operational aspects of fuel switching and some shipping companies are requesting distillate fuels with a higher minimum viscosity requirement”. She suggested however that there might be more operational issues in the future with the changeover to 0.10% sulphur fuels in the emission control areas. The bio-issue in marine fuels which can not entirely be excluded due to potential cross contamination in multi-product pipelines was also tackled in an annex. “This is one of the future challenges of the
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working group to obtain more experience with respect to storage and handling of marine fuels containing Fatty Acid Methyl Esters (FAME) and studies are being undertaken to generate the technical data.” According to Vermeire: “Another important characteristic added to the specifications is a H2S liquid phase limit of two mg/kg maximum, as of July 2012. The delayed implementation limit allows for the industry to make modifications where required but also to avoid disruption of the supply in the intervening period”. “This limit reduces the risk of H2S exposure, however it remains critical for ship and crew to maintain appropriate safety procedures/ processes onboard. This limit will improve the current situation as there is currently no restriction on the H2S level, though it should be mentioned that the level of incidents in marine fuel supplies due to H2S are rare and will become rarer with the new specification.” In view of the concern of potential H2S exposure to crew on both barge and ship from bunker fuel oils (residual and/or distillates), a subgroup of the ISO technical working group will conduct a study to establish the degree of risk and collect field data. “This is the other challenge the ISO technical group has started to work on.” Vermeire said. As far as fuel oil availability is concerned, further crucial changes of the marine fuel sulphur specifications are to come with a further reduction to just 0.10% sulphur in 2015 in ECAs. Depending on the outcome of a feasibility study planned in 2018, the global sulphur cap will be reduced to 0.50% in 2020 or 2025. The demand for middle distillate products like automotive diesel has increased and the introduction of biofuels in the automotive market has a direct impact on the demand for their fossil equivalents and may free up some supplies of distillate fuels to the shipping industry in the future, Vermeire believed. To cope with the changing qualitative and quantitative product demand, refineries need to adapt continuously and make considerable investments, while at the same time being challenged to curb their own absolute level of CO2 emitted, Vermeire maintained. “The momentous change to 0.10% sulphur in designated ECA areas in 2015 will call on refiners to make available an estimated additional amount of 40 Mt/a of low sulphur marine (distillate) fuels. Recognising the European market is already short in middle distillates and the growing dieselisation trend in the US, investment in additional refinery conversion capacity may be required, for example, hydrocracking, coking and further hydro-treatment of the distillate product to meet the sulphur limit, resulting in additional refinery energy consumption and CO2 emissions. Changes in the marine fuel sulphur requirements, manufacturing processes and other market developments will be taken into account when developing future ISO 8217 specifications in order to guarantee fuels are fit for purpose, Vermeire said. Whether or not there will be a shortfall in fuel supply in the future is a moot point. One key point, Vermeire commented, is to what extent further development and installation of onboard emissions abatement equipment can achieve equivalent emissions reductions.
World Bunkering Autumn 2011
LUBRICANTS
Meeting the ECA challenge
Patrick Havil
Patrick Havil, global marketing manager, Total Lubmarine says that new lubricant technology is vital to meet emissions controls.
C
hanges to the shipping industry are occurring faster than ever before and the need to meet new challenges has implications for every sector of the industry. Maritime emissions are of particular and immediate concern to the international shipping industry, especially the need to reduce SOx, NOx and CO2 emissions. There are also regulatory moves to reduce emissions from particulate matter (PM). The reduction of SOx is already under way with the introduction of Emission Control Areas (ECAs) and the use of low-sulphur fuel. These developments are also expected to have an impact on NOx emissions. While CO2 is not yet regulated, new technology is continually being developed to help reduce such emissions from ships. The methods used to reduce the levels of these gases has a vital impact on the type of lubricant used on board ships, and this is illustrated perfectly by the requirements which shipping has to meet when trading into and out of ECAs. Currently we have ECAs in the Baltic, the North Sea and the English Channel, with the North American ECA to become effective in 2012. Areas where ECAs are being planned include the Mediterranean and Tokyo Bay for 2015. In 2020, it is expected that Australia, Alaska, Hong Kong, Singapore, Korea and the Gulf of Mexico will also have emissions controls in place. It has been estimated that 50% of containership voyages next year will involve transit through an ECA at some point. In 2015, the figure could be over 80%, and by 2020 we could be looking at 95% of voyages being impacted by an ECA. Current experience of ship operations suggests that the most challenging problem is not so much the difficulty involved in switch-
World Bunkering Autumn 2011
ing fuels, but rather the issue of lubricants. Engine manufacturer guidelines state that lubricants suitable for use with high-sulphur fuel are not suitable for use with low-sulphur fuel. But this is just part of the problem. At the same time, charterers and operators face problems resulting from the gap between the rise in operating costs and freight rates. One consequence of this is that slow steaming and ultra-slow steaming are becoming commonplace. The demands of slow steaming mean that a high BN (Base Number) lubricant is required. But engine manufacturers recommend that a low-BN lubricant is used in ECAs. It has become clear that a new generation of specifically designed marine lubricants is needed to address the changing operational environment. This new generation must not only offer significant cost savings, but must be safer and preferably be capable of use with fuel of any sulphur content under any conditions. This provides massive benefits when moving in and out of ECAs. New lubricant technology is vitally important – one which produces an accurate BN with a specific detergency level. In the current economic climate, shipoperators simply cannot afford to ignore any potential cost savings which do not adversely affect reliability of operation. Total Lubmarine’s Talusia Universal cylinder oil is, to date, the only lubricant on the market that can be used with both highsulphur and low-sulphur fuel, when slow steaming or going as fast as the engine will allow – essentially, under any conditions. Extensive testing has established that this product is highly effective under even the most demanding conditions. Talusia Universal facilitates lifting operations and eliminates the possibility of errors in the service tank, thus making for safe and
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GLOBAL BUNKER SUPPLIERS AND TRADERS
Peninsula Petroleum is a major physical bunker and lubricant supplier operating from the ports of Gibraltar, Ceuta, the Canary Islands, Panama, Athens and Singapore. As a physical supplier and a worldwide trader with annual sales in excess of 6,000,000 tonnes, we have the resources and capabilities to guarantee the highest quality products and first-class customer care at all times. With offices in London, Gibraltar, Geneva, Tønsberg, Athens, Dubai, Singapore, Shanghai, Tokyo and Montevideo our highly skilled staff, which includes more than 15 nationalities, is ideally placed to make the most of their vast experience and expertise. Available 24 hours a day, 7 days a week, 365 days a year, we provide professional, cost-effective ways of meeting marine fuel needs, swiftly and efficiently – anywhere in the world.
LONDON Tel: +44 207 766 3999
GIBRALTAR Tel: +350 200 52641
DUBAI Tel: +971 4 4458435
SINGAPORE Tel: +65 6238 6621
GENEVA Tel: +41 22 322 9600 SHANGHAI Tel: +86 21 5386 8866
TØNSBERG Tel: +47 333 40 100 TOKYO Tel: 81 3 5208 1511
WWW.PENINSULAPETROLEUM.COM
ATHENS Tel: +30 210 4287800 1 MONTEVIDEO Tel: +598 2903 3450
efficient engine operation, with no risk of damage from a mismatch between different cylinder oils. There is no need for other, extra tank capacity. This has been found to be particularly useful in the tramp sector, where operators must be prepared to go anywhere and to operate under different regulations in different areas. Crew responsibility is concentrated on handling just one lube oil for both high and low-sulphur fuels. Bunker operations, with only one cylinder lubricant, are simpler because there is no longer any danger of mixing up two different types of oil in one storage tank. The crew need focus only on the switch of fuel oil, and optimisation of the combustion chamber, to achieve exact compliance with ECA requirements. Talusia Universal is also cheaper to use than other lubricants, with all original equipment manufacturer (OEM) approvals having been granted at the lowest feed rates. Meanwhile, Lubmarine is already developing a universal lubricant for the 2015 market that will give optimum assured performance from the highest sulphur content heavy fuel oils (HFOs) to the lowest sulphur content HFOs. Moreover, this product will be capable of matching with all distillates and heavy fuel oils. Other developments are also taking place. Bio-lubricants, for example, are only really now starting to permeate the consciousness of the shipping industry, but they are set to assume increasing importance. Shipoperators have shown a great deal of interest in these, because they are increasingly committed to limiting the risk of pollution. As maintenance of port and harbour water quality
World Bunkering Autumn 2011
assumes growing significance, with legislation such as the Clean Water Act in the US and the EU’s Marine Strategy Framework Directive coming into play, a new study by the Environmental Research Consultancy (ERC) has shown that the scale and impact of marine lubricant operational discharges around the world is far worse than previously thought. And an IMO working group has already estimated that annual oil discharge into the marine environment totals 645,000 tonnes a year. The ERC study indicates that, on top of this, there is a further 10% (61,000 tonnes) entering port waters worldwide from marine lubricant operational discharges. ERC’s research found that, together, on-deck and sub-sea machinery result in the release of 32.3m litres of oil into the sea during normal ship operations. It simply is not feasible to eliminate these discharges entirely, and increasingly it is being realised that the only way to limit the harmful and damaging effect of oil spillages at sea is to use biodegradable lubricants. While more and more companies are keen to use non-toxic biodegradable lubricants, they are not prepared to accept any compromise in terms of performance. For a biodegradable product to perform as effectively and efficiently as a mineral oil-based product, its formulation has to be completely redeveloped. After extensive testing over a period of years at its dedicated research centre, Total Lubmarine is now able to offer a full range of high-performance biodegradable products. The cost of these products may be higher, but this is more than compensated for by improved performance and better environmental credentials.
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SCRUBBERS
Getting the facts right
Don Gregory
Don Gregory, Director of the Exhaust Gas Cleaning Systems Association (EGCSA), says that the information on scrubbers put before the key decision makers is often outdated, inaccurate word-of-mouth opinion.
W
ith just over three years from a dramatic and costly price hike for fuels suitable for emission control areas (ECAs) the shipping industry appears to be on a collision course with regulators and society. This begs the question: are owners, investors and charterers of ships being effectively advised with objective and up-to-date information on the implications of the impending 0.1%S limit in current and future ECAs? Based on over 10 years’ involvement in marine exhaust emissions I think that the information before the key decision makers is often outdated, inaccurate and often word-of-mouth opinion. Evidence is preferable to opinion. Having spoken with a number of parties in the European shipping community it is clear that knowledge and information is dated, incorrect and often simply repeats of previous quotes from the press or presented at conferences. For example, how many times in the last six months have you read an article in the marine or bunker press that states in some form or other that exhaust gas scrubbers are still under development or are problematic or simply don’t work? In fact there is a large Norwegian oil refinery fitted with a very large exhaust gas scrubber which works effectively and has not caused any environmental harm, and there are many large coal fired power stations that use sea water to scrub the chimney gases of sulphur. The successful long-term industrial operation of exhaust gas scrubbers is at odds with the paradigm expressed in the shipping
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industry that exhaust gas cleaning cannot be used in port; the technology costs too much; the equipment does not work; there will not be enough high sulphur fuel available (HSFO); but perhaps worst of all, the regulations will be postponed. The situation has not been helped by a number of consultant reports that have not properly researched the topic or have used limited data sets. The responsibility for some of this must lie with government bodies which have commissioned research without adequate account and specification of the resource and quality to be applied to their taxpayer funded work. But is there really exhaust gas cleaning technology that works for marine applications? The facts are that there are several ships at sea today with exhaust gas cleaning systems installed capable of reducing emission of sulphur dioxide (SOx) below that produced by a 0.1%S diesel fuel. The current size range tops at 21MW on the Tor Ficarria to 2MW on the Timbus. That is a size range that is close to meeting the requirements of pretty much all ECA-only operating vessels. With the International Maritime Organization (IMO) guidelines for Exhaust Gas Cleaning Systems adopted, EGCSA is working with Class to define a standardised and practical set of safety rules for the uniform approval of the use of systems on board ship. The basis for a technically sound solution to emissions is now in place. Nevertheless, the technology readiness is only a part of the technical equation. Scrubbing equipment, whether it is a dry system or a wet system, is inherently large in size due to the need to handle large volumes of exhaust gas. The ability to manage the space require-
World Bunkering Autumn 2011
ments and deploy the equipment on board ship with minimum trading disruptions has yet to be proven on an industrial scale. But retro-fit installations will be common practice in the marine industry throughout this decade. Ballast water and other emission treatment systems will need to be installed to meet regulatory requirements in a wide range of marine activity. Unfortunately, much of the retrofitting requirements, including ballast water, are a sunk cost with little or no return. The picture is quite different for the cleaning of exhaust gases. The alternative to technology is the use of specified fuels which are 0.1%S in 2015 in ECAs and 0.5%S globally in 2020. With residual fuel oil rising at approximately 15% per annum since 2002 this trend is set to continue, albeit the large increase will occur in 2015 when the only option in an ECA will be diesel fuel. Currently some US$300 per tonne more costly than residual fuel, the likelihood is that the cost will increase at least another $200 per tonne in 2015. This is a result of a step change in distillate demand of around 40m tonnes or not far short of the light duty vehicle diesel consumption in the whole of the EU27. It should be stressed that the table below is illustrative; price premia and overall costs may vary up or down. What is certain is that the actual and cumulative costs will make the use of fuel as the method compliance with emissions economically damaging for some operators. Add to that the need to carry multiple fuels if transiting an ECA and the significant technical problems associated with future diesel
fuels. The logic for moving to technology to achieve compliance is compelling. In fact the pay-back for an investment of $3m to $5m may be a matter of weeks and certainly less than six months for some ECA high fuel consumers such as the ferry trades. On competitive routes operators with exhaust gas cleaning systems fitted before January 2015 will not only have significantly lower operating costs they will have price advantage that can grow market share. Shareholders in companies that have not thought through their strategies for compliance and more importantly implemented the strategy will be facing depressed share prices at the very least. Anyone who does not believe that share price on passenger trades is affected by fuel costs need only look at the share price performance of the cruise trade which is suffering even before the new ECA limits come into force. The future is undoubtedly challenging. Making the wrong decision may have serious consequences. To facilitate and provide security for early adoption of technology, EGCSA is working with sectors of shipping industry to assist in defining the choice of the right system in specifying the deployment needs, and in facilitating finance where it is needed. Future new ideas may include emissions solutions undertakers a concept used in land based industry. The acceptance and expediting of the introduction and deployment of technology will provide an easier transition to a low-sulphur fuel world and ensure the hulls of world shipping continue to glide effortlessly through our seas and oceans.
ANNUAL CONSUMPTION & PRICE PREMIA FOR MARPOL ANNEX VI LOW SULPHUR FUELS Year 1.0%S Fuel Oil (million tonne)
2012
2013
2014
2015
35
50
50
0
Additional Diesel (million tonne)
2016
2017
2018
2019
2020
60
60
60
60
60
315
Premia over HSFO ($/tonne)
30
30
30
500
400
350
350
350
800
Annual additional fuel cost ($bn)
1
1.5
1.5
30
24
21
21
21
250
NB It has been assumed that 0.5%S global fuel spec will require 85% 0.15S diesel blended with 2.7%S residual.
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SCRUBBERS
Scrubbers gain ground
Impending, stricter sulphur content regulations and high premia for distillate fuels mean that scrubbers are looking like a viable option, as David Hughes reports.
U
nder pressure from the impending marine emissions legislation, onboard scrubbing will become viable, initially for vessels operating in ECA areas, but subsequently for all newbuilds. That at least is the conclusion of a new report by Robin Meech and FGE. The study, “Outlook for Marine Bunkers and Fuel Oil to 2030”, says that implementing the IMO sulphur limit proposals by 2020 would be “virtually impossible”, requiring the refining industry to invest in more than 4 million b/d of extra secondary processing capacity, above that already scheduled. The report’s findings add to a growing industry perception that abatement technology will be increasingly attractive. At present, however, most owners are still holding back from ordering. Nick Confuorto of Belco Technologies Corporation says: “We and many of our competitors are ready to supply commercial scrubber units on ships if only the shipowners were willing to start buying systems now. Once the shipowners begin to actually buy scrubbers the industry will see many additional suppliers (existing on land scrubbing businesses) entering the marine market. These will be in addition to the many competitors already in this industry.” He adds: “Of course shipowners need to properly plan ahead and should be starting to buy now and not wait for December 2014. The shipowners who wait will end up spending a considerable amount of money on the low-sulphur fuel with nothing to show for it. Yet I believe there will be a large number of shipowners who will choose to buy the low-sulphur fuel rather than retrofit scrubbers. We believe that a sizeable market will be available for both scrubbers and lowsulphur fuel.” In a similar vein Wärtsilä Corporation says that the technology has advanced to the point that it is now possible to quickly ramp up production volumes to meet the increasing demand in the marine market as regulations become more stringent. Wärtsilä received its first commercial scrubber order for a marine application in December last year.
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Wärtsilä recently signed an agrrement with Metso Corporation to co-operate in developing and delivering scrubber systems for marine applications. Under this agreement, Metso will supply the scrubber unit, while Wärtsilä is responsible for worldwide sales and integration of complete, certified, documented marine scrubber systems, including automation, water treatment, and ancillaries. Both Wärtsilä and Metso have extensive experience in the use of scrubber technology for land-based installations. The recent deal builds on cooperation going back to 2005 when the two companies, together with other companies within the Finnish maritime cluster, embarked on a programme to develop a feasible marine scrubber. By autumn 2007, the project had reached the stage of being ready for a test installation. A tanker, Neste Shipping’s the Suula, was made available and the project-testing phase began in November 2008. During the test period, which was completed in mid-2010, the Suula operated primarily in the Baltic Sea but also visited many North Sea harbours. Sulphur removal efficiency proved, Wärtsilä says, to be excellent and well within the International Maritime Organization’s (IMO) most stringent limits. Furthermore, the discharge water was also proven to be well in compliance with IMO Washwater Guidelines. In December 2010 Finnish, owner Containerships placed a contract for a turnkey installation on board the Containerships VII, which has a Wärtsilä 7L64 main engine. The scrubber will be delivered to the customer in August 2011. MAN Diesel & Turbo has also been active in scrubber development for more than five years. A spokesperson told World Bunkering: “The combination of an after-treatment scrubber and a fuel flexible marine diesel engine with the well-known high efficiency, durability and reliability will allow for continued good engine performance, while fulfilling emission regulations at an optimal cost.” The company says that it sees scrubbers having two areas of application. The first is after-treatment for complying with emission
World Bunkering Autumn 2011
regulations such as the 2015 0.1% Emission Control Area and 2020 0.5% global fuel-sulphur limits. The second is for assuring optimal operation of an engine with Exhaust Gas Recirculation (EGR) technology for the 2016 Tier III NOx limit for new ships. The spokesperson added: “As engine designers, we focus on our area of expertise and develop high pressure scrubbing for EGR engines and assure that our engines are ready for after-treatment scrubbers. We are not involved in developing our own after-treatment scrubbers. However, we have been involved in various projects involving application of aftertreatment scrubbers on MAN B&W engines.” He explained: “For an aftertreatment scrubber to be suitable for fitting after an MAN B&W engine it must not in any way affect the safe operation of the engine. Also, it should not affect the performance of the engine adversely. If an after-treatment scrubber is fitted properly to an engine, the only potential problematic issue affecting the operation of the engine is increased back pressure. This occurs is when the resistance of the exhaust system after engine exhaust gas manifold is increased. Increased back pressure may impact the efficiency of the engine and result in increased fuel oil consumption. For this reason, we have issued new guidance on allowable back pressure. In some cases, after-treatment scrubbers can operate within our previous guidance values, and in other cases within the new extended values. In any case, the engine will operate as expected. For high back pressure values, the fuel oil consumption will be only slightly affected, and in some cases rematching of the turbocharger may be required. However, in most cases no changeswil be required to the engine.” The company lists the considerations for shipowners. For new machinery, engines can be prepared for after-treatment systems. When retrofitting scrubbers, the system must be verified as being within allowable back-pressure limits and the implications for NOx certification also need to be taken into account. With regard to NOx limits, engines can be fitted with scrubbers and comply with Tier III requirements.
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LUKOIL-BUNKER strengthens its hand T
he Bunkering division of the Russian Oil Company (OC) LUKOIL, LUKOIL-BUNKER, has considerably extended the geography of its activities lately. This has meant that competent logistics for the supply of oil products from OC LUKOIL refineries have become especially important. Added to the tougher environmental requirements for the content of bunker fuel in the Baltic Sea, the company is faced with a constant set of challenges in the bunker business in the Northwest Russia.
From Perm to the Atlantic
LUKOIL-BUNKER, part of the vertically-integrated oil company LUKOIL (the largest private oil company in Russia), has particularly flexible capabilities for the delivery of oil products from its own refineries. LUKOIL’s oil products are delivered by many different means of transport, and the logistics systems developed to manage these have become a significant factor in the competitive advantage possessed by LUKOIL and its subsidiaries. These become even more necessary when taking into account the large Russian distances and the wide business geography of LUKOIL-BUNKER, which provides bunkering services for vessels in all major river and sea ports of the European part of Russia (such as ports of St.Petersburg, Ust Luga, Vyborg, Vysotsk, Primorsk, Kronshtadt, of Baltiysk (for transit vessels), Murmansk, Kaliningrad, Svetly), South Region of Russia (such as Tuapse, Astrakhan, Olya, Rostov-on-Don, Azov) and river ports: Volgograd, Yaroslavl, Cherepovets, Kazan, Nizhny Novgorod and others. In Bulgaria, the Company operates at port of Burgas, Varna, Nessebur, Rosenets, Ruse, Lom, Vidin, in Romania – at port of Constanta, in Serbia – at port of Kladovo, in Turkey – at Istanbul port and in Italy – at port Augusta. Oil products for LUKOIL-BUNKER are supplied from LUKOIL’s refineries located at Ukhta, Perm, Volgograd and Nizhny Novgorod in Russia, as well as at Burgas in Bulgaria and Augusta ISAB plant in Italy (where LUKOIL is a co-owner).
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Delivery time from the refinery in Ukhta to St. Petersburg may be three to five days, from Perm five to seven days, from Nizhny Novgorod five to seven days and from Volgograd seven to eight days. Since the beginning of 2011 summer navigation light oils (distillates) in addition to railway shipments are transported by river fleet consisting of four units, with total deadweight over 17.5 thousand tones. These tankers deliver distillates to the river ports of the European part of Russia (Kazan, Nizhny Novgorod, Yaroslavl and Cherepovets) and the Big port of St. Petersburg. It allows the company to optimize the cost of delivery in summer time. Because of large investment projects in the sea ports of Russia and the future development of international intermodal transport corridors, shipping is expected to grow – this positive dynamic will be in both sea ports and inland waterways of the Russian Federation. Bunker supply volumes will recover not only up to the pre-crisis level, but will also show steady growth. Thereafter, companies with flexible logistics capabilities will have a competitive advantage – that’s why LUKOIL-BUNKER pays special attention to uninterrupted oil products supply from its refinery facilities. Oil products are supplied to Istanbul, where LUKOIL-BUNKER’s
Burgas Refinery
World Bunkering Autumn 2011
branch Lukoil-Bunker Istanbul Ihrakiye Tic. Ltd. Sti. supplies bunkering operations, from the Russian refineries of LUKOIL via the Black Sea ports and from LUKOIL’s refinery in Bulgaria. The fleet of Lukoil-Bunker Istanbul Ihrakiye Tic. Ltd. Sti. currently consists of seven bunker barges. In Turkey, bunkering operations are made on the road of Istanbul, but it is planned to expand the branch activity to other Turkish ports in future. In Romania and Serbia, where bunker services are provided by LUKOIL-BUNKER’s Bulgarian branch LUKOIL-BULGARIA BUNKER, fuel is supplied both from LUKOIL’s refineries at Bulgaria and from Russia. The company also started business in Serbia in April 2011 – Gasoil of 0.1 and 10 ppm is supplied there from the on-land storage depot at the port of Kladovo. During the first month of operation, bunker fuel supply volume in the Serbian market amounted to about 1000 tonnes of fuel. And for the company’s Italian branch LUKOIL-BUNKER ITALY SRL., oil products come from the ISAB plant in Augusta. The Italian office started bunkering operations in the East Atlantic in April 2011 – the company’s major customers in this region are fishery and transit vessels. Bunkering operations are made on the road of the North African ports from the 12000 deadweight tonnes bunker barge VASI. The company offers all grades of high-sulphur (from IFO30 to IFO380) fuel oils and gasoil. In Russia, LUKOIL’s refinery products are delivered to the company’s bunkering branches mainly by railway, using railway vagons belonging to OC LUKOIL. In particular, in the port of Murmansk in the north of Russia, supplies are wholly performed by railway. Murmansk is a very promising market, especially taking into account the plans of the Russian government for shipping industry development along the Northern Sea Route and Murmansk traffic centre making. In the Murmansk branch, the bunker barge Desna operates, and from November 1 2011 the tanker Aginskoye will start operating, complying with MARPOL requirements. In the Russian part of the Baltic Sea, LUKOIL-BUNKER provides bunkering in the ports of St. Petersburg, Vysotsk, Primorsk, UstLuga and Kaliningrad. The cargo, delivered there by rail, is stored at LUKOIL’s regional oil depots and for supply of bunker fuel to a vessel, they use their own bunkering fleet. This includes eight tanker
Volgograd Refinery
barges, with a total cargo capacity of 14000mt – four of these were reconstructed in according MARPOL Regulations. In the southern basin, the company offers bunkering services at sea ports of Tuapse, Astrakhan, Olya, Rostov-on-Don, Azov and at the river port of Volgograd. The company intends expansion to other basin ports – oil products for bunkering operations at the current ports are supplied from the LUKOIL’s Volgograd refinery. In the largest navigable regions, the company monitors the entire chain of fuel logistics, ensuring quality control of their oil products at every stage from the manufacturer to the customer. Bunker fuel sales by LUKOIL-BUNKER in 2010 in Russia grew by 13% in comparison with the same of the previous year and amounted up to 1.635 million tonnes. At the same time, the total bunker supply volume, including the companies in Bulgaria, Turkey and Italy, amounted to 2.036 million tonnes. Low sulphur to be for sure
Because of the tightening of the environmental requirements for bunker fuel by the international community, in the Baltic Sea, North Sea and 200-mile North American areas from January 2015 it will be required to reduce allowable sulphur content in fuel to 0.1% within the ECAs (Emissions Control Areas). Production of low-sulphur oil products by LUKOIL, coupled with its capabilities for flexible products logistics, will help the company’s customers when the new legislations come into effect and present the company with a very optimistic future. As reported by Kirill Shirshov, Deputy General Director for Commercial Issues of LUKOIL-BUNKER: “It is possible for LUKOIL-BUNKER, being a part of vertically-integrated oil company LUKOIL, to supply low-sulphur fuel oil from our refineries in Volgograd and Ukhta. Our wide logistics capabilities will also ensure that there are no shortages of this new grade fuel stock for the company’s customers.” In a long-term outlook, the toughening of requirements concerning sulphur content in fuel oil can result in a wider application of alternative grades of fuels such as 0.1 gasoil and liquefied natural gas (LNG). In these circumstances, those bunker operators which are connected with vertically-integrated oil companies can be flexible and respond quickly changing market conditions, and can invest considerable funds into production of new grades of products and to deliver them quickly to distant regions.
ISAB in Italy
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interview
Duel fuel
Analysing future trends in the bunker fuel market is no easy matter and a lot will depend on the success of scrubbing technology and its relationship fuel prices; Sandra Speares talks to consultant Fred Doll about the issues.
F
red Doll is certainly no novice when it comes to analysing trends in the shipping markets . Before setting up Doll Shipping Consultancy in November 1999 he managed the consultancy business at H Clarkson from 1997 to 1999, and was appointed to the Board in July 1998. Unlike many analysts, Doll has seagoing experience. A graduate of the State University of New York Maritime College with a BSc (Hons) in Marine Transportation, he sailed with Exxon Shipping Co. (now SeaRiver Maritime) from 1979 to 1986, gaining his Chief Mate’s licence. He spent a four-year sabbatical in Florence as a freelance writer and translator before being invited to rejoin Exxon. From 1990 until joining Clarkson, he worked with Exxon Company, International in New Jersey
54
in several different capacities, analysing shipping projects, charters and sales; working with the Sumed pipeline; and developing shipping industry analyses. Aside from his other interests, Doll is much in demand at shipping conferences, not least for his willingness to analyse the markets going forward, a willingness that many commentators do not share. Commenting on overall market conditions, global supply trends for bunkers as regards supplies of both high and lowsulphur fuels, Doll suggests that there may be short-term supply concerns, “but the short-term problems may not necessarily
Fred Doll
be related to long-term supply factors in the market”. According to Doll “in the short run at least the 1% emission control area fuel we have been dealing with so far and the 3.5% sulphur cap we are going to be looking at in January 2012, you can really handle through existing refining plant where you are using lighter crudes, optimising crude slates or maybe doing some blending. Those sort of things are being accommodated within
World Bunkering Autumn 2011
the current system without major refining investments. As we start moving into 2015, if we have to burn 0.1% sulphur fuel in the emission control area the only way to do that is to take hydrotreated middle distillate fuel, so we are basically talking about gas oil at that point”. Gas oils will have to go through rigorous hydrotreating, he says. If investment in hydrotreating is needed, competition with land-based alternatives may be on the cards. As far as the bigger picture is concerned, Doll says the European refining industry is already not making money. “They are under severe economic pressure right now and we already have refineries that are closing. You are taking an industry that is already under pressure and not making money, and introducing a new investment requirement.” Imports from the Middle East, for example, might be an alternative. “If that is the case then prices have to increase in some fashion. You either need higher prices, or greater imports or local investment. Essentially somebody is going to have to make the investments to provide these fuels.” In order to make such investments, prices are going to have to increase, he says and “peoples’ expectations of prices are going to have to increase”. Investment needs to begin before 2015, or there will be shortages and prices will go up in response to them. Doll says that investment does not seem to be happening in Europe, although there is some investment in the US “but that’s probably being driven to supply local demand”.
World Bunkering Autumn 2011
The introduction of the emission control area in the US will also provide its own challenges, he says. Refining projects are taking place in Asia and the Middle East. “Perhaps the investments are being undertaken there, but what will have to happen is that prices reach a sufficient level to attract the products from those refiners into Europe.” Seagoing transport is the most environmentally efficient way to transport goods, and one concern is that, in the interests of increasing environmental quality, shipping becomes more expensive and more use is made of road transport. Doll says that he mentioned this issue to an EU official who said he did not believe that there would be modal shift because fuel costs for land transport would also rise. Aside from refinery investments, higher volumes of distillate fuel will also be needed “which again will require increasing conversion of heavier portions of the crude fraction in order to get the lighter fuels out of it”. This would also require energy and CO2 emissions on land. Doll says he has not seen a “complete well to exhaust pipe comparison of the different alternatives”. Commenting on signs that some bunker companies are reducing their credit terms, Doll says that there are large bunker companies that offer an entirely bundled service of price hedging, financial credit availability and the like. Then there are smaller companies who basically sell the oil. “To the extent that the smaller companies reduce their credit terms they tend to enlarge the competitive advantage of the larger companies that offer bundled credit, hedging and other products.” Whether that means people would switch suppliers or not is a question to be asked. As far as the major challenges facing bunker traders and suppliers are concerned, Doll says regulatory changes are likely to cause difficulties for certain people “especially if it turns out that the sourcing changes
in a major way. If it turns out that European refiners are constrained on gas oil and selling most of it in the land-based market and the sourcing is coming from other regions, then clearly that would be a fairly big challenge for bunker suppliers”. Some suggest that bunker supplies from large ports like Singapore and Fujairah may be affected in the future as the sulphur content of the unrefined product is much higher than elsewhere. According to Doll there is going to have to be a complete change anyway. Getting down to the required 0.5% will be a bigger challenge for ports like Singapore and Fujairah, he believes, but they are probably going to need distillate fuel or a distillate residual fuel mix anyway to meet the 0.5% sulphur cap. “It is still a major change they will have anyway, and hopefully they are closer to regions that will have some excess capacity to meet these requirements.” If use of scrubbing technology to solve the problem is developed and operators can continue to use heavy fuel oil, the HFO price is likely to rise in the future: “The economic value of the technology is just going to be based on what the perceived differential between low-sulphur and high-sulphur fuel is, and if it is more than that the scrubber will have been a good buy and if it is less than that, it won’t.” If it turns out that it is possible to use the high-sulphur fuel the price will go up and the correlation with the price of crude would remain strong, he says. If scrubbing technology does not work and distillate fuel is needed, then high sulphur fuel would essentially become refinery feedstock, but, Doll says: would still have a value in some way connected to the value of crude oil. What is certain is a lot will be riding on timely investment in scrubbing technology in predicting fuel price changes in the future.
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Letter to the editor
Coriolis: the new black? Sir, Interesting to see from Dr. Weinstein’s response (Spring 2011, page 33) to my article in the Winter 2011 issue just how much agreement there is; effectively it appears he agrees there is no reason why Coriolis should be the only available choice for bunkering. So when he says (and I agree): “What we found curious was the idea that the primary motivation to use Coriolis meters in bunkering is immunity to entrained gas,” it isn’t me saying it. While no one may have actually claimed this, it has been a fair inference from the various articles and it was important enough in the BP trials in Singapore that air had to be deliberately introduced and allowance made for 0.5% accuracy and not the 0.15% achievable with air free fluids. Dr. Weinstein’s statements that this capability is not a major factor, that an absence of air is beneficial (including to Coriolis meters), and also “many barges are designed to completely avoid aeration”; showing that entrained air is not an insuperable problem, there is no reason to make Coriolis the only approved technology. Bunkering problems are not just about quantity. To the extent that it is about “value for money”, it is about both quantity and quality, and quality is also a factor in environmental legislation. Is quality a serious problem? Of course it is. While no one seems to have measured just how frequently “cappuccino effect” fuels are encountered; DNVPS has just released results of a survey on bunkering problems that demonstrates the surprising extent of quality problems and a frequency with which quality is more often an issue than quantity. Hence, during bunkering, any solution needs to address both quality and quantity as the fuel is being transferred; once the fuel is on board, it is “use it” or “debunker” (14% of operators had to de-bunker according to the survey). That said, it is important to detect (easily done) and reject and fuel showing evidence of the “cappuccino effect” because air corrupts several of the affordable online and offline quality tests. An ability to meter fuels with entrained air might thus be at the expense of quality assurance. “Coriolis meters eliminate several sources of uncertainty currently present in bunkering” The growing number of articles promoting the use of Coriolis meters, is such that many believe this is now a “done deal”, and while Coriolis is certainly a valuable technology, does it really show the superiority that would make it the exclusive choice for bunkering? In these articles Coriolis is rightly promoted as a tremendous advance in bunker quantity accounting. But the comparison is with tank dipping – exclude entrained air capability and substitute a different meter technology and these articles could pretty much describe the advantages of any meter technology over tank dipping. The important comparison is of Coriolis metering with other possible technologies. The article didn’t argue that Coriolis meters shouldn’t be used, just that they should not be an only choice; that the marine industry is just as capable of managing a choice of technologies as is the oil industry.
Jon Watson
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World Bunkering Autumn 2011
GEoGraphical focus: Middle east
Challenging times
Political instability has affected several parts of the Middle East but the region’s bunker industry carries on.
R
ecent political turmoil in parts of the Middle East may have captured the headlines but it was clear at the Seventh International Fujairah Bunkering and Fuel Oil Forum (Fujcon 2011) that the bunkering industry has so far been largely unaffected. There are immediate and also long-term challenges ahead, but largely of a technical and commercial nature. At Fujcon, Fereidun Fesharaki sketched out the fundamental market changes that will affect the East of Suez market. Dr Fesharaki said that additional conversion and treating capacity coming on stream should provide support to fuel oil prices but that the fuel oil market is expected to tighten in the East of Suez. He observed that Asia Pacific net imports are projected to increase by 34% from the current level to 1.3 million b/d by 2015. In contrast, net exports from the Middle East are projected to decline by over 80% to 50 kb/d over the same period due to growing domestic demand. There will be some inter-regional movements of fuel oil to correct some of the imbalances in the East of Suez.
World Bunkering Autumn 2011
Dr Al Kindi
This will be happening against a background of global shipping adjusting to increasingly strict sulphur limits. This raises some interesting questions as to where fuel, and particularly low-sulphur bunkers, will be sourced in the Middle East. In the meantime, however, business carries on and it emerged during Fujcon that Fujairah is handling much higher volumes than previously thought. The bunker hub’s harbour master Tamer Masoud told Platts that bunker sales reached 24 million tonnes in 2010. Capt Masoud added that demand for bunkering was expected to grow by about 4% a year. Fujcon’s chairman, and Fujairah’s former Minister of Environment and Water, Mohammed Saeed Al Kindi, ran through the Emirate of Fujairah’s commitment to continued progress, to build on sustained investment “based on realistic forecasts and expectations”. He noted that ship calls had grown from 5,000 in 2000 to just under 12,000 calls in 2010. He did not mention actual figures but said: “Fujairah rightly ranks, alongside Singapore and Rotterdam, as one of the Top Three International Bunkering locations.” As a maritime logistics hub, underpinned by the efforts of a
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variety of professional and independently-owned companies, our abilities, experience and levels of service are second to none. While Fujairah has developed so far almost entirely as a bunkering hub, this is beginning to change. Dr Al Kindi pointed out that the government of Abu Dhabi was about to complete and make operational the Abu Dhabi Crude Oil Pipeline Project (ADCOP). The project involves building a 360 km pipeline from the Habsham Fields to Fujairah, constructing 12 million barrels of storage and three single point mooring buoys for deep-water loading. He said: “It is estimated that somewhere in the region of a third of the UAE’s crude exports will use this route, neatly relieving congestion at the Straits of Hormuz and providing a viable alternative to entering the Gulf. The implementation of plans for the logical development of a refinery facility to complement this project is now taking place.” Private investment is also adding to the port’s storage facilities. Public and privately funded projects are together expected to increase the number of storage tanks from 121 at the beginning of this year, capable of holding about 3 million cu m oil, to 262 tanks, representing a total storage capacity of over 7 million cu m by the end of 2012. Fujairah is first and foremost an anchorage port but it has greatly increased the number of alongside berths in the past decade. In 2000 there were only 1,500 metres of main quay. It now has just under 4,820 metres of quay of which 2,340 metres are dedicated oil berths. Contracts are soon to be awarded for a minimum of
World Bunkering Autumn 2011
1,000 metres of additional oil berths while a master plan has been drawn up for an additional 11 berths to be implemented in stages as required. The big story though is the continuing transformation of Fujairah into an increasingly mature and diverse maritime hub Fujairah is not the only bunker port in the region, far from it, and for many containerships Jebel Ali Port in Dubai, and the largest container port in the Middle East, is the obvious place to take on fuel. Recently, Shell Marine Products began supplying at Jebel Ali. The company said in a statement that the move further reinforced Shell’s “selective growth strategy” by extending its network of ports in the Arabian Gulf region. Shell said that it was the only global integrated energy company that has set up operations at Jebel Ali Port. “The strategic location of Jebel Ali Port, a fast-growing container port, puts Shell in an excellent position to support liners operating in the Middle East,” said Richard Jory, General Manager, Shell Markets Middle East Limited in Dubai. Shell acquired several storage oil tanks adjacent to one of the main terminals at Jebel Ali Port, and also set up a high-capacity bunker barge to deliver fuels and services that meet international barging standards to customers. The 8,000-tonne barge, which was previously deployed in Singapore, is one of the first vessels to use mass flow meters in the Middle East. Through the introduction of the latest flow meter technology, Shell says that it aims to provide increased transparency
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in the quantity measurement of marine fuels delivery. Koh Chaik-Ming, general manager, Asia Pacific and Middle East, Shell Marine Products, said: “We are confident that Shell’s expertise and operational excellence will boost our presence as one of the leading marine fuel and lubricants providers in the Middle East. On top of the assurance that our products are always vetted according to rigorous standards, the use of mass flow meter technology now brings improved accuracy and transparency to the fuel delivery process.” Hinting of further moves in the region, Shell said: “The Middle East remains one of the key growth markets for Shell’s marine fuels and lubricants business, and Shell will continue to assess the feasibility of expanding bunker operations at other locations in the Gulf region.” Despite political uncertainty in some places and, currently, intense pressure on margins, the mood among players in the market is generally optimistic, at least for the long term. At Fujcon, Dr Al Kindi told delegates: “Despite the ongoing global economic crisis, I can assure you that the United Arab Emirates, as a well established leading commercial centre in the Middle East, will continue to play an important role as a major financial link between the East and the West. Our structural policies are put into place for maintaining the stability of the real economy.” Zain Jamal, senior trader and chief operating officer at UAEbased trader Asean International told World Bunkering: “Since the turmoil following the Egyptian uprising and the ongoing Libyan coup, starting March this year, crude prices have drastically fluctuated, causing historic surges. Consequently, this has left many suppliers, traders and buyers still hoping for a clear understanding of the bunker price trends.” However, Mr Jamal noted that, given the sky rocketing prices and plummeting confidence of industry players, the demand side did not change as much. What has happened though is that payment issues shave arisen as pressure mounts on some shipping
World Bunkering Autumn 2011
companies. “In time,” says Mr Jamal, “this can be seen as factor changing the bunkering industry and the direction in which organisations choose to develop their client base further.” “Nevertheless,” he says, “considering the key factors that influence the economics of the bunker industry, it does indeed carry on. In fact now, due to the very recently declining global oil prices, trade and the consumer economy on the whole is slowly picking up. This is particularly visible in the UAE. The proof is a growing container terminal in the heart of the UAE and the steady rise of 380 cSt consumption in the port of Jebel Ali.” Asked about the widely reported pressure on margins, the CEO of Fujairah-based trader FNSA Fuels, SK Bhasin, told World Bunkering margins are very much an individual matter for each company. He added: “There is no doubt that competition has increased but the margin for us as a trader is still the same as in previous years.” Referring to price competition from Singapore, Capt Bhasin commented that Singapore competed with Fujairah when a vessel had enough bunkers to reach the South East Asian bunker but added: “What choice will the vessel have if it is not heading in that direction?” As for the effect of the European Emission Control Areas, Capt Bhasin said that so far there has only been limited demand for low-sulphur fuel oil and gas oil. He added that FNSA had had 2010 and looked forward positively to the remainder of this year. Mehran Ghobadian, sales and marketing director for UAE-based BGK Bunkers, said there had been few changes to the market over the past few months, with fierce price competition still prevailing. He did though pick out one factor that had boosted Singapore compared to the Middle East. He said that, because of intense competition in the tanker market, many tankers sailing west from Asia do not have a charter fixed until they have passed Singapore. Many bunker at Singapore in case they are chartered to load in Africa.
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GEoGraphical focus: ARA
Short-term pain, long-term optimism
Suppliers in the ARA regions are having a tough time at present but continued expansion of port facilities signals confidence in the future.
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low, if any, sales growth and fierce competition characterise the Antwerp, Rotterdam, and Amsterdam (ARA) range of ports at present. Last year, Rotterdam, the largest bunker port in Europe, saw a drop in overall bunker sales from 12.17 million to 11.9 million tonnes, but an increase from 300,000 tonnes to 520,000 tonnes in gas oil. Unsurprisingly, the Port of Rotterdam Authority liked the rise in gas oil with EU regulations, introduced on 1 January 2010, meaning that ships berthed in EU ports may no longer use heavy fuel oil. A spokesman also made the point that the decline in 2010 was less dramatic than in previous years. Nevertheless, volumes were well below the record years of 2006 and 2007 (see Table). The port added that a large part of the decline was due to the recession when ships were laid up, and also to slow steaming. It made the point that a 10% lower service speed saves 21% fuel while a 20% reduction saves as much as 36%. The spokesman commented: “With consumption of 250 to 300 tonnes a day, that makes quite a difference.” A spokesperson for independent physical supplier Oliehandel Klaas De Boer (KdB) told World Bunkering: “The market remains highly competitive with low margins, especially compared to the cash flow needed to run the organisation and bunker operations. KdB feels that due to its strong relationships and its niche market, it still has a healthy basis to continue business. With high oil prices, not only suppliers, but also end users, suffer. We all have to carry this with us.” Responding to LR Fobas reports that as much as 60% of bunkers are marginally over the 1.0% sulphur limit, the KdB spokesperson says: “We are not surprised about this. Due to lack of, for example, Libyan sweet crude, the sulphur content when loading at the refinery
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has been around 0.99% recently. Just a bit of residue high-sulphur fuel in terminal lines or barges can result in slightly higher sulphur values. KdB works with dedicated LSFO barges and thus sees the occasional sulphur disputes but these do not happen as regularly as reported.” On prospects for the coming year the company says: “We are optimising our operations to have an even more flexible organisation, and are thus more confident about our future. As a relatively small player in the market we have a strong customer base and considerable flexibility. So we think it’s possible to expand our business.” Major Rotterdam-based bunker barge operator, VT Group, was recently brought in to service a new 13,100 dwt barge, the Vorstenbosch. The company says that although the bunker market in Rotterdam has declined over the past couple of years it sees a clear upward trend within its customer pool. It says that design of the new Vorstenbosch Class is based on economy of scale, efficiency and sustainability. VT says it has invested heavily over the last decade in double-hull vessels for the renewal of its fleet, which now comprises, in addition to the Vorstenbosch, over 25 fully-owned vessels, varying in size from 220 dwt to 14,000 dwt. The company also charters in tonnage as required. VT’s Head of Business Development, Yuri Ouweneel, says: “The industry faces higher costs, credit is tight and expensive. Prices are down, forcing us to take a close look at our costs without losing quality, which is a hard thing to manage. The market expects that we invest in new equipment, and demands the best, although it is unwilling to pay for it at the moment. The market has become extremely competitive, which will result in a zero win situation in the long run if things do not change fast.”
World Bunkering Autumn 2011
He says that customers are downplaying VT’s unique selling point – its top-class equipment – to force prices down. He comments: “At first glance, the product (barges) looks homogeneous; they all look the same and on paper they should be able to perform the same tasks. Shipping insiders know straightaway that this is not the case. But when people are sitting behind their desks it is all the same. In every industry in crisis, the buyers rule, insuring and upgrading their procurement bonuses without looking at the big picture and the long term.” “We want a stable market where prices are not too high in good times and reasonable in bad times, though the market is forcing us to adopt the VLCC type of approach – sky high prices in good times and extremely low prices in crisis times,” he says. “By the end of the day, the average numbers should be in black.” At the moment, VT believes it is able to deal with the current harsh economic period through diversification, both in geographic locations and products transported. It has three main divisions: Clean and Black Minerals, Lubricants, and Chemicals. It also carries out fleet management and consulting and spreads its risks further by being active in Central America, Panama and Northern Europe. Mr Ouweneel says: “Bunkering is a core activity, though not the only one.” It has been reported that some ARA-based suppliers are restricting credit terms to customers to 21 days. He agrees that this is a general trend and adds that it is “completely logical” although “you also hear that the big lines have got their high credit back, so mixed noises on this one”. He points to the role of the banks, which are reluctant to see bunker supplies fail as they are owed large sums. He notes that recently the Economic Bureau of the ING Bank stated in the Dutch Financial Times that not enough transport companies, especially shipping companies, are going bankrupt, slowing down the market recovery.
He observes: “That is ironic because the banks are the ones keeping the shipping companies alive and withholding bankruptcy. The second-hand market for ships is dreadful and they are unwilling to set a new low-end benchmark for auctioned vessels, further dragging the market downwards. In the present situation,” he says, “cash is king.” On the practical effects of the ECAs and EU emissions rules, Mr Ouweneel says: “We will see an increase in distillates volumes though low-sulphur HFO is here to stay for decades to come. Scrubbers are getting better, reducing the need for distillates. Distillates are just too expensive.” There is an increase in volumes of high viscosity bunkers, with implications including higher heating costs and a need for more highly rated pumps. He says: “All VT barges are built to cope with extreme high viscous products.” He notes that the increase in distillate sales is leading to a requirement for more segregated lines and tanks, and also to an increase in the number of smaller distillates barges, both newbuilds and conversions. He says: “For now, stem sizes will remain smaller than they were before the economic crisis. Slow steaming will remain. Though speeds will increase, they will never go back to pre-crisis levels.” VT is working on the basis that it will need to increasingly deal with bigger containerships with even shorter port stays, and that accuracy of delivery volumes will be essential. Its barges have high pump rates, certified flow mass meter systems and tank radar systems. The construction of the massive Maasvlakte 2 container terminal is an indication of the enormous increase in port calls, and bunker demand, in the longer term. Mr Ouweneel sums up by saying: “The current market has probably not reached its low point yet. Margins are extremely low, competition is tough. We are focusing on sustaining quality, maintaining and improving our service, and fleet expansion for the long term.”
VT group’s new 13,100 dwt bunker barge Vorstenbosch
World Bunkering Autumn 2011
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Busy times for LUKOIL Benelux B.V. LUKOIL Benelux B.V.’s Finance Director Oleksandr Butsan and Bunker Desk Manager Trader Marco Bats take a look at the ARA market.
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o far this year has been a busy one for the ARA-based physical supplier LUKOIL Benelux B.V. according to Marco Bats. He says this is partly due to many VLCCs bunkering at Rotterdam. “The market has been quite tight,” he says, “but low-sulphur fuel oil (LSFO) avails have been reasonable.” The company is part of Russia’s second largest oil major, and the country’s biggest private oil company, and is a significant player in the ARA region, with a market share of around 10% to 15%. As an expanding supplier in Europe’s No. 1 bunker port, Rotterdam, the company is an example of the LUKOIL Group’s continuing diversification into markets outside Russia. It is also, says Oleksandr Butsan, part of the Group’s policy of expanding into trading, in addition to upstream and downstream. The company now has a leaner operation that it did two years ago and now operates with a single Bunker Desk in Rotterdam after moving into a new office from the old smaller one in Capelle aan den Ijssel. The Bunker Desk now covers the whole region Amsterdam-Rotterdam-Antwerp (“ARA”), including smaller Dutch and Belgian ports. LUKOIL Benelux B.V. is yet to see growth through its new Antwerp operation. Oleksandr says: “We are now licensed as a physical supplier in Antwerp and are about to go in full speed there.” Asked for his view of the financial stability of the small suppliers and whether there are likely to be new entrants to the ARA bunker market or firms dropping out, Marco Bats says: “As a result of the relatively high fuel prices last year the smaller suppliers might face some difficulties but nobody seems to be in real trouble yet. Anyone entering the ARA market would have to be financially well supported but with small profit margins and fierce competition it is not very likely that many people are eager to enter.” On another topical issue, Marco Bats notes that fuel quality in the ARA region remains good but modern installations are able to blend to the limits to maximise profits. He says: “There have been rumours of minor off-spec deliveries but we have not noticed any big quality issues.” There has been a lot of talk in the ARA market recently about some bunker companies reducing their credit terms from 30 to 25
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Ariane
Noordster
World Bunkering Autumn 2011
From left to right: Floris Baaima, Junior Bunker Trader/Operator; Marco Bats, Bunker Desk Manager; Oleksandr Butsan, Finance Director; Taco Scheening, Bunker Operator; Ron van der Elst, Bunker Trader
days. Marco says: “Our payment terms have been 21 days for several years but we have been boosting our relationships with certain lines. LUKOIL Benelux B.V.’s immediate parent company, LITASCO SA, based in Geneva, Switzerland, has increased the credit lines for a significant number of customers and allowed more flexibility in dealing with new customers.” Marco explains that while the company’s focus is firmly on being a physical supplier in the ARA area, its activities spread to the Baltic, Black and Mediterranean seas. Marco says: “We also act as a trader in the northern Russian ports of St Petersburg, Kaliningrad, Vysotsk, Primorsk and Murmansk, where we are in very good contact with a variety of the local suppliers.” The company’s focus stays on selling predictable volumes to the core companies of the shipping industry with a large number of calls in ARA every month, while trying to reap the benefits in the niche transactions bringing higher margins. The predictability element comes from the fact that LUKOIL Benelux B.V. is a bunker extension of the mother trading company LITASCO which sells LUKOIL Benelux B.V. almost all of the fuel for further resale as fuels and needs to plan its volumes thoroughly. Oleksandr says: “One of the keys to LUKOIL Benelux B.V.’s success is LITASCO Group’s own and rented terminals in ARA. We have a refinery at Flushing, storage in Antwerp, significant storage with Vopak in Rotterdam, and last but not least, our own terminal STR in Rotterdam-Botlek, which is currently being expanded to approx 150,000 cu m. We own it together with our Dutch partners from the Burando Group. The new phase will be completed in Q1 2012. Not many suppliers have this kind of flexibility. I think it is becoming increasingly difficult to operate successfully in this market without a storage capability.” The storage capacity also complements another aspect of LUKOIL Benelux B.V.’s competitive strategy. Marco observes: “This is a highly competitive market. I do not see anybody leaving but there are newcomers. Being part of the LUKOIL Group puts us in a different position to other players in the ARA bunker market. We trade fuel, and selling bunkers is a relatively small portion of the business. Again that gives us great flexibility to respond to the market.” During the past year the northern European marine fuel market has felt the effects of the 1.0% cap on sulphur in bunkers used with the Emission Control Areas (ECAs) and the EU 0.1% cap on fuel used alongside the berth. Has the increased demand for low sulphur been a problem?
World Bunkering Autumn 2011
“No,” says Marco, “but we have certainly seen increased demand for 1.0% sulphur, which now constitutes a large part of our volumes. Also, though we are not a physical supplier of MGO, we do arrange supplies and have seen increased demand there, too.” Until recently the company supplied a wide range of fuel, down to 120 cSt, 40 cSt and 20 cSt. Now, however, Marco says: “We have stepped back from the lower viscosity fuels because of very limited demand. We now focus on 700, 500, 380 and 180.” Marco stresses: “In this highly competitive market it is essential to ensure efficient deliveries. We achieve this with a fleet of six timechartered barges ranging from about 1,700 to 6,130 dwt. This should normally be sufficient, even when our Antwerp supply operation is up and running. However, we always have the option of bringing in extra barges on spot charters to fulfil deliveries when required. Again that adds to the flexibility of the operation.” Asked what his priorities are for 2011, Marco responds: “Well, there are two tests that we have to pass. One is that we must keep asking ourselves what makes for a successful player in the bunker market. That means we must consider new ideas. That could mean looking closely at the possibility of supply at offshore locations in the Channel/North Sea area and in the ports in the Med, for example.” The second test continues on a familiar theme. Oleksandr adds: “We must continue to be cost conscious. We need to contain expenditure as much as possible. Centralising our operation in Rotterdam, and dispensing with the office in Amsterdam, is a good example of this. We need to keep fixed costs under careful control. That is one reason why there are no plans at present to expand the barge fleet.” Looking ahead Marco sees two serious challenges: the sulphur regulations and a possible new recession triggered by the current Euro zone problems. The latter is outside the control of the bunker industry but like the industry generally, LUKOIL has been preparing for the stricter sulphur regulations. He says: “With the sulphur levels going down, supply is not getting easier or cheaper. The most likely result is that gas oil will be the cheapest solution, which will have quite an impact on the shipping companies as they will have a huge increase on their vessel costs.” For his own company, however, Oleksandr says: “The prospects for LUKOIL Benelux B.V. are good if we continue to run a lean, flexible operation that is also innovative and enjoys the global strength of being part of LUKOIL Group.”
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GEoGraphical focus: BLACK SEA
Expansion mode
While the ports serving the Black Sea are very different in many ways, the bunker industry appears to be expanding in all of them. RUSSIA
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he provision of bunkers at Russia’s principal Black Sea Port, Novorossiysk, is currently a controversial area with Russia’s Federal Antimonopoly Service (FAS) conducting an investigation into the local marine fuel market. An official press release said: “FAS has initiated a case of abuse of market dominance against OJSC IPP (part of the Group of companies PJSC Novorossiysk Commercial Sea Port, NCSP) for violating Article 10 of the Law on Protection of Competition.” The company in question owns the sole oil terminal at the port. Whatever the outcome of the investigation it seems clear that bunkering activity at Novorossiysk, and also bunkering based there at but delivered offshore, is set to continue increasing as the port itself expands. Novorossiysk Marine Commercial Port is currently implementing a US$200 million investment programme. Also plans are in hand for a new fuel oil terminal in a joint venture between the Russian oil pipeline giant Transneft and the Swiss-based oil trading company Gunvor. In April, local physical supplier Era Bunker completed the modernisation of its largest tanker, a 3,000 dwt vessel used for distillate, whilst two 1,000 tonne barges supply fuel oil. Meanwhile, another major player Evrasia Bunker supplies in the port itself and its anchorage by barge, at Novorossiysk’s Sheskharis Oil Terminal, ex-pipe, during cargo operation for tankers only, at three locations in the Russian side of the Kerch Strait and at Port Tuapse. ROMANIA
The Romanian bunker scene has become significantly more competitive over the past year as two new players entered the market, bidding to supply a potential market of some 800 ships a month. The biggest supplier is private sector company UNICOM, which was set up some 10 years ago. It is part of a group of private companies, founded in 1996, with interests in railways, energy trading, cargo forwarding, trading and transportation of oil products. It owns oil
World Bunkering Autumn 2011
terminals in Galati and at Drobeta Turnu-Severin on the Danube. The group has an annual turnover of more than E500 million a year. UNICOM’s bunker manager Bogdan Burgui says: “We deal with bunker enquiries coming for all four Romanian Black Sea Ports (Constanta, Agigea, Midia and Mangalia) and we also have a very strong position in the inland bunker market, on the Danube.” He continues: “Basically, we have about six to eight enquiries per day on average, and that is fairly good. In terms of volumes, the average enquiry for gas oil is around 30 tonnes, 100 tonnes for fuel oil grades between 30 cSt and 120 cSt, 150 tonnes for IFO-180 and 400 tonnes for IFO-380.” “Competition in this market is tough these days,” says Mr Burgui, “as two players entered the market last year. This battle for market share has made the customers happy, as they obtain better prices, but it has also squeezed the margins very much. This has meant every player having to change their strategy. In these days of economic crisis, bunker expenditure has become more and more important in every shipping company’s budge. Price now plays a more important role in the purchasing decision than in the earlier years, as the freight rates and the number of voyages have decreased.” “On the other hand,” he says, “these lower prices have persuaded more ships to bunker at Constanta for bunkers only and the total bunker market increased from about 8,000 tonnes a month, supplied to 50 ships, to about 20,000 tonnes, supplied to about 180 ships. This level is 40% higher than before the start of the financial crisis, when our company was the undisputed physical bunker supplier at these ports, with more than 90% market share.” He notes that 70% of ships operating in the Black Sea are tramps, and Russian ports compete strongly for their business. The Romanian suppliers cannot match the Russian prices. Mr Burgui says his company is working with its suppliers to fully implement ISO 8217:2010 by the end of the year. Also, in another sign of the times, UNICOM started supplying low-sulphur fuel oil mainly 180cSt 1.0% sulphur – earlier this year and it says it is the only supplier in the region who can offer low-sulphur high-viscosity
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SCADAR was established in Murmansk in 1998. We are physical suppliers at the port of Murmansk and carry out offshore delivery in the Barents sea We are pleased to offer all bunker buyers top quality service and the following range of products, which are well within the ISO8217 quality standards, with full respect for correct sampling procedures. We operate a double hull barge with segregated tanks for carrying multiple fuel grades. We can deliver the products outside port limits for passing vessels with no calling costs, and there are no extra charges for weekends or holidays. Our aim is to benefit our clients with good prices and a reliable service. Scadar Ltd Tel: +7 8152 596 170 Fax: +7 8152 596179 E-mail: scadar@scadar.com Website: www.scadar.com
Tel:+35725760376Fax:+35725341803 email:info@evrasiabunker.com Internet:www.evrasiabunker.com LimassolCyprus Novorossiysk●Tuapse●KerchStrait●Odessa●Primorsk●St.Petersburg●Kozmino
products. Mr Burgui says: “There is demand for low-sulphur fuel oil but it not great right now. But having in mind all impending IMO and EU regulations, we want to be ready to fulfil our customers’ needs.” He is optimistic about his company’s prospects, saying: “We look with confidence to the future, and we will do our best to support the shipping community when it comes to bunker in Romanian ports.” He adds that he believes that, following the hits that shipping has taken during the economic crisis, it is now in a period of recovery. TURKEY
The competitive situation in the Black Sea is often seen as a battle between Turkey – primarily Istanbul – and the other Black Sea countries. Energy Petrol head Mustafa Muhtaroglu says the real situation is rather different and that Turkey is willing to grow together with the other countries in the region, especially Russia. He does not deny that there is is strong competition in the region. He says: “By nature, every port competes with each other in bunkering. When a ship orders bunker at one port it means other ports lose the business. In this regard, we do compete with all ports in the area. Depending on ships’ routes, we compete with Pireaus, Malta, Suez, Syros and Kali Limenes Islands and of course Black Sea ports like Novorossisk, Odessa, Kerch, Bourgas, and Constantza.” He continues: “The fact is that we do serve ships coming from or going to Black Sea ports. Seventy per cent of potential buyers are in this trading zone. However, I still believe Turkey and the Black Sea grow together. We are happy with buyers checking bunkering opportunities in the Black Sea ports and Istanbul then bunkering in the area. If they are not happy with options in the Black Sea and Turkey, they consider alternatives in Mediterranean ports such as Pireaus or Malta. This is quite a satisfactory situation for both Turkish and other Black Sea suppliers and we have to act together to keep these vessels bunkering in our zone.”
“Of course ships bunkering in the Black Sea ports will not be taking bunkers in Turkey but we still have enough vessels to bunker. An improved facilities and bunkering options in the Black Sea region will of course effect Turkey negatively. However, 50,000 ships pass through the Turkish Straits every year. We will be always able to catch enough of them to keep Istanbul’s strong position in the area. Do not forget there are some 12,000 ships calling at the busy Izmıt Bay ports and a large number of vessels that never go to the Black Sea but stay in Turkey, the Aegean and the Mediterranean seas. That makes Istanbul an alternative and important bunker supply centre in the area.” Other important factors in bunkering, Mr Muhtaroglu stresses, are quality and service. He claims: “Market players and buyers clearly confirm Turkey, specifically Istanbul, is much better on these issues compared to the Black Sea, and even most of the Mediterranean ports. We are a very fast, efficient and reliable bunker market. There are almost no quantity and quality claims, which is a most important issue for bunker buyers and shipowners active in the area.” He says: “We and the Black Sea countries, especially Russia, have to look to the future together and we have to grow together. Russia is the most important country in the region and the relationship between Russia and Turkey is that we need them, and they need us.” He explains that Russia can supply Turkey with much of what it needs and Turkey is a very good market for Russia. Trade between the two countries has grown from US$450 million in 1992 to over US$25 billion now. Russia is now Turkey’s number 1 trading partner and Turkey is Russia’s number 5. He concludes: “We have to accept that cooperation is the only way forward for both countries. As well as being the biggest oilproducing country in the area, Russia is also one of main suppliers of oil for the Turkish retail and bunker markets. That means we can easily grow together.”
Caption
World Bunkering Autumn 2011
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Allow us to tell you about how strong we are in the Baltic! MONJASA has since the beginning of 2010, been a physical bunker supplier in Latvia. We are able to supply all grades of IFO and MGO. We are based in Riga and Ventspils and we can supply from our 3 barges and own terminal. Call and allow us to make a difference!
monjasa.com Strevelinsvej 34, DK-7000 Fredericia Tel.: +45 70 260 230 denmark@monjasa.com www.monjasa.com
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PORT focus: SCANDINAVIA AND BALTIC
No shortages so far
Sandra Speares reports that the highly environmentally aware Scandinavian and Baltic bunkering industries are coping with the switch to low sulphur fuels.
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ccording to Denmark-based Global Risk Management’s Dennis Andersen there have so far been no supply shortages in Scandinavia and the Baltic as a result of the advent of the emission control area. “There has been no supply disruption and no shortage relating to the shift between high sulphur and lower sulphur fuels,“ he said. Although it is not an issue in Scandinavia, with the tightening of regulations by 2020 Anderson believes it could become so in other countries. In areas such as Fujairah and Singapore for example, once the distillates or diesel have been refined the residual fuel oil will be very sulphur rich and there may therefore problems in meeting the new standards. How much of an issue it will become in terms of price increases will depend on the ability of the shipping industry to adapt technology on the ships using scrubbers to remove the sulphur. On the supply side it will be an issue of refining bunker products to meet the new standards for sulphur, nitrous oxide, carbon dioxide and particulate matter. Oil majors, independents and national suppliers may say that until they get an idea of demand from shipping they will not make the investment. Relatively speaking, even the largest shipping companies are small from a global perspective, Mr Andersen says. “Making the wrong investment in new technology could be fatal” if their expectations are not met. For the time being availability may not be an issue, but it may change in the years to come. Looking back, many observers anticipated a price jump when North Europe enforced Sulphur Emission Control Area (SECA) (now Emission Control Area (ECA)), but the reality is that suppliers gradually phased in the new specifications so at the time of change-over the prices barely changed and the shipping market did not take a hit. According to other big market players, many people may be talking about shortage of supply of low sulphur fuels, but in countries like
World Bunkering Autumn 2011
Denmark, supplies of high sulphur fuels are more of a problem. While there is obviously a bigger market for low sulphur fuel at the moment, and taking into account whether the ship is inbound or outbound and where it is headed afterwards, there can be problems in providing high sulphur fuels in the ARA area, for example. The Baltic area also has some problems with supply of low sulphur products, some traders suggest. One reason for this may be that there is a shortage of constant supply for low sulphur products. Some of the ports have been struggling as regards reliable provision of quality fuel. In terms of refining capacity, according to one trader, those in the Scandinavian area are coping with the situation. The debate between moving goods by sea or land continues with a good deal of acrimonious debate between the automotive and shipping industries as to who is the most eco-friendly. If trucks are making the headlines in Denmark because of road deaths, there are real concerns in the shipping industry that it may lose ground to road transport because of costs. The issue has been aired by Scandinavian delegations at the International Maritime Organization (IMO) particularly concerned about a potential switch to road transport. Meanwhile, the International Chamber of Shipping (ICS) is in favour of using the Baltic ECA as part of a study to assess the availability of low sulphur fuels going forward. The ICS submitted a paper for consideration at the IMO’s Marine Environment Protection Committee commenting on a document submitted by the US on behalf of the correspondence group, proposing a model for the assessment of the future availability of compliance fuel oil under Marpol Annex VI regulation 14.8. The ICS points out that one of the key elements under consideration is the need to carry out a preliminary study in time to confirm the accuracy and reliability of the proposed model prior to its use for the final review that must be carried out prior to 2018 under regulation 14.8 of MARPOL Annex VI. “ICS believes that there are compelling arguments for carrying out
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such a preliminary study in order to ensure that the proposed model is capable of providing reliable projections of real world scenarios for future fuel availability taking into account step changes such as the introduction of additional ECAs. It is essential that the model is confirmed as being capable of providing reliable projections across such step changes in the regulatory environment. “ICS suggests that a preliminary study conducted in 2012-2013 of the likely availability of compliant fuel taking into account the introduction of the Baltic, North Sea and North American ECAs in 2015, would provide a suitable test case where available supply/refining capacity for 2015 was essentially set. “The study would provide a projection of likely scenarios resulting from the introduction of the 2015 0.10% ECA standard, against a global backdrop, which could then be considered in comparison with the real situation,” the submission states. Using this approach, the ICS says, would give an indication of whether projections for global oil demand and growth for distillate fuels were valid. “The knowledge gained would enable any necessary refinement of the model to be carried out in good time prior to the critical review of the impact of the 2020 requirements to be completed by 2018. The ICS says it is essential to work backwards from the target date for the global 0.5% sulphur standard in 2020 for a sufficient period so that refiners have time to invest and react. Upgrading projects that would be necessary to meet the regulation would generally take four or five years to plan and begin implementation and therefore 2018 would be too late to meet a 2020 deadline, “particularly if preliminary verification and refinement of the model has not taken place”. “The possibility of a majority or even total conversion of residual fuels to distillates would be a significant undertaking for refiners. Without the more reliable statement of requirements that could be provided by an early study it is likely that even longer lead times for refinery construction and conversion will be needed. It should be noted that the MARPOL regulation requires a study to be completed by 2018, but does not fix the date for the fuel availability study”. The ICS is suggesting that during 2012–13 the fuel availability model be used to carry out a preliminary study to provide scenarios for the 2015-16 period. The new ECA limits come into force in 2015. Other recent announcements in the Scandinavian arena include an announcement by Statoil Fuel & Retail that it had signed an
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agreement with Malik Supply AS which will mean Malik’s subsidiary Nordic Marine Oil will take over Statoil’s Danish core activities in the marine segment including sales to coasters and fishermen. According to Hans-Olav Høidahl, executive vice president for Scandinavia, at Statoil Fuel & Retail.”We are pleased with the agreement with Malik Supply. Over the last few years we have divested a number of other areas (wood pellets, natural gas and liquefied petroleum gas) which were not part of our core business. Each of these has been sold to a strong partner in its field, offering greater opportunities for the further development of the businesses. Malik Supply is also a strong partner in its field and will be able to contribute to the future development of these marine activities.” Commenting on the announcement Steen Møller, managing director of Malik Supply, said: “The agreement enables Malik Supply through our subsidiary Nordic Marine Oil to further consolidate our Danish position in the market. Our main area is the ports of northern Europe, and the agreement on the acquisition of Statoil Fuel & Retail’s Danish marine activities is in line with our strategy to become the preferred partner within bunkers and lubricants to the marine industry. We look forward to continuing to develop our Danish company in line with this ambition.” With fuel costs on the increase, the Swedish port of Gothenburg has come up with a new plan to encourage ship owners and operators to choose cleaner fuel for their vessels, offering reimbursements for increased fuel costs. Shipping lines that choose a fuel containing a maximum of 0.1 per cent sulphur can receive up to SEK 250,000 in compensation for increased fuel costs and other fuels, like liquefied natural gas can also qualify for financial support. Gothenburg has been charging supplements for vessels with more than 0.5% sulphur content for a number of years, and the revenue serves to compensate those owners using cleaner fuels. “We have worked with our customers to arrive at proposals for how this revenue should be used. Providing support for low-sulphur fuel is one of several initiatives,” Magnus Kårestedt, Port of Gothenburg chief executive said when announcing the new incentives. “Through this environmental measure we aim to demonstrate that it is possible to take important steps towards cleaner shipping through voluntary collaboration and our hope is that in this way we will facilitate the transition to low-sulphur fuels.”
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IBIA Annual Convention IBIASpain Annual Con 2011 Barcelona,
Barcelona, Spain
2-4 November 2011 Hotel Rey Juan Carlos l
PREMIER SPONSOR
OTHER SPONSORS
Register today for the IBIA Annual Convention and be part of The Conference Programme THE bunker industry conference where your opinion counts!
• Topical conference programme Join us in November to experience a programme which will including Europe, focus on key industry issues spotlight’s in Europe, The on Americas and Asia. America & Asia Keynote speakers will discuss the 2015 0.1% ECA followed • Top industry speakers discussing by a CEO Panel who will discuss further the arguments for after 2015, LNG, Fuel and against theECA’s reduction.
Availability, Short Sea Shipping and much Other topics include; themuch future ofmore short sea shipping, energy demand in Asia and fuel switching. For more information on our programme and speakers visitvote www.ibia.net. • Chance forplease you to on future
IBIA policies
A fantastic networking and social programme has been organised for you to make the most of meeting and making • out Excellent social programme contacts with member and non-member delegates. Join andIBIA networking opportunities us for wine tasting, Quiz Challenge, Welcome Reception and IBIA Gala Dinner at the you Hotel the Arts, time Barcelona. allowing to make new
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Delegate Prices Delegate Prices: Member Rate: Non-Member Rate:
£900.00 €1,060.00 £1450.00 €1,710.00*
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£800.00 €945. £900.00 €1,06 £1450.00 €1,71
*Join IBIA as a corporate member for one year and receive the member rate for the Convention all for the * Early bird rate ends on July 4th 2011 same price as the Non-Member rate, whilst enjoying the benefits of being an IBIA member. Contact chanette.roughton@ibia.net for more details.
PREVIEW – IBIA convention
Barcelona bound
This year’s IBIA convention will be held in the major Spanish Mediterranean port city.
R
egular attendees to the IBIA Annual Convention will quickly spot that there are some innovations this year. The event is being held from Wednesday 2 to Friday 4 November at Barcelona’s Hotel Rey Juan Carlos l. Wednesday will be a busy day for many. IBIA committee meetings start at 10.00 and then the Board convenes from 14.00 to 16.00, at the same time as registration takes place for most delegates. The show really gets going with the official opening, with a welcome by IBIA chairman Bob Lintott, who is also Convention chairman, followed by a debate around the central issue of the day: “2015 and the 0.1% ECAs – More haste and less speed? What are the economic effects to the bunker industry?” The discussion is launched by Manuel Carlier, director, European Community Shipowners’ Association (ECSA) with a counter argument presented by Arnaud Leroy, Senior Project Officer, European Maritime Safety Agency (EMSA). There follows a high powered panel discussion on the issues raised. The serious discussion turns into networking at 18.30 at the Welcome Reception. Reflecting the location of this year’s convention, Thursday’s first session is a Spotlight on Europe with Stena Rederi’s director of sustainability, Johan Roos, speaking on the contentious issue: “The future of short sea shipping after 2015”. The following presentation will be: “How will the increased demand for MGO effect bunker prices, shipping segments and fuel availability in Europe?” Then the programme deals with another topical issue: “As crude prices go up and environmental pressures dictate the move to cleaner fuels – is LNG the solution to the emissions problem?” Chris te Stroet, of TNO Research Organisation, the Netherlands, asks: “What are the real implications for the bunker industry to successfully move to LNG fuelled ships?” Tom Strang, vice president, Policy & Regulation, Maritime Policy & Compliance for Carnival Corporation puts the question: “Does the technology hold the key to lowering ship emissions? Scrubbers v LNG.” In another new departure, delegates then sit down to the IBIA Quiz Challenge Lunch before tackling MARPOL Annex VI. Tim Wilson,
World Bunkering Autumn 2011
Lloyd’s Register FOBAS, looks at: “The way forward for marine fuel sampling; a look at the practicality in applying the MARPOL Annex VI requirements.” IBIA Board member, legal eagle and IBIA’s Acting Chief Executive, Trevor Harrison ponders whether MARPOL Annex VI is a “Midsummer Night’s Dream or Much Ado About Nothing – Do the Dramas Continue or is it All Over?” SEAaT secretary general, John Aitken wraps up on the theme with a presentation on “The future for shipping legislation”. Then there will be a chance to influence IBIA policy. A vote will be taken after the previous day’s keynote speech and CEO Panel to determine IBIA’s position on whether it should lobby IMO to postpone the 0.1% cap in 2015. In the evening the action moves to the Hotel Arts for reception and Gala Dinner. The final morning’s sessions cover a range of issues and geographical areas. Canadian Shipping Lines Kirk Jones will address the topic “Fuel availability, cost and Short Sea Shipping effect in North America”. Thane Gilman of the US Coast Guard then speaks on “Fuel Switching – What are the real dangers: Viewpoint on the North American ECA”. Infineum USA’s Salvatore Rea asks, and no doubt answers: “What Can Fuel Additives Do for You?” While the location this year is Europe, the growing influence of Asia has not been forgotten. The managing director of Clarksons’ Market Analyst Team, Colin Cridland, speaks on “The impact of China and India on Energy and Shipping Demand”. Not so long ago bunker gatherings, including the IBIA Convention, were largely about quantity and quality issues. Quantity does not get a look in this year, but Simon Neo of Integra Fuels reports on “Fuel quality in the Far East”, and Terje Cook, bunker manager, Grieg Star Shipping asks: “Are Suppliers Performing to Standard?” It will then be up to Bob Lintott to round up the Convention’s proceedings, prior to a Farewell Lunch and Wine Tasting (yes, another innovation). See you in Barcelona!
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REVIEWS – Istanbul Bunker Conference
Another success
The fifth International Istanbul Bunker Conference drew in delegates from around the world.
O
nce again the Istanbul bunkering community pulled out all the stops to inform and entertain the world’s bunkering community at the major bunkering hub of Istanbul. While the view from the impressive Four Seasons Hotel at the Bosphorus was quite a distraction, the well constructed programme, proceeding under the adept chairmanship of Mustafa Muhtaroğlu, kept the attention of the delegates throughout the two days. The event started with an opening cocktail ‘Welcome Reception’ sponsored by the Turkish Bunker Association. The following day the conference kicked off with opening speeches by Turkish Bunker Association chairman, Yeşim Muhtaroglu, Turkish Maritime Chamber chairman, Metin Kalkavan, and the Port Captain of Istanbul, Capt Mustafa Azman. This was followed by a keynote speech by WFS’s Paul Stebbings who set the tone for a conference that looked at the global bunker industry but with a distinct Turkish flavour. While conference managed to cover a lot of serious issues, the mood was lightened by an enjoyable social programme, including, notably, a boat tour sponsored by Anadolu. Sailing along the Bosphorus – one of the world’s busiest waterways with 50,000 ships passing through annually – never fails to impress. The trip was followed by Dinner by the Bosphorus, sponsored by KPI Bridge Oil. By the time of the next Istanbul Bunker Conference in 2013 many of the changes affecting the industry discussed this time will have happened. What will not have changed will be the welcome from Turkey’s vibrant bunkering community.
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BOOK REVIEWS
Avoiding the pitfalls
Nigel Draffin
Nigel Draffin’s latest book covers the commercial aspects of the bunkering business
C
ommercial Practice in Bunkering assumes a little knowledge of ships, commerce and marine fuel and, according to the author, is intended as a ready reference for those who need to understand how the commercial side of the business really works. Any commercial deal between a seller and buyer can be frustrated at any stage of the process, and bunkering can be particularly prone to contractual problems. In Commercial Practice in Bunkering, Nigel Draffin deftly guides the reader around the pitfalls, using simple and sometimes entertaining language to explain often complicated issues. The book examines every aspect of the commercial deal, from the buyer’s enquiry to the supplier’s offer, terms and conditions, the contract and each party’s obligations. Mr Draffin, currently IBIA’s vice chairman, uses his comprehensive knowledge of the industry to take the reader through the enquiry, (offers, costs, payment terms, negotiations), pre- and post-fixing, ownership profiles and responsibilities, sellers’ terms and conditions, finance (credit, insurance, hedging, prices), and the use of bunkering software and the Internet. It also covers defaults and claims and debunkering. Importantly, and for the first time in print, the book also dissects the latest edition of bunker quality standard ISO 82127:2010 and draws comparisons with its predecessor, ISO 8217:2005. Commercial Practice in Bunkering is full of examples of clauses drawn from real contracts and practical advice on how to navigate around them. There is also a chapter on the costs – as well as the potential financial penalties – of increasingly stringent international
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environmental regulations. As can be expected with a book written by Nigel Draffin, this publication also includes a vast amount of informed detail on some of those areas of bunkering that are often ignored, sometimes to great cost and inconvenience. Once again, he has included an extensive glossary, comprehensive indices and appendices, as well as a very useful ‘where to go for help’ section. This is Mr Draffin’s fourth title on bunker fuels and is published by Petrospot Limited (www.petrospot.com/books) as were: An Introduction to Bunkering (2008), An Introduction to Fuel Analysis (2009) and An Introduction to Bunker Operations (2010). Claims prevention guide revised
The North of England P&I club has published a third edition of Bunker Claims Prevention, which aims to help shipowners avoid potentially large losses arising from loading unsuitable or insufficient marine fuel oil. Subtitled A Guide to Good Practice and with a wealth of practical information contained in some 90 easily readable pages, this publication ought to be in the engineer’s office on every ship. The new edition reflects recent changes to international marine fuel specifications introduced in ISO 8217:2010. Head of loss prevention Tony Baker says, ‘The guide tackles bunker quality and quantity issues at source by giving those involved in the purchase and use of fuel oils a thorough understanding of the problems that may be encountered. It is designed to assist all those who come across bunker quality and quantity disputes in their working day and aims
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to give a basic understanding of the technical and legal problems involved.’ Written by North director Mike Salthouse, manager Richard Bracken and bunker expert – and past IBIA chairman – Chris Fisher, the third edition reflects the many changes introduced in the International Organization for Standardization’s standard ISO 8217:2010 Petroleum products – Fuels (class F) – Specifications for marine fuels. “First published in 1987, ISO 8217 was revised in 1996 and 2005, the latter version becoming widely used and accepted in the shipping industry,” says Mr Baker. “However, it is important that the industry universally adopts the new standard to avoid confusion. Furthermore, the standard will continue to be updated every few years and it is vital to obtain and use the latest version at all times.” North’s guide also explains the latest revisions to and implications of the IMO International Convention for the Prevention of Pollution from Ships (MARPOL) annex VI on preventing air pollution. Under MARPOL all fuel oil suppliers must document the sulphur content of fuel supplied, which from January 2012 must be no more than 3.5% m/m. The third edition of Bunker Claims Prevention, ISBN 978-09558257-7-4, has been distributed to all North’s 375 members and over 3500 mutually entered ships. As with all the club’s other loss-prevention guides, posters and DVDs, it is also available to non-members, priced £30 from Anchorage Press (www.anchoragepress.co.uk).
World Bunkering Autumn 2011
russian Update
Russian news and views
Olga Bogacheva
A round-up of developments in the bunkering scene by Olga Bogacheva LUKOIL-Bunker expands globally
L
UKOIL-Bunker subsidiary Lukoil-Bunker Italy has begun supplying bunkers in the Atlantic off the coasts of Mauritania and Senegal. The company is supplying fishing vessels operating in the area as well as passing commercial vessels. The 12,000 tonne carrying capacity tanker Vasi started supplying in the anchorages around northern African ports at the end of April. The company plans to deliver all types of high-sulphur marine fuel, from IFO30 to IFO380, and MGO. The tanker is equipped with an onboard blending system. Meanwhile another subisidiary, LUKOIL-Bulgaria Bunker, has commenced bunkering operations in Kladovo, Serbia, in April. Sales of gas oil from a coastal base in Kladovo port totalled 1,000 tonnes during the first month. Additionally, the group’s Volgograd branch has started supplying in the port’s anchorage. Fuel is delivered from the Hasan bunkering barge, on which has a total tank capacity of 3,500 cu m and a pumping capacity of 100 cu/m hour. Baltic Fuel Company expands
Baltic Fuel Company (BFC) is set to almost double its volumes compared to last year, achieving 750,000 tonnes of oil products during this summer navigation season. The increase is partly because the company has started transporting oil products along Russian internal waterways. Two 5,000 dwt tankers, the Volgoneft-41 and Volgoneft-56, are being be used to deliver oil products from refineries located in Central Russia. Seven tankers are working in the Finnish Gulf and along Neva River – from St Petersburg to Ladoga Lake. The 5,000 dwt tanker Captain Ponikarovsky is exporting oil products from St Petersburg to European ports. BFC expects to move some 400,000 tonnes in 2011, of which 350,000 tonnes will be bunkers.
World Bunkering Autumn 2011
Meanwhile, the company has expanded its fleet to 31 bunker tankers with the addition of a double-hull vessel, the TM-10. In a statement the company said that the TM-10 would operate at St Petersburg. BFC purchased the tanker from a Russian shipowner this May with transfer of ownership taking place on 1 June. The 300 tonne tanker has a length of 57.7 m, a beam of 9.55 m and is fully compliant with IMO’s MARPOL convention. BFC’s general director Stanislav Korneev said his company was actively pursuing a strategy of upgrading its fleet to bring it into line with international requirements for vessels transporting crude oil and oil products. St Petersburg-headquartered BFC was established in 2008 to manage the bunkering companies of the holding group, which has been engaged in oil products export, bunkering operations, provision of environmental services, etc for over 10 years. BFC now operates a bunkering fleet of 31 vessels in North-West Russia. It ranks among top three players in the bunker market at St Petersburg and within the wider Leningrad region. In addition, in July BFC announced that it had bought four identical river tugs. The first of the series of one-deck twin-screw pusher tugs, the EvroStar-2, arrived at Rostov-on-Don in late July. All four tugs were due to sail to St Petersburg for fitting out for their pusher vessel role. In St Petersburg the tugs will be equipped with drawbars, purchased by BFC from Taisei Engineering Japanese Corporation, for making barge-tug connection apparatus. According to Mr Korneev, barge-tug operation in the Russian Federation’s inland waterways will start next year, carrying products from the refineries of the largest Russian oil companies to St Petersburg.
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russian Update
Baltic Fuel Company obtains four river tugs
Baltic Fuel Company (BFC, St. Petersburg, Russia) has purchased four new river tugs. The 2,400 hp tugs are intended for pushing vessels, including oil tankers used for transportation of oil products with a flash point of over 60oC. The price of the same class vessel in the international market amounts to about €200,000. The first tug, the single deck twin-screw push boat EvroStar-2, has sailed to the Russian sea port of Rostov-on-Don and is currently under registration procedure. The tugs will be transported from the ports of Rostov-on-Don and Azov through the Russian Federation inland waterways to the port of St Petersburg by the end of this August. In St Petersburg, the tugs will be equipped with drawbars, purchased by BFC from Taisei Engineering Japanese Corporation, for making barge-tug connection apparatus. The general director of BFC, Stanislav Korneev, commented: “This year our company has started to develop a new business – transportation of oil products in the Russian inland waterways. In February we placed an order at the Baltiysky plant (St Petersburg, Russia) for the construction of four oil barges of 24,000 cu m total capacity. During the construction, we decided to modernise the barges in order to strictly comply with the requirements of such organisations as BP-Shipping. Currently, Marine Engineering Bureau (St Petersburg, Russia) is finishing the modernisation project.”
World Bunkering Autumn 2011
According to Mr Korneev, barge-tug connection apparatus will start to be used during the 2012 navigation of the Russian Federation inland waterways. Oil products will be delivered from the refineries of the largest Russian oil companies to the port of St Petersburg. Gaspromneft Marine Bunker expands in Baltic
Andrey Vasiliev, general director of Gasprom Marine Bunker, has told Oil&Gas Journal Russia the company will start operations in Baltic countries in 2011. He said the region fits perfectly into the company’s strategy for developing its bunkering business. The company began expanding internationallly last year. Turkey was the first step; in Istanbul Gasprom has been working with local bunkering company Petrol Ofici. “Currently we are working on the logistics of our fuel deliveries by sea to Baltic ports. The next stage will be the establishment of bunkering services in ports. We will rent infrastructure for storage and transportation at the initial stage,” Mr Vasiliev said. The company will source its bunkers from St Petersburg and Kaliningrad and is aiming to achieve at least a 30% share of a market with an estimated turnover of 1 million tonnes. The company is also expanding in the Danube estuary, Romania, and is preparing to start bunkering in Serbia. Further afield, Gasprom is also working on a project to supply
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russian Update
Djibouti. The company says the African port located at the entrance to the Red Sea is a very attractive location for bunkers only operations. Meanwhile the company expects to see its volumes supplied on Russia’s inland waterways increase to 95,500 tonnes during this year’s navigation season, up 14% on 2010. Gaspromneft is now offering bunkering services at Volga, Don, Kama, Neva and Lena rivers. New locations (Samara, Volgograd, Astrakhan and Nizhny Novgorod) have been added to the existing bunker ports of St Petersburg, Yaroslavl, Rybinsk, Kazan, Rostov-on-Don, and Azov. The bunkers come from Gaspromneft’s Omsk and Moscow refineries. Gaspromneft’s bunkering subsidiary was established in October 2007 and itself has two subsidiaries: Gaspromneft Shipping, which runs its own fleet of 10 bunkering vessels, and Gaspromneft Terminal which operates a bunkering base at St Petersburg. Rosneft opened the first floating bunkering station on Don River
Rosneft oil company’s bunkering subsidiary PN-Rostovnefteproduct
Pantone Black 6 C M Y K 50 0 0 100
World Bunkering Autumn 2011
started operating its first floating refuelling station (FRS) in mid-June. The station is 11 km from Rostov near Olginskaya city and offers diesel and petrol to small vessels. The station consists basically of a stationary barge but also has a shoreside oil discharge facility. It also incorporates environmnetal protection features including floating booms on the river. The company says it plans to open several similar stations on the Don River. It already has stations at Angara, Volga, and Anapa in the Crimea. Morskoy Trast joins Association
Russian Far East-based Morskoy Trast has joined Russian Association of Marine and River Bunkering Suppliers. The company was established in 2007 and transports oil products, offers transhipment services for hazardous cargoes, and supplies bunkers to fishing vessels in the Sea of Okhotsk and the Bering Sea using seven tankers. Morskoy Trast has representative offices working in the Far Eastern ports of Vostochny, Nahodka, Vanino, Korsakov, Vladivostok, Severo-Kurilsk, Petropavlovsk-Kamchatsky and other ports on the Kamchatsky Peninsula.
Pantone 116 C M Y K 0 17 100 0
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russian Update
2011 St Petersburg Bunkering Forum largest so far
The fourth Russian Forum “Current State and Prospects for Development of Russian Bunker Services Market” was held on June 23-24, 2011, in St Petersburg. The number of participants beat the records of the previous years – there were no vacant seats in the hall for the opening ceremony when St Petersburg vice-governor Yuri Molchanov addressed Forum participants. While difficult challenges face the industry the participants were in an optimistic mood. Albert Vygovsky of North-Western Shipping Company observed that the soaring diesel price had reduced the profitability of river transportation significantly. To meet this challenge shipowners are switching to less expensive heavy fuel oil. Russian bunker companies are still worried about whether they will be able to supply vessels trading within the ECAs after January 1, 2015, when the 0.1% sulphur cap enters into force. It was
World Bunkering Autumn 2011
apparent that refineries owned by Russia’s large integrated energy companies are not ready to cover demand for low-sulphur fuel oil. There is still shortage of processing capability and this cannot be rectified before the deadline. Speakers noted that, under these circumstances, fuel prices would be hard to predict. In experts’ opinion, the best possible way out may be to switch to diesel fuel. However, it is not yet clear how owners will respond. In turn, Russian bunker owners are unclear whether they need to push ahead with the switch to double-hull bunker barges as they understand that double-hulls are not required if only carrying distillate. Vladimir Kapustin of VNIPIneft presented a detailed analysis of Russian oil processing facilities. In his opinion, producing heavy fuel with a sulphur content of 0.1% was not a problem from a technical point of view. He said plants for deep oil processing were needed for this purpose. The governmnet had some time ago adopted programmes to put the necessary infrastructure in place but they
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russian Update
were never implemented. He said that it was unlikely that the vertically integrated oil companies would make the extraordinarily large investments required to achieve this goal. Currently the major players in low-sulphur heavy fuel oil market are independent refineries with annual capacities in the range from several hundred thousand tons to 3 million tonnes. Mikhail Turukanov of Kortes news agency, Moscow, presented a detailed analysis of this sector of the refining industry. In 2010, small and medium refineries produced 2,221,000 tonnes of heavy oil containing less than 1.5% sulphur, which covers about 20% of the Russian market. About 20% of the product is consumed by the domestic market and the rest is exported. In recent years demand for heavy fuel oil in Russia gradually had reduced in all industries excluding bunkering.
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In 2005, bunkering companies delivered 5.1 million tonnes of heavy oil but this figure had increased by 2010 to 5.5 million tonnes. The Kortes analyst estimated low-sulphur heavy demand in 2015, when all Russian ports will be surrounded by ECA zones, as 7 to 8 million tonnes a year. In theory this amount could be produced by independent refineries but new legislation amendments could force many of these companies to close down. Another acute problem, permanent changes to the bunker fuel declaring procedure, was discussed by Dmitriy Smirnov of Baltic Customs. The Federal Customs Agency proposed a new simplified bunkering fuel declaration procedure which currently applies to Belorussia and Kazakhstan, members of the Custom Union. Temporary procedure “export 00� has been used now since
World Bunkering Autumn 2011
russian Update
January this year but some believe that all energy resources should be declared at Customs, so uncertainty still exists. Eduard Mohnatkin of Analytical Center for Ecological Standards and Fuel Testing warned that Russian bunkering companies may find themselves unprepared for new Eurasian Economic Community technical regulations, which will come into force on January 1, 2012. He strongly recommended bunkering companies to prepare and register safety certificates for their products to avoid problems with watchdog agencies at the beginning of next year. As usual, there were discussions over bunkering fuel quality. A speech delivered by Rudolf Em, director of Fuel Department of Far East Shipping Company, was well received by participants because suppliers’ and shipowners’ interests are often in conflict. Mr Em
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described a five-step control system that allowed his company to reduce the number of bunker operations with quality problems from 4% in 2006 to 0.3% in 2010. Trade awards set up by the Association were presented at the Forum for the first time. The Crystal Pearl for “Personal contribution to the Russian bunkering market” was presented to Alexander Golovizin, the former director of Baltic Bunkering Company. Discussions and networking continued during a formal dinner at one of the best St Petersburg restaurants. The president of the Russian Association of Marine and River Bunkering Suppliers proposed a toast to industry prosperity and wished every success to all Forum participants.
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legal news
Tough line continues
US courts are still cracking down severely on oil record book offences
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recent case before a Maryland court shows that not only are US courts taking a very dim view of oil record book offences but they will come down hard on individuals and companies who try cover up illegal oily waste discharges or obstruct investigations in anyway. Dimitrios Grifakis, 57, of Kallithea, Greece, was sentenced recently by US District Judge Marvin J. Garbis to six months in prison, followed by two years of supervised release, for obstructing a Coast Guard inspection that took place in May 2010 aboard a Maltese-flag 74,816 dwt bulk carrier Capitola at the Port of Baltimore. Mr Grifakis was then the Chief Engineer of the Capitola. In a related case, Dry Ships affiliated, Liberian-registered company Cardiff Marine Inc (the Liberian-registered shipping company and operator of the Capitola) previously pleaded guilty to obstructing a Coast Guard examination and violating the Act to Prevent Pollution from Ships. The company was sentenced in February 2011 to pay a US$2.4 million fine, and to serve three years probation, subject to an environmental compliance plan that includes audits by an independent third party auditor. According to Mr Grifakis’s guilty plea and other court documents, the investigation into the Capitola was launched on 3 May 2010 at the Port of Baltimore, after a crew member informed a clergy member who was on board the Capitola on a pastoral visit, that there had been “monkey business in the engine room,” which involved a “magic pipe.” The “magic pipe” proved to be a bypass hose that allowed the dumping of waste oil overboard, circumventing pollution prevention equipment required by law. The crew member asked the minister to alert the Coast Guard which triggered an inspection of the Capitola.
World Bunkering Autumn 2011
At his plea hearing, Grifakis admitted that from about March 2009 through to 3 May, 2010, he repeatedly ordered his subordinates to illegally pump oil-contaminated waste directly into the ocean, most commonly through the “magic pipe.” However, during the investigation, Grifakis falsely denied having ordered anyone to pump oily waste overboard and falsified documents to hide these discharges from inspectors in ports visited by the Capitola. Mr Grifakis also obstructed the investigation by concealing certain ship’s records and then denying that such records existed. Specifically, the Department of Justice said, he concealed the Capitola’s daily sounding record, which is a daily measurement of the contents of the ship’s waste tanks. This record would have been useful during the Coast Guard’s inspection of the Capitola in that it could have shown when the levels of the waste tanks changed, which could be compared to entries in the oil record book. Sudden, unexplained drops in the measurements could have indicated specific dates when wastes were discharged overboard. The daily sounding record was not produced to the Coast Guard. Grifakis also directed other members of the engine room crew to lie to investigators and claim that the Capitola did not have a daily record of soundings. North American ECA Update
The Environmental Protection Agency (EPA) and the US Coast Guard have signed a Memorandum of Understanding on how they will jointly enforce the requirements the North America Emission Control Area (ECA) vessels operating in US waters from August next year. The MOU is available at http://www.epa.gov/compliance/resources/agreements/caa/annexvi-mou062711.pdf.
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equipment and services
Maersk installs Micro Motion
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S-based company Emerson says that its Micro Motion® Certified Marine Bunker Measurement Solution for measuring heavy fuel oil (HFO) bunker deliveries is now being installed on Maersk vessels. The Maersk Bulan became the world’s first cargo vessel equipped with a Micro Motion® Certified Marine Bunker Measurement Solution in December last year. According to the St Louis, Missouri-headquartered company the measurement solution meets international standards for custody transfer and enables accurate, transparent and traceable HFO measurements that are accepted by fuel suppliers to Maersk. It provides real-time HFO bunker measurements that increase operational efficiency, minimise disputes and provide automated electronic Bunker Delivery Tickets. “Emerson’s Micro Motion® Certified Bunker Solution allows us to remove uncertainty and improve transparency on custody transfer of fuel oil, which is our largest cost item, while at the same time increasing our operational efficiency,” said Jesper Rosenkrans, Business Development Manager for Maersk Oil Trading. Micro Motion Coriolis meters for bunker measurement were first implemented by AP Moller Maersk on a number of vessels in 2008. Emerson says that, while the initial results were good, Maersk and the industry as a whole needed a transparent and traceable bunker measurement system based around the Micro Motion Coriolis meter to provide the necessary confidence and drive a true global industry change. Emerson carried out further work, with agreement from Maersk and its partners, to develop a deeper understanding of the challenges of bunkering fluid dynamics. This included addressing the issues to realise a direct mass-based, independently accredited, bunkering custody transfer solution for two-phase HFO. The Certified Marine Bunker Measurement Solution includes a Micro Motion ELITE Coriolis meter, Series 3000 transmitter with Marine Bunker Transfer Package, and bunker delivery ticket printer. The system is capable of handling the density and viscosity inconsistencies inherent in HFO and was certified by
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World Bunkering Autumn 2011
Nederlands Meetinstituut (NMi), the notified body for testing to the guidelines of the European Union Measurements Instruments Directive (MID) and Issuing Authority for International Organization for Legal Metrology (OIML). The solution meets the OIML standard R117-1 and the MID standard 2004/22/EC Annex MI-005. The same system has also been installed one Dutch barge operator VT Group’s vessels, the Vlaardingen. Emerson says that the implementation of the Certified Bunker Measurement Solution in December 2010 on MTS Vlaardingen is a natural extension of VT’s in-house developed software system, which is based on tank radar measurement, corrected for trim and list. The VT radar system eliminates manual processes and already gives industry-leading, high accuracy results. Emerson’s Micro Motion Coriolis mass flowmeter technology, it says, brings an extra level of certified accuracy, ensuring that the deliveries made and paid for by the end user are proven. “Certified Coriolis flowmeters support the existing VT business model of accurate quantity measurements,” said Yuri Ouweneel of VT Group. “These flowmeters allow us to differentiate ourselves as a top-tier bunker service company, further improving our reputation while illustrating this value clearly to our customers.”
Emerson’s Micro Motion® Certified Marine Bunker Measurement Solution for measuring heavy fuel oil (HFO) bunker deliveries
Maersk is installing the Emerson system on its vessels
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Company News
The experiences of an independent bunker market player in Big port of St.Petersburg
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nternational laws are making stricter demands on the environmental aspects of shipping. A primary example of this is the reduction of sulphur content in bunker fuel – legislation is expected to reduce the maximum allowable sulphur content in fuel oil to 0.1% within the ECAs (Emissions Control Areas) by 2015. Unfortunately, Russian oil product manufacturers are not ready to offer the bunker market sufficient amounts of low-sulphur fuel at reasonable prices, and the market is therefore expecting a great shortage of resources. How will this affect the bunker market of the Northwest of Russia, the key port area of the Baltic? The bunker market in Russia, as well as the oil refining market, differs greatly from that in other countries. Prices in the Russian market (unlike those in China for example, where prices for fuel are fixed by government) are defined by the free market economy and depend on supply and demand, fuel quality and levels of servicing – pricing is therefore highly fluid. Added to this, the leading position often belongs to branches of the largest vertically-integrated oil producing companies. These are often subdivisions of oil giants, and as such, are dependent on the interests of their head offices. At the same time, large oil companies in Russia are not interested in investing in modernisation, as during high oil price conditions, it is easier to export oil or high-sulphur fuel oil for further refining in foreign plants. Oil companies have had a number of tax incentives – fuel oil production in Russia became even more profitable because of reduced export dues on dark oils. This should have created investment capital for financing the modernisation of refineries (as the government hoped). Unfortunately this did not happen – oil companies saved money on taxes but did not re-invest it in the development of refining technologies. As a result, Russian oil refining appears not to be ready to comply with European environment quality standards for fuel. This too is true for the Russian bunker market as, in many respects, it is specified by the policies of larger oil corporations. At
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the same time, world practice shows that independent companies are the most effective in the bunker market – for example, large players as O.W. Bunker, Dan-Bunkering etc. In the bunker market of the Northwest of Russia Big port of St.Petersburg there are three main players, from which only the Baltic Fuel Company is independent from refiners – the other two are branches of giants such as LUKOIL and Gazpromneft. The Russian market cannot be described as competitive or transparent therefore. It is also significant that ‘branch’ companies have no market pre-conditions for effective business – their target is not to become profit centres but, to a large degree, act as mere prestige objects for oil producing giants. Independent players are strictly limited in their opportunity to enter the market unfortunately – the question becomes one of how to survive with no political or economic lobby in the bunker market of Russia. For example, according to the words of Stanislav Korneev, General Director of the Baltic Fuel Company: “During the last year our company has not only kept its position in the market but has considerably increased it by means of systematic implementation of business diversification strategies. It ensures us flexibility in those segments where market mechanisms do not always work because of the existing situation. The company has strengthened its transportation potential, either on water or on land, having created a transportation company which is a leader in the Northwest region in terms of equipment in the field of oil transportation.” To resume, it should be mentioned that as of today there are no pre-conditions for changing the bunker market development trend in Russia facing world experience. So, if Russia does not go ahead in separating the bunker market and oil refining market according to the world experience, it could result in shortage of low-sulphur fuel oil in the Northwest of Russia in 2015, production of which is not technically problematic, however it demands relevant capabilities for deep refining.
World Bunkering Autumn 2011
Company News
Trade House Transit-DV Co. LTD
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rade House Transit-DV Co., LTD. has launched deliveries to the Russian Far East markets of a broad range of oil products compliant with current environmental standards. The new program is being implemented in conjunction with the company’s strategic partners such as TNC-BP affiliates and SK Energy, South Korea. The company supplies large amounts of IFO-380 high-quality fuel oil to the bunkering market under this program. “We are establishing an IFO-380 market in this area virtually from zero. Because Russian oil refineries produce IFO-180 grade, ships using IFO-380 were meeting difficulty in bunkering with this particular fuel variety in Primorsky Region’s ports as its supply was very low. That’s why foreign vessels, particularly large-tonnage state-of-the-art ships, even when their routes passed via Primorsky Region’s ports preferred calling our Asian neighbors’ ports for bunkering – Singapore, Hong Kong, Busan, etc. The governing factor for that frequently was just lack of IFO-380 in our ports rather than oil product prices. And those who still bunkered in our ports had to fill a lighter fuel oil variety into their tanks to bring up fuel characteristics to more or less normal by mixing and adding various components. Today, we start competing with Asian ports through enhancing the bunker product spectrum. Bunker prices in Russian ports are currently more attractive than in major Asian bunkering centers,” says Valery Morozov, Executive Director of Trade House Transit-DV Co., LTD. Also, the company has improved bunkering logistics. The Elara-DV tanker owned by Transit-DV Holding has began operating as a bunkering tanker in Vostochny and Kozmino ports since early February. The decision to use a 7,000-ton tanker as a port bunkering ship has been a new approach to bunkering sector logistics. The advantage of a large-tonnage bunkering tanker is that it can deliver large oil product shipments intended for one or several vessels per one voyage. The Elara-DV is capable of taking up to 7,500 tons of cargo on its board and of discharging cargo at a rate of up to 1,000 cubic meters per hour. Such approach enables to set up a new system in the bunkering market based on the bunkering tanker’s regular voyages on an agreed schedule in accordance with customer requests. This operational mode elevates bunkering services in Primorsky Region’s ports to a higher level. Naturally enough, IFO-380 product has become asked-for by foreign vessels calling Primorsky Region’s ports from the first days of its sales. Trade House Transit-DV Co., Ltd. sold more than 17,000 tons of this product during first three weeks alone. In the nearest future, Vostokbunker JSC, also a member of Transit-DV Holding, will launch production of a broad range of oil products under its proprietary trademark “VB” for the bunker fuel market (VB-30, VB-40, VB-180, VB 380, F-5) based on fuel oil supplied to this area from TNC-BP’s oil refineries and by its South Korean partner, SK company. “We place our main focus on environmental safety. Current standards in shipbuilding, auto manufacturing, power generation both at major and small plants have been dictated by need for maximum reduction of adverse effects on the environment. Environmentally unsound engines and propulsion plants become obsolete and go out
World Bunkering Autumn 2011
of use. And new ones require energy resources that meet environmental standards,” says Valery Morozov. Vostokbunker JSC produces marine fuels of VB grade (VB 30, VB 40, VB 180, VB 380). Its equipment capacity is sufficient to support monthly production of up to 100,000 tons of fuel. Its fuel products conform to ISO 8217 international standard (IFO 30, IFO 40, IFO 180, IFO 380) and their quality is confirmed by GosStandard of Russia’s certificates. The annual oil product turnover handled by Vostokbunker JSC terminal is 1 million tons. Its tank farm holding capacity is 51,000 tons. The 300-meter-long oil loading pier is equipped with a 200-mm pipeline. With pumping capacity being 500 m3/h, simultaneous transfer of two fuel varieties into two tankers is possible. The pier is capable of handling ships of up to 50,000 dwt. In-house facilities for liquid fuel storage and transshipment make it possible to perform quality control at each delivery stage. Through application of available process technologies, performance data of resulting fuel can be customized according to client’s requirements, i.e. fuel for each particular engine type can be produced. Vostokbunker JSC oil depot capacity is sufficient to have large amounts and broad range of bunkering fuel oils in stock. Trade House Transit-DV Co., LTD. has a number of overseas offices. Marine Logistics Limited (Hong Kong) and Marine Logistics Limited Korea operate on-line with the head office in Vladivostok which minimizes time required for decision making and transaction of deals. “Operating our own oil loading terminal and fleets, we are ready to satisfy vessel bunkering requests in a shortest time possible. Such quick response is very convenient for customer,” Trade House Director Mr. Morozov says. “Furthermore, through our representatives in Hong Kong and Seoul we provide bunkering services to vessels in Korea, Singapore, Vietnam and Thailand.” Company Profile
Group Transit-DV is a holding company providing a broad range of services in the markets of energy resource processing and delivery (oil products, coals, natural gas), fleet bunkering, ocean carriage. The company was established on July 18, 1995. Trade House Transit-DV Co., LTD. is an exclusive distributor of “SK” marine oils in the Far East of Russia and ready to deliver oil in the ports of Vladivostok, Nakhodka, Vostochny, Kozmino, Magadan and Petropavlovsk-Kamchatsky.
Bunkering requests can be made at our website: http://eng.tranzitdv.ru/tdtdv/on-line-order/
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Company News
LUKOIL BENELUX B.V. as one of the key players in the ARA markets
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UKOIL Benelux B.V. is a prominent and reliable physical supplier of bunker fuels in the ARA region (Amsterdam-RotterdamAntwerp). We are supported by the logistic and financial strengths of our parent company, LITASCO SA in Geneva, Switzerland. LUKOIL Benelux B.V. is part of the Russian oil major, LUKOIL, which also has wide-scale operations outside of Russia. Our clientele varies from the well-known large and medium shipping lines to other physical suppliers and trading companies. In the last couple of years our company has had a market share of 10-15% in its home market of the Rotterdam and Amsterdam ports. In June 2010 the Credit Risk Management Committee of LITASCO SA approved a strategy of further strengthening the company’s presence in ARA, increased credit lines for a significant number of our customers, and allowed more flexibility in dealing with new customers. This step clearly shows that LITASCO SA and LUKOIL Benelux B.V. have adapted themselves very well to the post-crisis situation in the bunker industry in ARA, and feel comfortable to explore new market opportunities. However, we continue to closely monitor the situation in the market and are ready to adjust ourselves in order to be able to successfully face any new challenges and sustain the growth of our business. In July 2010 LUKOIL Benelux B.V. made a decision to close its Amsterdam office and centralise handling of all the bunker enquiries through one contact point, the Bunker Desk in Rotterdam. The formal closing of our Amsterdam office took place at the end of July 2010. This step has proved very successful and has helped our company to optimise its bunker trade operations. Since then, LUKOIL Benelux B.V. has been serving its clientele more quickly and efficiently. Since September 2009 we have supplied bunker fuels to the Belgian port of Antwerp from the refinery TRN (Total Raffinaderij Nederland) in Flushing, where the LUKOIL Group purchased a 45% stake, and from the other locations in ARA. In Q2 2011 the authorities of the Port of Antwerp granted the company the necessary licences for fully-fledged bunker operations. We will be expanding our activities in that port, which is Europe’s second largest, shortly. In addition to the ARA region, we are also active in the Baltic Sea, Black Sea and Mediterranean Sea. Our company is planning to get on firm footing with its bunker supplies in a number of the European ports. In the last two years LUKOIL Benelux B.V. has also been successfully targeting the Russian northern ports of St Petersburg, Kaliningrad, Vysotsk, Primorsk and Murmansk, arranging bunker fuels to a variety of shipping companies making calls in that region. Our presence there is only to be continued with closer ties with local physical suppliers. Since 2005 LUKOIL Benelux B.V. and our Dutch partner, Burando Holding, have been jointly operating Service Terminal Rotterdam, which enables LUKOIL Benelux B.V. to store fuel oils and blend them to necessary specifications. Currently new storage tanks are being constructed at STR, which will significantly increase total storage capacity of the terminal. The new tanks are expected to become operational in Q1 2012. Having our own terminal and purchasing almost all of our bunker fuels from our parent company LITASCO SA gives us a competitive advantage in the saturated market in
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which demand has been steadily picking up after the world’s recent economical crisis. Due to this competitive advantage, LUKOIL Benelux B.V. is in a position to design and implement flexible delivery strategies. As a supplier of a wide range of grades, we receive bunker enquiries and provide quotations for the products IFO 700, 600, 500, 380, 240, 180, 120, 80, 60, 40, 30, 20 cSt and bunker gas oil. We can also make other products available upon request. In order to ensure quick and timely deliveries of our products to seagoing vessels or to other physical suppliers, we currently have a fleet of six time-chartered barges with deadweight ranging from about 1,630 MT to 6,310 MT. Provided by FTS Hofftrans, the barge operating company of our partner Burando Holding, they are all new double-hulled barges with greater bunkering capabilities. Should we require a greater capacity, we have the option of hiring other barges for spot deliveries in the range from about 1,700 MT up to 9,200 MT, with both FTS Hofftrans and alternative reliable transport companies in the ports of Rotterdam, Amsterdam and Antwerp. Our team of bunker traders and operators has all it takes to become and remain your reliable partner: experience, expertise and thorough knowledge of the bunker markets. They are friendly and available for your enquiries 24 hours per any day. LUKOIL Benelux B.V. will gladly look into your enquiries for the regions where we have been actively operating, as well as for any other regions in the world. In May 2011 LUKOIL Benelux B.V. moved to a new office, to the 36th floor of the tallest building in the Netherlands, the Maastoren in the centre of Rotterdam. Our new home has been giving us a great deal of inspiration and energy to service our clients even better than before. We look forward to your bunker enquiries and hope to do business with you soon.
New office address: Wilhelminakade 85, Building “De Maastoren”, 36th floor, 3072 AP Rotterdam, the Netherlands New post address: PO Box 24065, 3007 DB Rotterdam, the Netherlands Tel: +31 10 264 27 00 E-mail: Bunkers@lukoil.nl
World Bunkering Autumn 2011
Company News
Rosneft Marine – committed to supplying LSFO to the marine market
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osneft Marine, a subsidiary of Russia’s national oil company Rosneft, is well positioned to meet the changing demands for marine fuel products as the global shipping industry moves towards tighter regulations to protect the environment. The company understands the importance of ensuring the reliable availability of premium quality low sulphur fuel oil. It is able to control all stages of the supply chain, from the refinery to the barge, ensuring that it is always in control of the quality of the fuel it delivers to customers. This allows Rosneft Marine to deliver only premium quality 1.00% low sulphur fuel oil that exceeds all international standards including MARPOL. The revised MARPOL Annex VI came into force 12 months ago on July 1, 2010. Annex VI called for a series of ambitious reductions of fuel sulphur content in order to reduce sulphur oxides (SOx). The global sulphur cap will be reduced to 3.50% in January 2012, with a long-term global target of just 0.50% in 2020, subject to a review in 2018. The measures also include progressively lower sulphur limits in the Baltic, North Sea and North American Emission Control Areas (ECAs). In ECAs, sulphur limits are set to drop to 1.00% in March 2010 and to 0.10% in January 2015. Europe has also adopted it’s own legislation on sulphur content in marine fuels under Directive 1999/32/EC, which goes above and beyond the IMO’s MARPOL Annex VI. As demand for low sulphur fuel increases, the quality of low sulphur fuel being supplied in many ports around the world has been called into question. To comply with sulphur limits and meet demand, some fuel suppliers have resorted to blending high sulphur fuel oil with questionable stock, leading to disputes and costly problems with ship engines.
Oil facility “Belokamenka” (Murmansk)
One of the main priorities for Rosneft Marine is to ensure that its customers consistently receive the best quality fuel available. By implementing international standards across its integrated supply chain, Rosneft not only readily supplies cleaner fuel to its customers but also adapts to reflect the realities of changing global fuel supply needs in the marketplace. An industry estimate suggests that one in every seven ships in the entire global shipping fleet is in the heavily-trafficked ECA zones at any one time, and this number is set to increase as more shipping operators and owners voluntarily switch to low sulphur fuel. In 2010, 15 shipping lines signed the Fair Winds Charter, a voluntary agreement to switch to low sulphur fuel when their ships are birthed in Hong Kong. The industry is also pushing for more government regulation and the establishment of an ECA in the Pearl River Delta region of the People’s Republic of China. While this is a positive step for the industry, industry observers have voiced concerns that there may not be sufficient low sulphur fuel to meet surging demand. Rosneft Marine remains focused on the development of its physical assets, such as with its refineries and storage terminals enabling it to increase its volumes to meet the growing demand for low sulphur fuel. Rosneft Marine currently has a presence as a physical bunker supplier in the Baltic, Black Sea, Russian Far North and Russian Far East and supplies 1% low sulphur fuel in Russian ports. In this way, Rosneft Marine plays its part in ensuring a sustainable supply of low sulphur fuel that will support the shipping industry in meeting current and upcoming regulatory requirements.
Oil terminal “Nakhodkanefteproduct” (Russian Far East)
World Bunkering Autumn 2011
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Company News
Nizhegorod Bunker Ltd runs successful river bunkering business
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izhegorod Bunker Ltd specialises in quality bunkering services to vessels working in the area of Volzhskiy and its neighbouring basin. The company’s fleet consists of shallow-draft tankers with the capacity of 300 tonnes and automotive bunkering vessels with 600 and 1,500 Vladimir Nikiforov, tonnes capacity, whilst its total tonnage of General Director, bunkering fleet amounts to 7,000 tonnes.It Nizhegorod Bunker also has a non-propelled oil station. Ltd The company is an official representative of the Russian oil giant, OJSC Rosneft. Its current strategy of development aims at increasing its presence on the North-West bunkering market. “The main advantage of our company which, in my opinion, should attract partnerships from the shipping companies, is that we provide bunkering services at the two key bunkering spots – in Rybinsk and, most importantly, in Sheksna,” says Andrei Losev, Nizhegorod Bunker Ltd’s general director, Commercial Director, Vladimir Nikiforov. “As the ships follow the Nizhegorod Bunker Volga-Baltic route they require quality fuel, Ltd and this is exactly what our company will supply them with”. For all its years in the bunkering business, Nizhegorod Bunker has never received a single claim regarding the quality of bunker it provides. During the last navigation period, the company supplied more than 40,000 tonnes of high quality fuel to its customers. “It is very important to supply top quality bunker to shipowners as it affects the vessel’s engine and other important mechanisms and thus prolongs its operation life,” says Nikiforov. “This is why the quality of bunker fuel is the main priority for Nizhegorod-Bunker Ltd”. The company has the potential, and explores opportunities, for expanding its business. Nizhegorod Bunker Ltd is ready to go beyond its current area of service (limited at the moment to Samara) to deliver quality bunker to vessels requiring refuelling further down the river Volga. The company can provide 24-hour supply of high standard fuel in that area. We always welcome new enquiries for our services and partnership proposals.
Nizhegorod Bunker Ltd 13/2, Ilyinskaya Street Nizhniy Novgorod Russia 603109 Office Tel/Fax: 007 831 434 4845 E-mail: noilnn@mail.ru Website: www.nizhegorod-bunker.ru
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Oliehandel Klaas de Boer
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stablished almost 100 years ago, Klaas de Boer is one of the oldest independent physical oil suppliers in the ARA region. The company started off as a small gas oil and lubricants supplier focused on the Dutch fishing fleet. Nowadays, the fishing fleet is still one of the cornerstones of the company, but where shipping has changed, so has the organisation. Klaas de Boer supplies a wide range of customers and businesses, varying from trawlers to dredgers, general cargo, chemical tankers and large bulkers. Also, the products delivered have changed over time and the range of products supplied has broadened. With our 13 owned barges and mature supply network, KdB supplies lubricants, MGO, high and low-sulphur fuels between 30 and 380 cSt. Of course, KdB supplies according to the latest ISO standards, thus ISO 8210:2010 specs are applicable for all our deliveries. Klaas de Boer is strategically situated to make deliveries from Emden to Rotterdam. We cover the whole Dutch coastline with our own quality products. All products are sourced from quality refiners and are delivered with the refiners quality certificates. Throughout the years, KdB has developed into a preferred professional partner for many customers calling the Amsterdam/Ijmuiden area. This partnership between KdB and its customers has resulted in a good understanding of the specific needs of both shipowners and operators. The benefit for the customer is quick and smooth supply, within the short time window the ship has in port. Due to our proximity to the harbours, the net result for owners and operators is to have bunkering completed with no time loss. Due to our short logistical lines, same day deliveries are usually possible; just call us and we will try our best! KdB reaches its 100th anniversary having grown alongside many of its loyal clients into a busy physical supplier, proving its commitment to its customers and vice versa. KdB is your reliable, established, quality supplier in the ARA.
For bunker enquiries please: E-mail: bunkers@klaasdeboer.nl or Tel: +31 255 513 240. For more information, please visit www.klaasdeboer.nl. We are looking forward to receive your enquiries.
World Bunkering Autumn 2011
Company News
Tsetan Company Limited
Aditya Fuels L.L.C.
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setan Company Limited provides customers with services in bunkering, transportation and trade of oil products. A young and dynamically growing company, Tsetan entered the bunkering market in 2003. At the early stage of its activity Tsetan operated one bunkering barge in the port of Nakhodka. At present the company owns three bunkering tankers, the first of which was purchased in 2003 and the other two in 2005 and 2008 respectively. Recently the a newly purchased Japanese made double-hull bunkering vessel Tsetan has been put into service, which will increase transportation and bunkering services in the ports of South Primorye. The total deadweight of Tsetan’s fleet is 5,000 tonnes, and the company’s annual cargo turnover is 50,000 tonnes. The scope of the bunkering services provided by the company covers all the ports of Southern Primorye, namely Nakhodka, Vostochny, Vladivostok, Slavyanka, Zarubino. For the past couple of years Tsetan has strengtnened its’ position on the market and has gained a reputation of reliable bunker supplier. Even in the current economical climate, when the demand for fuel has decreased in the Primorsk Krai area, the company has managed to increase the volumes of bunker supply which at the end of year 2010 constitued 70 000 tons. In addition to this Tsetan has expanded the range of clients. The main supplier of the oil products for the company is Khabarovsk Oil Refinery (Khabarovskiy NPZ). The oil products are transported in cisterns by rail and then transhipped via the oil transhipments terminals of Nakhodka, Vostochny and Vladivostok. The company aims to maintain the high profile, international image of a professional supplier of quality bunker fuel to its clients. We value our clients and take a good care of their bunkering needs. We always welcome new clients and are permanently ready to offer our services.
Tsetan Company Limited. 132, Verhne-Morskaya str. Nakhodka 692917 Primorskiy Krai Russia Tel/Fax: +7 4236 629626 Tel/Fax: +7 4236 697060 Tel/Fax: +7 4236 645852 E-mail: tsetan@yandex.ru
World Bunkering Autumn 2011
ased in Dubai, Aditya Fuels L.L.C., part of the Aditya Marine Group, offers fuels supply services to all ships visiting Dubai. The company supplies bunkers in Ajman, Mina Saqr, Sharjah Hamriyah port, Ras al-Khaimah port, Jaballi, Steven rock jetty, and Khorffakan. We have our own FO and MGO bunkering trucks, and the company is now investing heavily in building and developing our storage facilities. We are aware of the importance of uplifting bunkers at the agreed time and place; after all, ships need to be sailing, not standing idle. We carefully monitor the supply and keep our customers informed of progress, 24/7. Our company policy is based on three major factors: quality, quantity and price; all our products meet with the ISO-8217:2005 standard and we pay great attention to safety and environment protection. Our current expectation is that demand will outstrip what we had initially anticipated; in order to facilitate this, the deployment of a barge will be necessary for supplies at outer anchorage, something which we hope to address in the near future. The company aims to maintain its high profile, and continue to enhance its international image as a professional supplier of quality bunker fuel. We value our clients and take good care of their bunkering needs. Furthermore, we always welcome new clients and are permanently ready to offer our services.
N V Rambabu Managing Director Bunker Supplier; East Cost India, #41-1-35, Rangayyanaidu Street, Kakinada – 533 007 India. Mobile: +91 984 825 7582 | Telephone +91 884 236 6717 /718 aditya@adioil.com | www.adioil.com Bandi. Sunil Kumar Flat No.115, AL Zaruni Complex, Dubai Islamic Bank Building, U.A.E. M: +971 5550 42872 E: aditya@adioil.com, uae@adioil.com WWW.adioil.com Mrs. A.SASIKALA (UK) E-mail: adioiluk@Gmail.Com Mob : +44 7825152973
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Company News
Gazpromneft Marine Bunker fuels everybody
G
azpromneft Marine Bunker, a subsidiary of JSC Gazprom Neft, was created in October 2007 for the year-round supply of petroleum products – fuel oil, marine fuel and lubricants – for sea and river transport. The enterprise includes five offices and two subsidiary companies; Gazpromneft Shipping manages a fleet of 10 bunkering vessels, whilst Gazpromneft Terminal SPb operates a bunker oil refinery in its Kirov factory in the St Petersburg region.
Where:
Gazpromneft Marine Bunker is represented in most major sea and river ports of Russia: • North West: Saint-Petersburg, Murmansk, Primorsk, Kaliningrad, Arkhangelsk, and Ust-Luga • The Black Sea: Novorossiysk, Tuapse and the Caucasus • Far East: Nakhodka, Vladivostok, and the East • Pool of the rivers Volga and Don: Rostov-on-Don, Yaroslavl, Kazan, Astrakhan, and Volgograd. Gazpromneft Marine Bunker large bunkering company, whose main strategic goal is to enter the international bunkering markets of Europe and Asia. The first step in this direction was made at the end of 2010, when the first international bunker service was provided in the port of Istanbul (Turkey). Our clients: About 70% of the company’s services are provided for foreign shipowners. Gazpromneft Marine Bunker has contractual relationships with major international shipping companies and traders operating in the ports of Russia. Russian shipowners are major sea and river shipping companies, as well as fishing companies.
Neftehim Bunker Jsc
N
eftehim Bunker Jsc is an affiliate of the well-known and reputable oil product trader and bunker supplier, Neftehim Ltd, which has been operating since the year 2000. We maintain a reputation for reliably supplying the highest stand outstanding business relations with the major Russian oil companies, as well as the independent oil producers, we are able to be very flexible in the market, and always offer the best prices to our clients. Thanks to these extensive and stable relations, we always have the full range of residual products available. Furthermore, our marine gas oil is in full compliance with the latest international industry standards. Our company has access to a fleet of five different barging companies, giving us flexibility and efficiency in our bunker delivery operations. With our company’s growth in mind, we now we have our own bunker-barge, Severaynka, under reconstruction on the Vyborg ship yard by MARPOL regulation. We expect to receive this modernized vessel in September 2011. Quality control is a matter of great importance to us, so before a bunker delivery to the vessel we regularly engage a surveyor to test our fuel. In choosing Neftehim Bunker Jsc for your bunker supplies, you will always find outstanding levels of service, quality and efficiency.
Neftehim Bunker Jsc. Office 602 Bolshoy avenue V.o. 80 St Petersburg 199900 Russia
Our products: For bunkering from Omsk Oil Refinery, which is owned by Gazpromneft, a selection of high quality international standards compliant marine fuels are specifically designed and produced (SMT-er, CMT-1, TAS-380). From April 2010 a low-sulphur (less than 1%) TAS-380 marine fuel has been produced which has made Gazpromneft Marine Bunker a major player in the low-sulphur fuel oil market. Our Volumes: The volumes of bunkers provided have increased nearly two-fold since the company’s foundation; from 857,000 tonnes in 2008, they grew up to 1,500,000 tonnes in 2010. The bulk of bunkering services are provided in the North-West region. Due to company strengthening its position in this particular area, it has achieved a considerable 17% increase in offshore bunker sales (compared to 2009).
Vasilyevskiy Island, 3rd line, 62A, St Petersburg, Russia, 199178 Tel: +7 (812) 449 49 70 Fax: +7 (812) 449 49 71 E-mail: bunkers@spb.gazprom-neft.ru 98
World Bunkering Autumn 2011
Company News
Baltic Bunkering Company - quality is the milestone of our business
B
altic Bunkering Company was founded in August 1995 and for more than 15 years has provided reliable and high quality bunkering services, becoming one of the leading players on the St. Petersburg bunker market. Backed by a strategic alliance with Petersburg Oil Terminal (POT) - the biggest oil storage facility in the northwest of Russia (www. oilterminal.ru) - as well as with the oil trading company PNT-GSM, Baltic Bunkering Company provides unrivaled availability of a full range of high quality fuel products. We supply high quality bunker fuels, including low sulphur products. All fuels are transshipped through POT and are closely monitored and controlled in the POT laboratory to ensure they meet ISO 8217:2010 (E). The quality control process starts even before the purchase of our fuel - we regularly buy fuels only from those refineries who have a proven track record for the quality of their products. We have also introduced additional quality controls at the barge loading stage of operations. Our bunker barges “Alana” (3500 mt) and “Viland” (3000 mt) are equipped with laboratories that test every shipment of bunker before it is supplied it to our clients. Quality is the milestone of our business and is guaranteed by the work of our skilled specialists. We are approved for ISO 9001 Quality System Certificate by Det Norske Veritas and are a member of the International Bunker Industry Association (IBIA). We pay special attention to the ecological aspects of our bunkering activities and strictly follow and observe all existing standards and rules prescribed for the petroleum transshipping operations and prevention of leakage of oil products. Our competitive advantages include: • a full range of fuel oil products available, from IFO-30 till IFO-600; • LSFO always available; • all our products conform with ISO 8217:2010 (E) plus later amendments; • our own bunker fleet; • prompt delivery of all bunker services; • fuel deliveries conform with Regulations 14 (1) or (4) and 18 (1) of MARPOL 73/78, Annex VI, and Annex 1 and Annex 2 of SOLAS Regulation VI/5-1 (MSDS).
For more information please contact us at: 48, Stachek prospect, 198097 St-Petersburg Russia Tel: +7 812 320 82 00 Fax: +7 812 325 45 33 E-mail: bbc@bunkering.spb.ru Web-site: www.bunkering.spb.ru Sales department: Tanya Sorokina Mobile: +7 921 905 70 63, E-mail: tanya@bunkering.spb.ru Dmitry Elster, Mobile: +7 921 965 87 83, E-mail: ed@bunkering.spb.ru
World Bunkering Autumn 2011
Portugal fuel stop
B
ased at Lisbon, Petrogal, SA, part of the Galp Energia Group, is able to offer fuel supply services to all ships visiting this warm and pleasant country. Petrogal provides its customers with a professional bunkers’ team, high-quality fuels and services, and the highest safety standards in all bunker activity. The company’s bunkering products fulfil the ISO 8217: 2010 specification in all grades. To help achieve customers’ targets on the environment, the company can supply low-sulphur fuels at several ports. The port of Lisbon is the main port for low-sulphur fuel. Petrogal optimises the logistics resources and storage to provide high-quality services and products. We can also supply a large quantity of marine distillates. Petrogal is the main bunker supplier in Portugal, providing a bunker service carried out by two barges with capacities of 5,800 tonnes and 3,000 tonnes each. A 5,800 dwt double-hull barge, Bahia Tres, began operations in 2010 to support the company’s business in the ports of Sines and Setúbal. Bahia Tres is well aware of the importance of safety and protecting the environment. The 5,800 dwt double-hull barge is equipped with anti-pollution measurers and is covered by European Maritime Safety Agency regulations in the Atlantic Ocean and Mediterranean Sea. Aware that the customer’s main concern is product cost, Petrogal offers competitive prices without compromising product or service quality. Visiting Portugal and being supplied by Petrogal Bunkering will always be a good decision for regular customers used to working with a professional team. Petrogal is the only refiner in Portugal and operate two refineries, Sines and Oporto, and has an extensive product range that includes gasoline, diesel fuel, jet fuel, fuel oil, LPG, bitumen and several aromatic products. Our refining business is responsible for the supply of oil products to our retail, wholesale and LPG marketing divisions, competitors and foreign customers, as well as for the operation of our refining and logistics assets. We have a leading position in the Portuguese market, as we own the four largest Portuguese tank farms and 80% of national crude oil products storage. Our two refineries in Portugal together represent 100% and 20% of Portuguese and Iberian refining capacity, respectively, and collectively account for 88% of Portugal’s annual domestic petroleum product requirements. We have invested approximately €240 million in the last five years to upgrade and improve the efficiency of our refineries (€158 million for Sines and €82 million for Oporto).
For further information contact: Galp Energia SA Tel: +3512 1724 0637/654 Fax: +3512 1724 2957 E-mail: bunkers@galpenergia.com www.galpenergia.com
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Company News
U
nicom Holding entered the Romanian bunkering market in 1999, with the establishment of a dedicated bunkering department. Since then we have developed rapidly, gaining the knowledge and experience necessary to become the undisputed leading bunker supplier in Romania. Originally known as Unicom Bunkering, we traded under this name from 2005 to the end of 2010 when, following a merger, we were re-launched as the bunkering department of Unicom Holding. Despite this change in name, our goal has remained the same - to provide our customers with the best possible bunkering services and to develop strong and mutually profitable partnerships. We bunker at the Romanian Black Sea ports of Constanta, Agigea, Midia and Mangalia, and also at the Romanian Danube river ports of Galati, Tulcea, Braila and Drobeta Turnu Severin. At the maritime ports we deliver a full range of high-sulphur fuel oil products, from IFO-30 to IFO-380, as well as low and high-sulphur distillates. The fuel oil is delivered to ships by barge, while the gas oil can be supplied either by barge or by truck. Barge deliveries are made by our M/T “Unicom 3”. We also own the oil barge “Deltaoil”, but this is mainly used as a storage unit for fuel oil, giving us increased flexibility for dealing with large orders or short timescales. At the Danube River ports we supply only low sulphur gasoil, ULSD 10 ppm inclusive, ex-pipe, using our barge “Unicom 1”, or by truck. Presently we deliver high quality oil products that are compliant with the ISO 8217:2005 specifications, but we are soon to apply the ISO 8217:2010 standards. All our bunker deliveries are professionally managed by our experienced staff, in full accordance with the relevant legal requirements. Apart from supplying bunkers and providing our help and expertise, we have also started to offer transport services by carrying oil products for our clients on the Danube River. Currently we do this via our M/T “Astrid”, but are planning to extend our fleet in the near future. Our staff are available 24-hours a day and are ready to put their experience, expertise and knowledge at your service.
Tel: +40 21 233 27 70 Fax: +40 21 233 27 69 General E-mail: office.bunkering@unicom-group.ro Website: http://www.unicom-group.ro/holding Mr. Bogdan BURGUI – Bunker Sales Manager (maritime sales) Mob: +40.741.383.412 E-mail: bogdan.burgui@unicom-group.ro Mr. Marc BOBEICO – Bunker Sales Manager (river sales) Mob: +40.741.362.023 E-mail: marc.bobeico@unicom-group.ro
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bunkers
Unicom Holding S.A.
a secure quality service @ Ceuta
VILMA OIL, MADRID c/ Chile, 10 · Oficina 236 28290 Las Matas · Madrid · Spain Phone: +34 916 308 900 bunkers@vilmaoil.com · www.vilmaoil.es World Bunkering Autumn 2011
ADDAX BUNKERING SERVICES
MONJASA A/S
ALBA PETROLEUM LIMITED
M/S ADITYA MARINE
ASMIRA PETROL LTD
NEFTEHIM-BUNKER JSC
AEGEAN MARINE PETROLEUM
NIZHEGOROD BUNKER LTD.
A/S GLOBAL RISK MANAGEMENT LTD
OLIEHANDEL KLAAS DE BOER B.V.
BALTIC BUNKERING COMPANY
OIL MARKETING & TRADING INTERNATIONAL.
BALTIC FUEL COMPANY
PENINSULA PETROLEUM LTD
BGK BUNKERS
PETROLEOS DE PORTUGAL
C.I INTERNATIONAL FUELS LTDA
ROSNEFT MARINE LTD
CUROIL NV
SEARIGHTS MARITIME SERVICES PRIVATE LTD.
EVRASIA BUNKER LTD
SGS SA
FNSA FUEL LTD
TOTAL MARINE FUELS
GAZPROMNEFT MARINE BUNKER LTD
TRUMF BUNKER A/S/
ISO BUNKERS LLC
TRANZIT DV
LUKOIL BENELUX B.V.
TSETAN CO. LTD.
LUKOIL BUNKER LTD
UNICOM HOLDING S.A
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World Bunkering WINTER 2011 issue Special Features: Blending The publication of IBIA’s guidelines on in-line blending coincide with this issue of World Bunkering. We look at the background and also consider the possibilities of onboard-ship blending.
Fuel Additives At a time when the shipping industry is under great pressure to improve fuel efficiency we look at what the additive manufacturers have to offer.
Lubricants The requirement to switch from high to low sulphur fuels as vessels move in and out of ECAs together with the trend towards slow steaming pose difficult challenges for lubricant manufacturers. We look at the new products on the market.
Barge Design We look at what factors owners have in mind when ordering new barges. To what extent do price considerations override optimal technical performance.
Geographical Focus: Americas In North America the impending Emissions Control Area is the big story but what factors affect the markets in Central and South America. We look at how the South American suppliers are faring as the regional economy starts to pick up.
Africa Our annual survey of this vast continent again looks at its various, distinct markets. New players continue to enter the West African offshore market while South Africa’s bunker industry has had to cope with strikes and the continued problem of limited avails..
Event Review IBIA Annual Convention – Barcelona,
Regular Features Interview, Industry News, Environment, Testing, Risk Management, Russian Update, Legal News, Equipment and Services, Diary.
Visit World Bunkering’s re-designed website. Featuring a new daily news service compiled by World Bunkering editor David Hughes Also live pricing information for the major world ports.
Products & Services directory Events list Latest technical developments Industry blog
The Seahorse Club JOURNALIST AWARDS 2009
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DiARY
Looking ahead 14 - 15 September
17 - 18 November
ICS and ISF International Shipping Conference London www.marisec.org;
Bunkering Disputes Hilton Hotel,Singapore: www.cconnection.org
21-22 September 9th Intermodal Africa 2011 Casablanca, Morocco www.transportevents.com
3-6 October 2011 36th Annual Interferry Conference Barcelona, Spain www.interferry.com
24-25 November 6th Thai Ports and Shipping 2011 Bangkok, Thailand www.transportevents.com
1-2 December Bunker Fuel Blending Technology & Economics Singapore www.cconnection.org
26-27 October 7th Trans Middle East 2011 Abu Dhabi, United Arab Emirates www.transportevents.com
2-4 November IBIA Annual Conventional Barcelona, Spain www.ibia.net
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World Bunkering Autumn 2011
ENErGY of GROWTH • High quality ISO 8217-2010 bunker fuel • Quality control from oil refinery plant to end user • Flexible prices • Main sea ports of service: St. Petersburg, Arkhangelsk, Ust-Luga, Kaliningrad, Murmansk, Vladivostok, Nakhodka, Novorossiysk, Tuapse, Port Kavkaz • Main river ports of service: St. Petersburg, Yaroslavl, Nizhni-Novgorod, Kazan, Samara, Volgogard, Astrahan, Rostov-on-Don, Azov
GAZPROMNEFT MARINE BUNKER Ltd Saint Petersburg Office: Vasiliyevskiy Island, 3rd line, 62A, Saint-Petersburg, Russia, 199178 Tel: +7 (812) 449 4970 Fax: +7 (812) 449 4971 E-mail: bunkers@spb.gazprom-neft.ru
Main Office: 14, Krzhyzhanovskogo street, Building 3, Moscow, Russia, 117218, Tel: +7 (495) 213 04 36 Fax: +7 (495) 213 04 37 E-mail: marinebunker@gazprom-neft.ru