Wb spring 2015 web

SPRING 2015

Spring 2015

Inside this issue: EU forges ahead on reporting Traders pick up OW pieces O.1% ECA rule comes in

World BUNKERING

Prices head South Goodbye slow steaming?

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Editor’s letter

Sailing into the unknown

I

am writing this as we enter another uncertain year. Who, 12 months ago, would have predicted HFO 380 prices of around US$300 a tonne and marine gas oil selling at prices below $600 a tonne? So is it goodbye to slow steaming? IBIA’s chairman, Jens Maul Jørgensen, doesn’t think so.

Or who would have ventured the opinion that the biggest trader/ supplier would declare a big hole in its finances just as the IBIA convention was wrapping up and file for bankruptcy within three days? Both the dramatic fall in prices and the collapse of OW Bunker feature prominently in this issue.

The former was a big surprise, although, of course, everybody knew that, as of 1 January this year, a sulphur in bunkers limit of 0.10 % would apply in emission control areas. But, for now at least, the impact of this rule on shipowners may have been somewhat blunted by the reduced cost of marine fuel. The sulphur limits loom large at present but there is a

World Bunkering Spring 2015

much more important discussion slowly moving towards a conclusion.

In our Environment pages we report on the United Nations Climate Change Conference (COP 20), which took place in Lima, Peru, in December. As we note, press reports were largely to the effect that nothing significant was achieved at COP 20, while the shipping industry was hardly mentioned in the final paperwork.

Yet, as we explain, the shipping industry should not assume that the idea of it paying into a Green Climate Fund through a market-based measure has been kicked into the long grass for ever. This year’s COP 21 could be a more uncomfortable one for the shipping industry.

It is difficult to discuss almost any aspect of our industry at present without the OW Bunker bankruptcy being mentioned. And that is also true, I am afraid, of many of the features in this issue. As major trader Monjasa noted: “To us, OW Bunker has appeared as a cornerstone in the industry.”

There is, nevertheless, a surprising degree of optimism to be found in the industry. In our UAE feature, DP World chairman Sultan Ahmed bin Sulayem is quoted as saying: “The fall in oil price may stimulate particular economies, such as India and China, which are among the most energy-dependent countries, relying on overseas producers for much of their oil needs. When these engines of growth begin to rise, so does the rest of the world.”

I am sure that one sign of that optimism is the massive demand we are seeing for tickets for the IBIA Dinner in February. The World Bunlering team will be there and we look forward to meeting as many of you as possible.

Dawn David Hughes,(Barley) editor

Allison

It is with great sadness that we report the death in early January of Dawn Barley, our Project Director. Dawn worked for this publication for six years and was well liked and respected by all her colleagues, not only for her hard work, which contributed greatly to the success of this magazine, but also for her friendly and cheerful nature .

Managing Director Bill Robinson said, “Dawn was an important member of the team. Her dedication and knowledge combined with her friendly and easy-going manner ensured her successful tenure as the Project Director. She will leave a big gap in the lives of all those who had the pleasure of knowing her”.

Our sincere condolences go to her husband Nick and all her family. We will miss her.

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SPRING 2015

SPRING 2015

SPRING 2015

Publisher: W H Robinson Editor: David Hughes

InsIde thIs Issue: EU forges ahead on reporting Traders pick up OW pieces O.1% ECA rule comes in

editor@mar-media.com

Deputy Editor: Sandra Speares World BUNKERING

Prices head south

sandra.speares@mar-media.com

Project Director: Dawn (Barley) Allison

Goodbye slow steaming?

Project Consultant: Alex Corboude THE ONLY OFFICIAL MAGAZINE OF

alex.corboude@mar-media.com

Designer: Justin Ives

Published by: Maritime Media Ltd Suite 19, Hurlingham Studios, Ranelagh Gardens, London SW6 3PA, UK Tel: +44 (0) 20 7386 6100 Fax: +44 (0) 20 7381 8890 E-mail: inbox@mar-media.com Website: www.worldbunkering.com

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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.

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SPRING 2015

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Editor’s letter Chairman’s introduction Chief Executive’s report Asia report Africa report New members Events report Noticeboard

Industry news Environment Traders Quantity Lubricant IT

IBIA reports 1 7 9 11 13 19 21 23

Special features 24 27 30 34 37 41

Geographical focus Northern Europe 43 Sri Lanka 46 India 47 Pakistan 49 UAE 51 LNG Testing

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Russian update interview

58 61

Innovation Legal news Equipment and services Preview: FUJCON Preview: Gibraltar Preview: Europort Preview: Sea Asia Preview: IBC Diary

68 70 72 74 75 76 77 78 84

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I

t is difficult to believe we are in 2015 now. 2014 went by so quickly, but what a year it was.

We all thought the high prices at the beginning of the year would continue. Actually, as we all now know, they collapsed.

The majority of our members like it when prices go down. Owners have lower costs while suppliers need less credit for their stocks and traders need lower cashflow. For all, the credit situation will be better. But, for now, I shall not be cheering and clapping and saying everything is perfect.

At present, a continuing oversupply of tonnage means our owners and operators face ultra-low freight rates.

Income is at very low levels and it seems this will continue, even with low bunker prices. Freight rates are also following a downward trend, and could drop even further.

The lower oil prices have also given rise to speculation that we will see the end of slow steaming. But will owners really change back to what was ‘normal speed’? I don’t think most owners will be pushing the throttles forward again.

Maybe a few will. In the end, though, it comes down to a calculation, and owners will realise that if ships return to sailing at normal speed again then freight rates will definitely not follow that upward trend. They could drop further, even though current levels are unbelievably low. Time will tell, so let’s see what happens.

OW Bunker. That name was everywhere for a while after the group’s main holding companies declared bankruptcy on Friday 7 November. So what really happened? What will happen now? I will leave it to OW’s trustees to find out what went wrong. Looking on the bright side though, there has been one positive development. The majority

World Bunkering Spring 2015

of OW’s very experienced and well respected staff have found new jobs.

OW may have ended badly, but it still looks good on a CV. Quality still seems to be a serious issue, but, with current low bunker prices, owners and operators have no excuse for not buying quality, as was the case in 2010 to 2012. Furthermore, the suppliers and the refineries now have lower resource costs. So let’s hope this will result in a trend towards better product.

By the time you are reading this, the new low-sulphur regulations in emission control areas (ECAs) will have been in place for a while. Yes, there is still confusion over how the 0.10% sulphur limit will be enforced. There are issues with sampling, and there could even be problems with availability. Nevertheless, I just hope that all within our industry will do their best to resolve the outstanding problems.

2015 will be an interesting year.

I will start my second year as chairman, and I am looking forward to continuing to highlight the quality issue! But I am also looking forward to IBIA’s packed Events Programme for 2015.

In April, we have the IBIA Dinner in Singapore, and, in November, the highlight of the year – our popular International Convention in Cancun, Mexico.

I am sure IBIA will continue to play an active role

in the ongoing challenges facing our industry, and I look forward to meeting as many of you, our members, as I can in the coming 12 months – and finding out your views on what your trade organisation should be doing.

Chairman’s welcome

What a year!

Jens Maul Jørgensen, chairman, IBIA

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BIA’s theme for this year is ‘Building on strong foundations’.

The International Bunker Industry Association was built on a community of ‘like-minded individuals with diverse views’.

They had a passion to see communication, education and best practice propagated throughout the industry.

As we go through 2015, our objective is to build upon these principles and help improve standards across the marine fuels industry and support our members in developing the business.

So what are the issues that IBIA will be facing and developing in 2015?

Addressing the risks

Risk is a fundamental part of life, and risk management is a fundamental part of business. The parable of the man who built his house on sand and the one who built on rock comes to mind as an effective way to approach a basic risk assessment.

With blue skies and a light, warm breeze blowing, both are effective, but when the prevailing conditions change which will survive?

You could set against this backdrop the OW crash, emission control area (ECA) compliance or very cheap fuel you might get away with using once.

The cost of failure can be high.

However, the human being is a creature of many traits and sailing closer and closer to the wind is one of them, to get that extra advantage. In the basic formula of risk management, frequency is often a forgotten factor. It is no bad thing to remind ourselves about risk management in our business.

The fundamentals are clear: we have hazards from which we need to protect ourselves. IBIA aims to try to unpack some of these issues over the coming year and reinforce the communication, education and best practice propagated throughout the industry.

We are currently participating in two work groups at IMO, one undertaking a fuel availability study and the other addressing fuel quality, in addition to our participation at each IMO main session.

There are a number emerging topics – the potential of lowering of flashpoint, greenhouse gases, alternative fuels and the implications for their management and development.

courses and a convention. These activities are taking place across 11 different cities in Europe, the Americas, Africa, the Middle East and Asia. The programme contains a mixture of member-only and open-to-all events.

In addition, individual board members and other IBIA members are speaking at a number of conferences and bespoke training sessions across the globe, delivering IBIA expertise on a range of topics.

Port charter

Board elections and AGM

The port charter emerged after some leading ports contacted IBIA enquiring how we could support them in improving quality, quantity and transparency. The charter complements IBIA’s policy with regard to continuous improvement and the adoption of best practice. IBIA will continue to increase interaction with other key ports across the world throughout 2015.

A reminder to everyone that voting for board nominations takes place between 5-30 January. I would encourage all of you to vote. The association’s AGM will take place on Monday 9 February at 1500 at the Naval Club in Hill Street, London W1, where the election results will be announced. That is the afternoon preceding the Annual Dinner, which this year takes place at the Park Plaza Westminster.

International Maritime Organization (IMO)

Events programme

The 2015 events programme (see page 21) includes regional forums, dinners, award ceremonies, training

Chief executive’s report

Building on strong foundations

Captain Peter Hall, chief executive, International Bunker Industry Association

World Bunkering Spring 2015

9

www.ibia.net

IBIA Asia report

Meet and greet The Asia branch held a well attended AGM in early January and kicked off the 2015 social programme with a festive cocktail event

I

BIA’s Asia branch held its AGM on 8 January at its Anson Road office in Singapore. The main business of the meeting was to update its byelaws and to elect new members to its executive committee.

IBIA Asia’s terms of reference are aligned with those of IBIA, which were amended on 5 January, and new branch byelaws were adopted to bring them into line with the association’s.

In accordance with the new byelaws, the executive committee chairman, Douglas Raitt, accepted the nomination to continue in position for another year. New members Captain Rahul Choudhuri, Daniel Phua, Richard Ho and Timothy Cosulich also joined.

The members of the executive committee term 2014-2015 are: Chairman – Douglas Raitt Immediate past chairman – Lim Teck Cheng Treasurer – Dennis Ho Vice chairman – Captain Rahul Choudhuri

Members – Madeline Lee / Tok Lim Hoe / Danny Chua / Richard Ho / Timothy Cosulich/ Daniel Phua / Dharma Sreenivas Reddy (co-opted)

World Bunkering Spring 2015

Plans for 2015 include the annual gala dinner, two forums, a cocktail event and the annual golf challenge.

This year’s social programme kicked off with the IBIA Asia festive cocktail event, held at the Woods by The Wine Company restaurant and bar. The old-world charm of Dempsey Hill, with its whistling trees and balmy breeze, was just the perfect venue for our guests to unwind and relax.

Formerly home to the British army barracks and the old Central Manpower Base national service enlistment centre, charming conservation buildings still stand proudly amidst lush greenery.

IBIA chairman Jens Maul Jørgensen was on hand to welcome guests, and even the evening’s intermittent rain showers did not dampen spirits.

Guests were able to enjoy the company of members of the bunker industry and to sample a selection of South African wines.

Michael Phoon and Marianne Choo from Singapore Shipping Association as well as Muchamed Elfian Bin Harun from the Maritime and Port Authority of Singapore kindly attended.

Jørgensen took the opportunity to update members on upcoming IBIA activities, including the IBIA Asia gala dinner at Fullerton Hotel on 23 April, being held in tandem with the Sea Asia event, and the ever popular IBIA Asia golf challenge in September.

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IBIA’s Southern Africa branch marked the end of the year in style with two successful events, as Tahra Sergeant reports

IBIA Africa report

Cause for celebration

O

ne of IBIA’s longeststanding members, Amoil celebrated 30 years of trading last year. To mark this special occasion, it hosted a well attended Gala Dinner, held in Cape Town on 4 December. The spectacular event was attended by many of our IBIA members from Southern Africa along with many of Amoil’s longstanding clients.

Amoil was established in 1984 by its current chairman, Peter Syrris, as the first fully South African-owned-andoperated bunker trading company based in Durban, South Africa. This marked the inception of the first truly independent bunker trader and supply service in South Africa, pioneering as one of the leading forces in the bunker industry serving the entire Southern African region.

The cocktails also flowed on a balmy Friday afternoon as IBIA Africa and South African Bulk Terminals (SABT) hosted the end-of-conference drinks for Maritime Week Africa. Approximately 80 guests joined us at SABT’s offices to celebrate the end of a successful year for both IBIA Africa and SABT. The event was a fine ending to a year filled with challenges and changes within the industry. We are all looking forward to the new year, with training planned for many of the regions in Africa. Please see the IBIA website for more details on these and other events.

World Bunkering Spring 2015

SABT’s trading team: Duane Dare, Jon Hughes, Pierre Henn, Durren Grant, Marc Clayton and Jacqui Taylor

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Charles Anusim – Serene Greenfields Duane Dare – SABT Timothy Kwame Oklu – Consolidated Ventures

Tahra Sergeant – IBIA Africa Peter Syrris - Amoil

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World Bunkering Spring 2015

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The International Bunker Industry Association

Join IBIA today Why Join IBIA? Are You a Bunkering Professional?

Involved in the supply of bunkers to vessels?

Want a direct line to IMO decision making?

Want network access to over 600 professionals and their organisations?

Levels of Membership Corporate:

A corporate membership allows a corporation to register up to two other offices and contact details FOC. They can send as many employees of any registered company to events, training courses and working groups at member rates. They are able to delegate to different members within the registered companies to attend committees. They are eligible to book tables at the IBIA Annual Dinner. They are able to use the IBIA logo on the website and business stationery.

They will receive three free subscriptions to World Bunkering. (This is up to 20 for Buyer members) This level of membership is designed for companies

Benefits allow companies

• Discounts to training courses, IBIA endorsed events - for all employees • Book tables at the prestigious Annual Dinner • Use of IBIA logo on their web site and stationary • Subscription to World Bunkering magazine

Individual:

This allows one person to register as a member in their own name. You will receive one set of free publications and one subscription to World Bunkering. All special rates and attendance at events will be limited to this member only.

Membership Options:

Recognition for your expertise?

Individual: £150.00 p.a Corporate: £700.00 p.a

t Join today online a

(e) ibia@ibia.net (t) +44 (0)20 3397 3850

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Gibraltar: Gateway to the Mediterranean Your chance to hear more about the Gibraltar StraitS aS a bunkerinG hub

24-27th February 2015

1 day IBIA Basic Bunkering Course Gibraltar Port Authority presentation Keynote speech by Gibraltar government Hear about regional supply trends Bunkering in the med Your chance to see STS, Bunkering operations and Marine services all in one place Excellent program of networking and social events including: Champagne reception, Gala dinner at the historic St Michaels cave Chance to make private appointments with the suppliers For full details visit www.ibia.net

MarinhaTotems_178x128.pdf 1 17-01-2014 11:05:35

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Tel.: +351 217 240 654 Fax: +351 217 242 957 email: bunkers@galpenergia.com

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Office 2001, Saba Tower 1, JLT DUBAI, UAE Tel: 00971 4 4350500 Fax: 00971 4 4350505 E-mail: bunkers@oil-marketing.com

12 Kithiron Street, Alimos 17455 ATHENS, GREECE Tel : +30 2109609860 Fax : +30 2109609861 E-mail: bunkers@oil-marketing.com E-mail: ceuta@oil-marketing.com E-mail: jamaica@oil-marketing.com

8 Eu Tong Sen Street, #18-83 The Central 059818, SINGAPORE Tel: 0065 6222 4028 Fax:0065 6222 4027 E-mail: singapore@oil-marketing.com

WEB: WW W. O I L - M A R K E T I N G . CO M

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CORPORATE Bunker / Trading Tan, Sing Hwa Coastal Oil Singapore Pte. Ltd. 18 Cross Street #06-01/05 China Square Central Singapore 048423 Singapore bunker.cos@coatalpetrol.com Marine Suppliers Hing, Ong Yong Costank (S) Pte Ltd 9, Temasek Boulevard Hex 07-00C Suntec City Tower Two 38989 Singapore bunkers@costank.com.sg Surveyors Nangapan, Sathiyamoorthi Bleu Marine Surveyors Pte Ltd 195 Pearls Hill Terrace #03-72 168976 Singapore operations@bleumarine.com.sg Bunker / Trading Furnes, Truls Louis Wilson Eurocarriers AS Bradbenken 1 PO Box 4145 Bergen / Sandviken 5835 Norway bunkers@wilsonship.no

CORPORATE additional Service Gilligan, John Veritas Petroleum Services Zwolsweg 1 2994 LB Barendrecht Netherlands john.gilligan@v-p-s.com

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INDIVIDUAL Service Vorster, Elsa Fuel 44 Box 106, Woodstock, 7915 Western Cape Cape Town 7915 South Africa elsa@fuel44.co.za Bunker Suppliers Oosterlee, JP Transmarine Fuels BV Krammer 8 3232HE Brielle 3232HE Netherlands oosterlee@transmarinefuels.com Bunker Suppliers Janssens, Dirk OW Bunker Jagersdreef 35 BE-2950 Kapellen Belgium janssens_dirk@skynet.be Bunker Trader Phillips, John Soyuz Bunkering Group Level 40, Ocean Financial Centre 10 Collyer Quay 049315 Singapore jp@sb-group.biz Bunker Trader Babbar, Ritika JMD Shipping & Trading fze Saif Zone, Al Dhaid Rd PO Box 9054 Sharjah UAE admin@jmdship.com

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As IBIA events manager Steve Hoare reports, there is a lot to look forward to in 2015

T

his year will be a very busy one for IBIA, with a full programme of worldwide events and training days throughout 2015.

With these come some excellent opportunities to be linked with IBIA via sponsorship of the events. Each event has its own unique sponsorship programme supporting it – from overall event sponsor to web presence only. This allows companies to be linked with thought leaders, market leaders and specialists across the industry, both locally and internationally. For more details, please give me a call.

Tickets are selling well for the IBIA Annual Dinner at London’s Park Plaza Hotel, Westminster Bridge. A new venue will bring new features, but these surprises are being closely guarded. You will need to buy a ticket to find out what they are!

Our first regional forum takes place in Gibraltar from 24-27 February. Full details are on page 75, but it will be a forum like no other, blending theory with practice and a great networking programme.

April brings a dinner in Singapore as part of the Sea Asia 2015 conference and exhibition, in conjunction with Singapore Maritime Week – along the lines of the IBIA Annual Dinner being held during International Petroleum Week.

The year will conclude with a superb convention in Cancun, Mexico, at the five-star Fiesta Live Aqua Hotel. The programme will feature presentations from industry leaders, workshops, a great networking programme and, for the first time, a partner programme. All this for a great price and fantastic value for money – watch this space for details!

World Bunkering Spring 2015

2015 programme Date

Event

Location

9 February

IBIA AGM

Naval Club – London

9 February

IBIA Annual Dinner

Park Plaza Westminster, London

24-26 February

IBIA Mediterranean Forum

Gibraltar

16 March

IBIA (Africa) AGM & Dinner

Cape Town

25-27 March

IBIA Basic Bunkering Course (FUJCON)

Fujairah

23 April

Sea Asia and IBIA (Asia) Gala Dinner & Awards

Fullerton Hotel, Singapore

April

IBIA Basic Bunkering Course

Lagos, Nigeria

May

IBIA Basic Bunkering Course

Mauritius

May

IBIA (Africa) Membership Luncheon

Cape Town

19 June

IBIA (Asia) Golf Challenge and Bursary Awards

Singapore

June

IBIA Basic Bunkering Course Maritime Week Americas

Cartagena

3-5 August

African Ports Evolution IBIA (Africa) Advanced Bunkering Training Course

Durban

9 September

IBIA London International Shipping Week Forum

The Baltic Exchange, London

September-October

Maritime Week

Cape Town

1-6 November

IBIA International Convention

Cancun, Mexico

December

IBIA (Africa) end-of-year drinks

Cape Town

IBIA events manager report

A packed programme

21

Benefits to members as of 1 Febraury 2015

Membership Costs

Individual membership: £150 Corporate membership: £700 Corporate additional membership: £150

These increases took effect on 1 July 2012.

Additional The Board has also decided that the present practice of listing Corporate have changes some and needs s’ member meet fairly and Members does not properly ship to member of benefits the match ly accurate more will that ed therefore been introduc its cost; affected members will be contacted directly by the Secretariat.

If you have any queries or comments about these changes, then please contact ibia@ibia.net or telephone: +44 (0) 20 3397 3850.

Noticeboard

IBIA noticeboard

IBIA Publications and Benefits 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, £60 or £80 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 with savings dependent on the advertisement size.

Please contact the Advertising Sales Team at Maritime Media London on + 44 (0)20 7386 6100 IBIA List of Members

If your details are not correct, please log on to our new website and update them on your members page. The new website is designed so members can easily access and change their own information.

This publication is only available to IBIA members.

IBIA Guide to In-Line Blending

Available free of charge to members IBIA Guide to Avoiding and Resolving Bunker Disputes

IBIA members receive their personal copy free, but the report is offered for sale to non-members at £50.

World Bunkering Spring 2015

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 Glossary of Bunker and Lubricating Oil Terminology

A comprehensive guide to all those complicated terms that 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 per copy.

IBIA Safety Cards for vessels’ 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 Please note that all of the above publications can also be downloaded by members by visiting www.ibia.net and logging into your account. Please then go to the download section of the website.

IBIA LogO

Free bromide supplied for use by corporate members only.

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Global news

In May last year, OW Bunker started making physical supplies in Los Angeles and Long Beach, California. In November, the company went bust

OW fall-out Following the shock bankruptcy of OW Bunker in November, the financial and bunkering sectors have been attempting to respond, partly through legal action

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n December, the nine pension funds that were the main investors in the Danish company launched an investigation into the collapse of the trader and physical supplier, which accounted for about 7% of the global market.

In a joint statement they said: “The purpose of the investigation is to determine the possibility of asserting legal liability and claiming compensation. The bankruptcy of OW Bunker was a significant, extraordinary and highly negative event in the Danish stock market, and there is a very strong need for understanding the events preceding the bankruptcy and, if possible, determining responsibility.”

The Financial Times (FT) reported Jesper Langmack, managing director at PFA Pension, one of the other investors leading the investigation, as saying: “As you can imagine, this case is unprecedented. I cannot recall such an investigation before, but as large players in the Danish market we have an obligation to find out what happened and what the possibility of legal actions are.”

The FT noted that when OW Bunker floated in March, its main owner, private equity firm Altor, reduced its holding from 93% to 35%.

It was subsequently reported in the Danish press that a group of 25 institutional investors filed a legal claim for the equivalent of $130 million, against

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senior management in OW Bunker and also individuals and companies involved with Altor.

In another move, reported by TradeWinds, Danish authorities arrested a former OW manager in relation to an alleged e7 million ($8.6 million) fraud against the Italian Navy. The newspaper reported that arrest warrants had earlier been issued by Italy’s fraud squad, the Guardia di Finanza, against six suspects, including three navy officers.

Central to the company’s failure was its Singapore subsidiary Dynamic Oil Trading (DOT), where, it was alleged at the time of the bankruptcy, that fraud to the tune of USD$125 million had taken place. According to press reports, the trustees winding up OW Bunker have written in a paper that senior executives at OW Bunker were aware that the credit situation at DOT was out of control.

In the first few weeks following OW Bunker’s bankruptcy, at least 15 vessels were reported as being arrested to secure claims, while there concerns that some shipowners could end up paying twice for bunkers received. Mutual insurer Gard commented: “Market concern about non-payment for bunker supplies arising out of the collapse of the OW Bunker supply group is leading to a frenzy of actual and threatened vessel arrests and delays, and ship operators face the risk of demands for double payment. However, there is no

formal standardisation of procedures for coordinated handling of creditor demand, which is far from satisfactory.”

Reuters reported that Thailandbased Precious Shipping, a major drybulker owner, asked the Singapore court for a decision on which company it should pay for fuel it bought. “When (OW Bunker) raised the invoice, we asked them for the ‘No Objections Certificate’ (NOC). At that time, their financial troubles started hitting the headlines,” said Precious Shipping’s managing director, Khalid Hashim, in an emailed statement.

Hashim was reported to have said that legal action was taken as there had been no response nor agreement among OW Bunker and physical suppliers on payment terms. “We approached the courts to get their guidance/order whom to pay to avoid making any incorrect payments.”

Meanwhile, the P&I Clubs have all been issuing comprehensive advice to their members on the many complex legal issues caused by OW’s crash.

As Steamship Mutual notes: “The issues arising from OW’s bankruptcy, and, in particular, the possibility that subcontractors or assignees of OW will pursue claims for unpaid bunker supplies, are not straightforward and fact sensitive.”

It advises any of its members receiving such claims or threats of arrest

World Bunkering Spring 2015

uninterrupted supply of bunkers. We are willing and able to act as local point of support in European ports as we are doing in Singapore.”

Switch-over calculator

Lloyd’s Register (LR) has developed a new version of its Fuel Oil Bunkering Analysis and Advisory Service (FOBAS) fuel changeover calculator. This makes it possible to estimate the time required to switch from high- to low-sulphur fuel oil, assisting in meeting the required sulphur limits at engine inlet.

The new version was launched in December, ahead of the 0.10% sulphur limit coming into effect in emission control areas (ECAs) on 1 January this year.

The new version of the calculator is now available online (http://www.lr.org/en/

'Eco-ship' warning

The International Chamber of Shipping (ICS) told a meeting of the OECD Working Party on Shipbuilding in Paris that the OECD should be cautious about becoming involved in the question of what constitutes an ‘eco-ship’.

ICS said that it believes that this subject is best left to the International Maritime Organization (IMO) or for shipyards to negotiate with their customers. If further consideration were to be given to an OECD definition of ‘eco-ship’, this should not be used as a justification for future subsidies by governments that might lead to market distortion.

Referring to China’s new ship recycling policy, whereby it is offering significant subsidies of about $250 per gross tonnage for Chinese shipping companies that scrap vessels early and then place orders at Chinese shipyards for at least the same tonnage, ICS expressed concern that such incentives to artificially boost shipbuilding could have a negative impact on the speed with which the global supply/demand balance in shipping is restored.

ICS reminded governments that for reasons of safety, as well as economy, a ship was built with an expected lifespan of 25 years or more. It was a big thing indeed for ships to be

marine/consulting/fobas/) and caters for the 0.10% sulphur requirement.

LR says that new version of the calculator is suited for segregated lowand high-sulphur fuel oil systems where mixing takes place after service tank.

It is advisable that the guidance notes provided with the calculator are read prior to using this tool.

FOBAS also provides a fuel changeover plan with step-by-step guidance on the fuel changeover procedure to the ship’s crew. The plan is a shipboard manual, which provides a record of the ship’s equipment, fuel tank arrangements, fuel capacities and equipment data, together with a list of actions to be taken in each operational mode when entering or leaving an ECA.

Global news

to contact the Club’s managers. The UK Club has also published a detailed question-and-answer guide, covering practical issues facing owners who have taken bunker stems involving OW. The International Bunker Industry Association (IBIA) acted to support companies and individuals affected by the collapse of OW Bunker. IBIA chief executive Peter Hall said: “This is an unprecedented occurrence, and our thoughts are with the very large number of competent, hard working ex-employees now urgently in need of support and industry contact. It is important that dialogue is maintained across the supply chain and we are pleased to be able to support the Singapore bunkering community. We hope that our efforts will ensure an

recycled when they were only 15 years old, which in some cases was happening at the moment.

ICS also suggested that the CO2 emissions created by dismantling a ship far earlier than intended, and then constructing a new one, were considerable, but were often overlooked.

These could actually outweigh the CO2 saved through efficiency reductions achieved by the replacement ship.

Using the current definition of a fuel-efficient vessel – a newbuild ship that complies with the applicable Energy Efficiency Design Index (EEDI), adopted by IMO to help reduce CO2 emissions – it should not always be assumed that ordering so called eco-ships would be in the best interests of the owner, their customers or the environment.

Many older ships, if operated at slower speeds, or given improvements such as engine upgrades or new propellers, may well continue to operate efficiently with low levels of fuel consumption that make them attractive economically and environmentally – especially if the owner has a smaller debt to service.

But, in the long run, ICS noted, all ships in operation would in effect be eco-ships as all newbuilds will have to comply with IMO’s tighter EEDI standards. And all of the existing fleet will eventually be replaced.

© Mercator Media 2015

World Bunkering Spring 2015

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Roger Strevens Wallenius Wilhelmsen Logistics

Tomas Aminoff Wärtsilä Ship Power

Keith Forget Consultant

Per Holmvang DNV GL

22-24 APRIL 2015, OSLO, NORWAY

The 36th International Bunker Conference The 36th International Bunker Conference will focus on the experiences after the 0.10% sulphur limit in ECAs. What did we expect and what are the experiences so far? What are the options for the late movers? And what are the consequences of non-compliance?

IBC is the leading conference and the place to learn of current and future trends. The most positive aspect of IBC 2014 was the high quality of the speakers.

Maurice O’Donoghue, Global Business Development Manager, Intertek Lintec ShipCare, United Kingdom.

bunkerconference.com

A statement issued by Hong Kong Shipowners Association managing director Arthur Bowring pulled no punches in opposing an EU move on fuel use monitoring, reporting and verification

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he International Chamber of Shipping (ICS) produced a special brochure for December’s United Nations Climate Change Conference (COP 20), which took place in Lima, setting out shipping’s ‘green’ credentials. Some may wonder whether they should have bothered.

Press reports were largely to the effect that nothing really significant was achieved at COP 20, while the shipping industry was hardly mentioned in the final paperwork.

So is it safe to assume that COP 21 in Paris late this year will be a damp squib too? Or that shipping has been forgotten? The answer is ‘No’ on both counts.

First, although many commentators stressed how “weak” the final agreement was, the show didn’t come off the rails. The official press release, headlined “World on track to new universal climate agreement with Lima call for climate action” described progress at the event as: “Governments agree ground rules on contributions to Paris 2015 agreement and boost adaptation.”

In other words, we are nearer a deal that will need funding. Guess which industry could be in line there. In COP jargon, shipping is likely to pay towards any Green Climate Fund through a market-based measure (MBM)

World Bunkering Spring 2015

Environment

COP-out in Lima?

The United Nations Climate Change Conference appeared to hardly register the existence of shipping, but complacency would be misplaced, observes David Hughes

In its brochure, ICS emphasised that any decision on whether to develop an MBM for shipping that might be linked to the Green Climate Fund should be a matter for International Maritime Organization (IMO) member states. ICS says that IMO will be best placed to develop an approach that can reconcile the United Nations Framework Convention on Climate Change principle of ‘common but differentiated responsibility’, whereby developing countries are treated differently, with the need for all ships, regardless of flag, to be treated in a uniform manner.

ICS emphasises that shipping is a global industry requiring rules on CO2 to be applied on a global basis to all ships. Apart from preventing market distortion in this totally globalised sector, this is necessary to avoid ‘carbon leakage’ since only about 35% of the world fleet is registered with those developed nations that are covered by emission reduction commitments under the existing Kyoto Protocol on climate change prevention.

ICS says that the industry is on track to reduce its emissions by more than 20% (compared with 2005) by 2020, with further reductions in future.

The brochure repeats the message that the global shipping industry, which transports around 90% of world trade, produced only about 2.2% of the

world’s total greenhouse gas emissions during 2012, compared with 2.8% in 2007. Shipping’s total emissions have been reduced by more than 10% during the same period.

The position of the shipping industry, ICS says, remains that any contribution by shipping to the Green Climate Fund must reflect the sector’s modest contribution to total global CO2 emissions. ICS is firmly opposed to any suggestion that the shipping industry should collectively pay tens of billions of dollars each year, stressing that the industry is not a ‘cash cow’.

ICS has told a meeting of the Organisation for Economic Co-operation and Development’s (OECD) Council Working Party on Shipbuilding in Paris that the OECD should be cautious about becoming involved in the question of what constitutes an ‘eco-ship’.

The Global Shippers’ Forum (GSF) also issued a statement in the run-up to COP 20, saying it was pleased to see that international shipping emissions had a place on the agenda. In the event, that was as far as shipping got.

GSF often takes a different position to ICS on major issues. It noted that, as COP20 progressed, the European Parliament approved the introduction of a Monitoring, Reporting and Verification (MRV) system for all ships over 5,000 gross tonnage that

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World Bunkering Spring 2015

He continued by saying: “This explains why IMO approaches the issue with great care. We would have preferred the inclusion of cargo-related data to have simply been postponed until an agreement was reached at IMO. We do, however, acknowledge that the negotiators took some of our concerns into account and have strengthened provisions on international alignment.

We will carefully assess these changes as soon as the full text of the agreement becomes available. We believe it is essential that industry is closely involved in any further steps, for instance on defining the metrics of cargo data.”

“Most importantly, we call upon the European Commission to actively engage in a confidence-building exercise with non-European member states at IMO to ensure that the common objective of establishing an international MRV instrument will be achieved,” he concluded.

A much blunter message came from the Hong Kong Shipowners Association (HKSOA).

In a statement, it said it “very much regrets the recent decision of the informal trialogue of the European Parliament, the Council of the European Union and the European Commission to proceed to seek the approval of a regulation of the European Parliament and the European Council on the monitoring, reporting and verification of emissions of carbon dioxide from maritime transport”.

HKSOA urged the European Parliament and the Council of the European Union “to reconsider this proposed regulation, which would appear to have been developed prematurely without the proper consideration of all the factors and unintended consequences that may result”.

The association said there were several reasons for HKSOA’s opposition to the proposed regulation.

“Firstly, HKSOA considers that any regulation that affects global shipping must be global in nature, and therefore developed through the International Maritime Organization.

The global shipping industry would find it impossible to trade globally if it had to comply with different regional regulations.

“Secondly, HKSOA believes that the premature actions of the EU will not assist the deliberations of the IMO on this issue. In fact, the EU’s actions could well result in some member states becoming strongly opposed to any such regulation. There are other diplomatic ways to seek support for international action that do not involve apparent threats of unilateral regional action.

“Thirdly, the descriptive text that precedes the proposed regulation states that international maritime shipping remains the only means of transportation not included in the Union’s commitment to reduce greenhouse gas emissions.”

HKSOA disagreed with this, saying that, while this claim might be correct for the EU (which is not a member of the IMO), it was not correct for the member states. It noted that IMO has already adopted the Energy Efficiency Design Index (EEDI), which would appear to be at least equivalent to the new vehicle emission standards of the EU. Owners and operators must also maintain a ship energy efficiency management plan (SEEMP).

In a fourth point, HKSOA said that it very much supported IMO work towards the monitoring and reporting of emissions but that this was not the time to develop a definition for ‘transport work’.

This was a difficult metric to design, because it must apply fairly and consistently across the maritime industry without affecting the efficiency of maritime transport. A simple definition of ‘multiplying the distance travelled with the amount of cargo carried’ would clearly benefit unprofitable and uneconomic diversions to reduce ballast legs, so reducing the efficiency of maritime transport. HKSOA said that time was required to properly assess and develop a fair and consistent metric that would increase rather than decrease the efficiency of maritime transport.

While the EU is unlikely to heed HKSOA’s arguments, the debate on MRVs, and on how much shipping should pay into a Green Climate Fund, will continue and could be a hot topic by the time COP 21 opens in Paris.

Environment

use EU ports. Ship owners will be required to provide fuel data plus other information, such as data to determine a ship’s energy efficiency.

GSF secretary-general Chris Welsh commented: “The advantage of the EU MRV is that it will collect not just fuel data but additional information that will help shippers to more easily record, report and reduce supply chain emissions. It echoes many of the voluntary schemes already adopted by industry.”

Prior to COP 20, GSF through the International Cargo Handling Coordination Association (ICHCA) also participated in the 67th session of IMO’s Marine Environment Protection Committee (MEPC 67), where an international data collection system for ships focused on fuel consumption is being developed. However, GSF, unlike ICS, did not raise concerns that the unilateral EU moves could jeopardise negotiations at IMO. Welsh added: “We are pleased to see IMO progressing towards a data collection system, which will ultimately help shippers report supply chain emissions. However, GSF would like the proposals to go beyond the collection of fuel consumption data. Whilst we recognise concerns over confidentiality of data and administrative burden, focusing just on fuel consumption is a missed opportunity. We urge the IMO to look at existing voluntary programmes that both shippers and shipowners participate in that collect a much wider range of data to assess energy efficiency.”

The EU Parliament decision soon turned into an informal deal to push though an EU regulation on MRV. This paved the way for a European MRV system that will become operational as of 2018, applying to ships above 5,000 gt arriving and departing from EU ports, regardless of their flag and ownership.

The first reaction from shipowners came from the European Community Shipowners’ Associations (ECSA).

“While the inclusion of cargo-related information allows the measurement of energy efficiency of vessels, there are concerns regarding data reliability and confidentiality as well as reporting responsibilities and obligations”, said secretary-general Patrick Verhoeven.

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Traders Carsten Ladekjaer, chief executive of KPI Bridge Oil Group

Turbulent times As David Hughes reports, last year was a challenging one for traders, and 2015 is full of uncertainty

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year ago, traders knew the market was difficult and that they could face increasing challenges ahead as the 0.10% sulphur in fuel limit in emission control areas (ECAs) drew closer.

What they could not have predicted was the demise of one the biggest players in the business, OW Bunker, nor the dramatic fall in the price of oil.

After the shock collapse of OW in early November, another major trader, Monjasa, reflected a widespread view when it said in a statement: “To us, OW Bunker has appeared as a cornerstone in the industry. A large company in terms of operating experience and volume – and always a tough competitor on bunker markets across the globe – OW Bunker was surrounded by respect.

The company was both a visionary and a strong family-led business from the 1980s until the change of ownership in 2007. OW Bunker leaves an empty space in the market and among colleagues in the industry.”

The Denmark headquartered company said: “Commercially, the fact that OW Bunker is no longer active in the global market has a frustrating impact on many subcontractors and shipowners around the world.”

But it added: “For Monjasa, the events have only very limited commercial effect. In our view, the worldwide

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bunker market should not experience any long-term problems absorbing the demand arising from the sad circumstances. At Monjasa, we have experienced a slight increase in the number of inquiries and orders, and noted a marginally higher interest in our vacant job positions around the globe. Our limited financial exposure towards OW Bunker is fully insured.”

“Looking ahead,” Monjasa cautioned, “the entire bunkering industry must learn from these events and use them constructively to come out stronger than before.”

Meanwhile, major trading company World Fuel Services Corporation (NYSE: INT), involved in aviation, marine and land fuel plus related products and services, reported third-quarter net income of $55.7 million or $0.78 diluted earnings per share, compared with $51.5 million or $0.72 diluted earnings per share in the third quarter of 2013. The company’s marine segment generated gross profit of $49.4 million, an increase of $0.6 million or 1% sequentially and $9.2 million or 23% year-on-year.

“We were pleased with our results this quarter as we posted record results despite continued global economic headwinds,” said Michael J. Kasbar, chairman and chief executive. “We remain focused on executing on the significant growth opportunities that exist across all of our business segments worldwide.”

Not all markets were equally hit by the OW bankruptcy. Lena Johnston, general manager of Sydney-based Australia Bunkering, said: “We were not affected by the OW collapse. The only problem was that they had the physical delivery exclusive in Port Kembla and Newcastle, but that is all but sorted now, so no real problem. In Australia, unlike the rest of the world, the traders do not trade with other local traders within Australia. Our marine gas oil (MGO) is already ultra-low-sulphur. Our heavy fuel oil (HFO) is still maximum 3.5% sulphur, typically 2.5%.”

In general, however, the OW collapse has been a huge shock and, as Carsten Ladekjaer, chief executive of KPI Bridge Oil Group, told World Bunkering, a number of shipowners are asking whether to avoid using bunker traders in the future. He noted: “This is owing to the situation following OW Group’s non-payment and the risk of having their vessels arrested by physical suppliers.”

He added that he believed it was important to consider what caused the collapse of OW before trying to conclude whether to use bunker trading companies in general. “As the facts unfold daily in the media, the main causes for the collapse of OW were: 1. Speculative position-taking in the paper market way beyond common sense.

World Bunkering Spring 2015

World Bunkering Spring 2015

Traders

2. Over-exposure and exceeding credit limits to an unsecured debtor to an level that endangered the whole group.

3. Speculative position-taking in the physical market to an extent beyond safe limits.

“In other words,” Ladekjaer explained, “the combination of the above factors are historical within our industry. In my nearly 20 years in the industry, I have not experienced such a collapse and I doubt that I will live to see it again before my days of retirement in approximately 25 years from now.

“The industry must not forget that 99% of the large established trading houses run a very tightly controlled business, where positions are limited to a minimum if not purely back to back. Also, in today’s shipping environment, all major bunker trading houses are closely overlooked by their banks, ensuring that they have the appropriate control measures in place. The worldwide bunker and shipping community has been largely depending on trading houses to provide the services and financial flexibility required to keep ships moving across the seven oceans and this will continue in the future.

“As such, my plea to the shipping community is to think twice and not panic because of one bad incident. At the end of the day, it all boils down to good oldfashioned values in our industry: to establish and build trust among business partners; to know your counterparty well; and to have close relationships.”

As to the general direction of the bunker sector, he said: “The bunker industry has in general been undergoing a period of consolidation since 2008 and I believe this trend will continue. In light of recent events, the need for liquidity, good quality, compliance control and good management tools in general is more crucial than ever. In today’s shipping climate, buyers want strong suppliers who can back them up in their business and who can fulfil their requirements wherever they need and whenever they need it.”

On the recent dramatic fall in oil price, he commented: “The drop in oil prices is largely good news for traders. First and foremost, because it offers some relief to the shipping community overall (excluding some segments such as offshore) and, secondly, because it minimises our risk. In other words, you can make more supplies to the same client within the same credit limit.

Generally, it has always been our mantra that if it is good to our clients, it is good to us.”

Trust is key issue Asked about the state of the market following the OW Bunker collapse, major trader Glander International outlined its view of the current bunkering scene

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he most imminent issue is to regain trust. Although the collapse of OW Bunker created opportunities across the board, it also diminished faith in the industry. As a result, many credit lines from suppliers to traders were cut or reduced. A lot of smaller and mid-sized traders are now unable to compete on those terms.

However, life goes on. Players are adjusting and, eventually, it will be business as usual, but with some changes. The bigger traders are getting bigger, and the smaller players will find the environment even more harsh. Without OW as a significant player in the physical market, suppliers now may see opportunities with a focus on profit rather than volume. If successful, the industry will grow healthier as a whole, including shipping companies, because suppliers will see it as beneficial to expand supply locations, logistics and availability in general.

One very interesting aspect we faced is that our customers have become much more interested in the way we conduct our business, and not least how can they be reassured that we pay our bills to suppliers. Unfortunately, many operators have faced the burden of having to pay the bill twice, or of having a ship arrested by a bunker supplier who was owed money by OW Bunker, so naturally they seek to deal with trustworthy counterparties.

Certainly, there are important lessons learned from the OW case regarding risk appetite – in particular, unsecured loans in the form of sleeving arrangements. Right now – as was the case in 2008-09 – suppliers are reluctant to grant credit to the smaller players, hence we shall see further consolidation.

In our opinion, bunker prices will be volatile in the foreseeable future, as suppliers – and, not least, their banks – have higher requirements to reward/ risk. Credit comes at a higher price.

We, too, are interested in seeing the correlation between supply and demand of emission-control-area-compliant, ultra-low-sulphur fuel oil and low-sulphur marine gas oil in 2015. Over the past year, there have been many discussions and predictions of market direction. The reality – as we see it – is that no one really knows what 2015 will bring in terms of supply and demand, alternative fuels, crude prices and the world economy in general.

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Company news

Ship Energy Efficiency Management with Mass Flow Metering Fuel consumption of ships is currently a topic of significant importance to operating costs, profitability and with the amendments of MARPOL Annex VI “Regulations for the prevention of air pollution from ships“, which entered into force on 1 January 2013 the monitoring of Ship energy efficiency is mandatory.

The two areas of the regulations of interest to the operator for ship energy efficiency are the Ship Energy Efficiency Management Plan (SEEMP) and the Ship Energy Efficiency Operational Indicator (EEOI).

How can continuous measurement help in supporting the operating company and the crew in meeting their obligations of the regulations?

Ship Energy Efficiency Management Plan (SEEMP)

The Guidelines advise that the SEEMP is a living document, developed and maintained by the ships’ masters, operators and owners.

The SEEMP should be an integral part of the ship safety management system and the environmental management system under ISO 14001. And as a “living” document the process of maintenance should be driven by continuous improvement.

The establishment of the SEEMP requires planning to develop a relevant, effective plan which can be implemented to minimize the onboard administrative burden and identify staff responsibilities.

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Record keeping and the responsibilities for documenting are clearly required in order to implement the SEEMP and generate a base line of performance and record changes.

These recorded changes need to be monitored to show the effect, both advantageous and detrimental. This can only be achieved by quantitative measurement and this directly relates to the Ship Energy Efficiency Operational Indicator (EEOI) discussed further below.

The forth step, self-evaluation, closes the loop and instigates the next planning phase of continuous improvement. This objective evaluation of the data collected and the measures implemented deepen understanding of the individual ship and highlight the possible areas of investigation for the evolution of the SEEMP plan.

Ship Energy Efficiency Operational Indicator (EEOI)

The monitoring section of the SEEMP implementation requires quantitative measurement; the EEOI defines a simple indicator for the highest level of monitoring.

EEOI = mass of CO2 / transport work The quantity of CO2 can be calculated from the fuel(s) consumed both at sea and in port for main and auxiliary engines, generators, boilers and incinerators using the conversion factors defined in the IMO guideline.

The transport work has two components; firstly the cargo carried, the unit of which must be derived consistently for the vessel

and depends on the nature of the cargo and allows for comparison between vessels in a working fleet.

The second component of transport work is the distance of the voyage or the distance travelled per day.

The transport work is generally the quantity of cargo carried multiplied by the distance. For special vessels other measures of transport work may be more appropriate.

Caution should be taken when collecting data for EEOI and monitoring the value, the EEOI is only the highest level indicator.

Secondary indicators used to calculate the EEOI should also be monitored and reviewed to understand the influences on those. Below we discuss the monitoring of fuel consumption and its influences and also consider cargo. These second level indicators are the ones the operator and crew can influence.

Fuel consumption monitoring as part of your SEEMP

The SEEMP requires that data is collected to monitor the efficiency of the vessel and to calculate the EEOI, this can of course be collected manually on a voyage basis or day to day basis, dipping tanks and estimating the fuel used. This may be relevant and practical in an initial SEEMP, but three factors quickly take effect; 1) The data collected is collected on voyage by voyage or better on a day by day basis but in both cases the data is collected and can only be acted on after it has been analysed. If the data for that period is wildly different from the previous period often the reason for the change is lost. Or if we take an action we do not know the effect until we have made the next series of data samples.

2) As we want to find out more we need to collect more data at shorter time intervals and the burden of data collection increases onboard and for shore based staff to analyse.

3) For operational reasons we do not collect data at the specific time or analyse it in a timely manner and the trend is lost or we must average and back-calculate, losing the accuracy of the real data collected.

Mass flow metering offers the opportunity to automatically collect data; this reduces the operation burden of onboard personnel in collecting data and

World Bunkering Spring 2015

2) Optimum trim – finding the optimum trim conditions at a specific draft for the cargo on board 3) Optimum ballast – validating cargo planning and supports optimum trim above 4) Hull and propeller maintenance – optimise cleaning regimes and validate the use of coating systems 5) Propulsion systems – maintenance schedule optimisation and monitoring degradation of performance preempting possible equipment failures.

6) EcoMATE® can provide data for the EEOI calculations and can provide directly the CO2 Tonnage and can transmit all data to shore for land based performance monitoring.

Using EcoMATE® to achieve your current and future SEEMP’s

Using CARGOMASTER® to support your current and future SEEMP’s

The IMO SEEMP guidelines refers the use of computer software, EcoMATE® is proven proprietary solutions specifically designed for real time fuel consumption monitoring of marine fuel systems.

The investment in any new equipment onboard is always difficult, justification for the purchase and installation of mass flow metering and monitoring software on its own to deliver savings is seen as especially difficult to quantify. But in other sectors which have a long established experience of implementing energy efficiency monitoring can say, monitoring as part of a commitment to the efficiency plan will on its own create awareness and yield a 2% efficiency saving.

2% of the fuel you use in 12 months is a significant justification for the capital expenditure and return on investment.

But going forward the advantage of real time monitoring becomes clear when you conduct studies as part of your SEEMP, such as: 1) Speed optimisation – finding the optimum speed for the vessel and the propulsion system, validating the engines and propeller curves.

KROHNE CARGOMASTER® system offers complete solutions for tank monitoring and alarming. The system sends readings from all tanks and lines onboard to leading edge, user-friendly software which runs on all standard marine computers.

KROHNE

KROHNE has also pioneered bulk transfer mass flow meters with twin straight tubes suitable for bunkering applications which are far more compact than the traditional and cumbersome twin bent tube meters. This ease of installation and small installation envelope, combined with the natural viscosity insensitivity of the innovative straight tube design, coupled with the synthesized drive will deliver mass flow meters for bunkering which provide the operator with “continuous” “direct” and “accurate” measurement of the bunker stem.

KROHNE continues to work with customers to enhance this portfolio of products in bunkering and allied sectors such as fuel consumption measurement and lube oil monitoring. KROHNE’s maritime division, KROHNE Marine, has developed in parallel EcoMATE®, a suite including fuel consumption and bunkering visualisation which also complements the long established CARGOMASTER® portfolio.

Company news

allows for data to be available in “real time”.

Data is collected consistently in a way which is not possible by any manual method.

But collecting data is only the beginning; a meter system only gives data. That data must be represented and displayed in a consistent way where it provides information which can be understood and acted on. This can be done by shore based staff, but the real time advantage of the data collection is lost.

To provide this functionality, dedicated software visualisation tools such as KROHNE’s EcoMATE® collect the real time data and represent this in a visual form which can be easily interpreted by the onboard staff responsible under the SEEMP. The data can also be made available to operational shore based staff.

The CARGOMASTER® system provides measurements also relevant to the EEOI such as: 1) Trim and actual draught 2) Ullage/level 3) Volume (based on volume tables) 4) Weight and cargo density

For further information, please contact Colin Cheeseman Product Manager – Mass Flow Tel: +44 1933 408 528 c.cheeseman@krohne.com

World Bunkering Spring 2015

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Fuel quantity

More than a million tonnes of ExxonMobil fuel has been delivered using the mass flow metering system

Getting what you pay for Mass flow meter enthusiasts believe that new measuring technology should give shipowners confidence that what is on the bunker delivery note is also what is in the ship’s tanks

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uantity disputes still crop up and can sour commercial relations between suppliers and ship operators. Suppliers tend to say that genuine cases of short delivery are few and far between.

Meanwhile, the dramatic drop in fuel price has somewhat taken the sting out of smaller discrepancies.

Nevertheless, quantity remains a contentious issue. For example, mutual liability insurer the London P&I Club recently advised its members on precautions to adopt to detect the presence of ‘cappuccino’ bunkers, probably to the irritation of some suppliers.

In its StopLoss Bulletin, the club explains that the cappuccino effect is essentially the frothing or bubbling effect caused by compressed air blown through the delivery hose. The aerated bunkers when sounded will give the impression that the fuel is delivered as ordered. In fact, after some time, when the entrapped air in suspension settles out of the fuel oil, the oil level drops and a shortfall is discovered.

The club says: “There are a number of ways in which cappuccino bunkers may be identified. These include signs of froth/foam on the surface of the fuel in the barge tanks when opening the gauge, and excessive bubbles on the sounding tape prior to, during and after bunkering. The bunker hose may also

34

jerk or whip around, delivery rates may be slower than those agreed, and there may be a gurgling sound in the vicinity of the bunker manifold. There may also be fluctuations in pressure on the manifold pressure gauge, and unusual noises from the bunker barge.”

Outlining precautions that should be taken before fuel transfer takes place, the club explains: “During usual gauging of bunker barge tanks, fuel oil from ullage hatches should be visually checked for any foam on the surface.

Foam may also be detected on the ullage tape. If entrained air is suspected on the tape or fuel surface, obtain a sample and pour it into a clean glass jar and observe carefully for signs of foam or bubbles. If the suspicion is confirmed, the chief engineer should not start bunkering and should notify the owners/charterers immediately.”

With regard to precautions during and after fuel transfer, the club notes that air can also be introduced in the fuel during the pumping period, so it is important to continue gauging the ship’s tanks, as air bubbles would be readily seen on the sounding tape.

As stripping and line blowing can also introduce air, stripping should only be performed at the end of the delivery for a short period of time, and line blowing kept to a minimum. The ship’s bunker manifold valve should be checked shut before gauging of the ship’s tanks.”

While suppliers, especially in top bunkering port Singapore, will bridle at the suggestion that there is wilful use of the cappuccino effect, the authorities there are forging ahead with plans to make use of flow meters compulsory.

At the Singapore International Bunkering Conference and Exhibition (SIBCON), the Maritime and Port Authority of Singapore (MPA) announced two new initiatives “as part of Singapore's continued efforts to enhance our bunkering processes and prepare the bunkering industry to meet the demands of the future”.

In a move to smooth the implementation of the mandatory adoption of mass flow meters for bunkering from 1 January 2017, bunker suppliers and bunker craft operators are eligible for benefits under the Productivity and Innovation Credit (PIC) scheme, administered by the Inland Revenue Authority of Singapore (IRAS), for expenditure incurred in adopting the mass flow meter with effect from the Year of Assessment (YA) 2015. This is on top of the S$80,000 (US$64,000) lump sum incentive from MPA on approval of each fitted mass flow meter system for eligible bunker tankers.

MPA also said that, as part of the mandatory adoption of the mass flow meter implementation plan, the National Metrology Centre (NMC) had been appointed by MPA as the data

World Bunkering Spring 2015

ing system. The system could also potentially bring additional significant savings by avoiding human calculation errors that can occur using traditional tank dipping.

In general, it said, the mass flow metering system introduced efficiency into the entire bunkering process by measuring fuel mass directly and reducing the uncertainties associated with density, temperature and other variables such as varying tank geometry.

The mass flow system offers the potential to save up to three hours per delivery. ExxonMobil noted: “This could offer potential significant financial and resource savings for vessels that bunker in Singapore.”

While the heart of the system is a Coriolis meter, the new system in Singapore covers the whole supply system on the barge. ExxonMobil added: “With refuelling integrity requiring more than a secure meter alone, the system has both calibrated and certified meter tamper-evident seals fitted by the Weights and Measures Office of Singapore. The system also has an independent sealing of the system’s associated pipelines, valves, gauges and barge equipment.”

Lastly, the new system is being promoted as increasing traceability and transparency. Measurement data is logged throughout the entire delivery process, illustrating the fuel mass transferred at any point in time, offering a transparent and accurate measure of fuel transferred into the tank.

“Fuel quantity shortages continue to be an ongoing issue facing custom-

ers,” said Molina Albright, general manager for marine fuels, Asia Pacific, at ExxonMobil. “But, with mass flow metered deliveries, customers no longer gamble on quantity. This milestone underlines the increasingly important role that ExxonMobil is playing within the industry to address this important issue. The majority of fuel supplied

by ExxonMobil’s chartered vessels in Singapore is now delivered using the mass flow metering system, helping customers to benefit from the valuable time and cost savings.”

Prior to its collapse in November, OW Bunker also claimed significant efficiency benefits when supplying using an MPA-approved flow meter on the 4,700 dwt barge Marine Noel owned by Sinanju Tankers. It said the time needed to supply bunkers, which would have been between seven and eight hours, had been reduced by 50%.

Actually using the new equipment involves training ship’s officers and crew to use it. MPA has accredited the International Bunker Industry Association’s (IBIA) new Mass Flow Meter training course, which provides in-depth information about mass flow meters, including how to install and use them, and looks at legislative, calibration and accuracy issues.

IBIA chief executive Peter Hall said: “This is the latest in our range of professional training courses for the bunkering industry. Ultimately, the use of mass flow meters will result in a smoother bunker transaction landscape with fewer commercial disputes, shorter delivery times and a simpler custody transfer process.”

Fuel quantity

verifier to carry out the acceptance test. The test data will be analysed

by NMC to determine the measurement uncertainty for compliance to the requirement of the relevant Singapore Standard (SS600).

In practice, several suppliers have already started using flow meters. In August, ExxonMobil passed the million tonne mark for marine fuel delivered via the MPA approved mass flow metering system. The oil major said that demand for this “market-leading process” continued to grow, following the MPA decision on the use of mass flow metering systems for fuel deliveries in Singapore.

In June 2012, ExxonMobil became the first fuel supplier to make bunker deliveries using a mass flow metering system approved by a port authority – the MPA. Now, ExxonMobil charters a full fleet in Singapore that can supply bunkers using the MPA-mandated mass flow metering procedure.

According to ExxonMobil, the onboard mass flow metering system delivers a more efficient, simplified and accurate refuelling process for vessel operators. Mass flow metering is a proven technology that considerably enhances quantity transparency.

Furthermore, it offers customers time and cost savings of up to an estimated three hours and US$7,000 per delivery.

Explaining the potential monetary savings, ExxonMobil said that changes in fuel temperature and density during the refuelling process can lead to additional costs for vessel operators. The estimated US$7,000 saving could be achieved by measuring these variables in real time with the mass flow meter-

The use of a flow meter on Marine Noel reduced the time taken to supply bunkers by 50%

World Bunkering Spring 2015

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Lubricants More complicated, more expensive The days when operators could safely order BN70 lubes and trade worldwide without further thought have gone, reports David Hughes

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ife has become much more complicated for marine engineers and ship operators.

Slow steaming, fuel switching and cold corrosion are all presenting difficult challenges and ‘universal’ lubes, typically with a total base number* (TBN) of 70, no longer work all the time and everywhere.

Iain White, global field marketing manager at ExxonMobil Marine Fuels & Lubricants, told World Bunkering that ExxonMobil had never marketed a lubricant as being ‘universal’. However, in the current operating conditions, and with the demands of modern engines, using the right lubricant at the right time was no longer merely best practice. “It is essential,” he said.

That was why, he said, ExxonMobil had added to its range of lubricants recently. Its new Mobilgard 525 is designed for slow-speed engines using 0.10% sulphur fuels. The company says the switch to low-sulphur fuels, such as marine gas oil (MGO), presents new lubrication challenges compared with heavy fuel oil (HFO). It says the new lubricant has been engineered to address issues such as deposit formation and scuffing-related engine wear that can occur when operating on low-sulphur fuel.

In another indication of the differentiation of products now required, ExxonMobil has launched a zinc-free

World Bunkering Spring 2015

marine engine oil, Mobilgard 410 NC, intended primarily for the US market, to maximise the performance of medium- and high-speed engines.

It also complies with upcoming US Environmental Protection Agency (EPA) Tier IV requirements. The company says it improves engine cleanliness, reduces wear and increases bearing protection compared with current Tier III lubricants. It has undergone extensive testing and has been approved for use by Electro-Motive Diesel and General Electric.

So must ships change lubricants even when switching to low-sulphur fuels for just a short time? Is it really important to get the right lubricant when slow steaming? The answer to both questions is “definitely”, according White. Asked whether he thought there would be operators who cut corners and damaged their ships’ engines as a result, he said: “It is happening now.”

Of course, all lubricant manufacturers are responding to the changing requirements of operators.

Total Lubmarine’s technical director, Jean-Philippe Roman, outlined Total Lubmarine’s “innovative approach” to the ECA regulations.

He said: “From a customer’s point of view, a good lubricant is a lubricant that offers both improved performance and is simple to use. Low-sulphur fuels and eco-engines throw up many

challenges to lubricant suppliers, and Total Lubmarine is committed to investing in the chemistry that will deliver simpler oil lubricants in the future.” Total Lubmarine is ahead of regulatory change by developing Talusia LS 25, which was successfully introduced to the market two months ago in anticipation of the MARPOL Annex VI directive.

He said: “Talusia LS 25 allows ship operators to maintain excellent deposit control through its use of specially developed low-ash chemistry and means that they don’t need to resort to ‘home-made’ blending techniques aboard their vessels.”

For use outside ECAs, Total Lubmarine markets Talusia HR 70 for use with HS HFO and Talusia LS 40 for LS HFO. Talusia Universal, Total’s single-cylinder lubricant, can be used with a wide range of HFOs on previous-generation engines. Talusia Universal 100 has been designed for modern engines potentially affected by cold corrosion issues.

Meanwhile, Chevron Marine Lubricants’ new 100 BN cylinder oil, intended to allow shipowners to comply with the latest emissions legislation, has received full sign-off from MAN Diesel & Turbo (MDT). Trials were successfully conducted on a very large crude carrier (VLCC) equipped with the latest generation MAN G-engine

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with low oil prices presumably having some cost-cutting effect. International accountant and shipping adviser Moore Stephens’ Shipping Confidence Survey found that respondents anticipated increases of 1.7% and then 2.0% in the cost of lubricants over the next two years.

UniMarine managing director Caroline Huot believes those expectations are “not completely realistic”.

She says: “On the one hand, there is still a huge pressure on vessels running operational expenditure (OPEX) budgets due to the crisis, and marine lubricants can represent (not considering bunkers supposed to be dealt with by charterers) 10% up to 17% of the OPEX. Hence the signal of crude oil going down is an indicator that pushes shipping companies to put pressure on their marine lubricants suppliers for minimum stable prices or even reduced ones.”

“On the other hand,” she continues, “various pressures are pushing the costs upward more than 2%: the introduction of new grades like cylinder oil BN 100 (for newer engines), which is more costly than the classic BN 70 cylinder oil; and the introduction of

the new cylinder oil BN 25, recommended for when vessels burn distillates within ECAs, which is also more costly. In addition, compliance with the EPA’s vessel general permit legislation through the use of environmentally acceptable lubricants (EALs) is also impacting budgets as prices of biodegradable marine lubricants are generally on the high side compared with their mineral predecessors. In addition, the complexity of having to manage multiple grades onboard has an impact on total budgets. Likewise, the reduced geographic spread of most suppliers’ networks obliges owners and managers to use ‘spot’ solutions and get more and more outside their traditional contracts in order to fit with their vessel’s trading pattern. Customised solutions more than ‘one-size-fit-all’ offers are very much necessary, hence the emergence of a player like UniMarine, which offers customised answers in order to manage the complexity in a costefficient way and reduce impacts on vessels’ OPEX budgets.” *Total base number (TBN) is a measure of a lubricant’s reserve alkalinity. It is measured in milligrams of potassium hydroxide per gram.

Lubricants

Mk 9.2 and took place in early 2014 under conditions prescribed by MAN. Finnish Nanol Technologies is approaching the lubrication issue in a different way. Nanol Technologies develops and produces nano­ technology-based lube oil additives.

The company says that the additive contains copper ‘particles’, which are perfectly dispersed in micelles and are completely soluble in oil. The micelles transport the active copper particles to the metal surface, where the additive delivers important performance benefits. Nanol protects metal surfaces by creating a very thin protective layer of copper. It also reduces friction and energy losses. This reduces wear, extends the lifetime of components and the lubricants and, most importantly, reduces fossil-fuel usage as well as harmful engine emissions.

According to Nanol, when its patented lubricant additive was tested in ro-ro and dry cargo vessels for six-month and 12-month trial periods, the vessels achieved a 5% reduction in fuel consumption in both instances.

Whatever approaches are adopted, increasingly complex is likely to also mean increasingly expensive, even

ExxonMobil’s zinc-free marine engine oil, Mobilgard 410 NC, maximises performance of medium and high-speed engines

World Bunkering Spring 2015

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Lubricants

Lube challenges Caroline Huot outlines her views on how the lubricants market is responding to changing operating requirements

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he marine lubricants industry has met some of the challenges posed by the creation of emission control areas (ECAs) in America as per MARPOL Annex VI in the same way that various answers were provided after the implementation of the European ECAs. In the past few months, the issue of whether to use a ‘universal type’ cylinder oil – which allows vessels the flexibility of using one type of lubricant when burning HSFO or LSFO up to 1% sulphur content in the fuel – or a specially formulated low cylinder oil (ie SAE 50 BN 40 grade) has been raised once again.

Most marine lubricants suppliers have chosen the path of the ‘universal type’ cylinder oil, because it provides them with a cost-efficient answer in term of stock management and formulation costs. However, the evolution of engine design as owners seek to cut fuel consumption and their emissions footprint has shown the limitations of such an approach.

In the past two years, and in view of the lubrication issues (cold corrosion) appearing on long-stroke /super-longstroke engines and when slow steaming, original equipment manufacturers (OEMs) have recommended the combination of higher BN cylinder oils (BN 100) when burning HSFO and BN 40 cylinder oils when burning LSFO for most modern engines (typically MAN Diesel & Turbo Mark 8 engines and later designs). For older types of engines, they recommend the use of classic coupling of BN 70 cylinder oil (when burning HSFO) and BN 40 cylinder oil (when burning LSFO) .

These clear recommendations have, of course, affected the ranges of lubricants already sold on the global market and in the US. Suppliers are back-pedalling on the discontinuation

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of BN 70 cylinder oils, while stocks of BN 40 cylinder oils, already discontinued by some suppliers, are being urgently renewed.

In term of availability, this has created numerous bottlenecks and supply issues all around the world, and for owners and managers this has meant a lot of ongoing confusion and headaches.

The same situation will apply with respect to the new 0.1% sulphur cap that will applied from the beginning of 2015. Development of a new cylinder oil, SAE 50 BN 25, is being introduced by many suppliers to be used when vessels are burning distillates entering ECAs from 1 January 2015 but, at the time of writing, no product was widely available to owners even in the world’s main ports, despite the requirement having been flagged some years ahead. As a result, owners can expect compliance issues resulting from supply bottlenecks and general global availability concerns in the future.

Availability issues have been triggered by various causes as follows: • The impact of new regulations like the vessel general permit (VGP) requirements from the US Environmental Protection Agency, which came into effect on 19 December 2013. These stipulate use of environmentally acceptable lubricant (EAL) oils (commonly referred to as ‘bio-lubes’) in all oil-tosea interfaces on any vessel greater than 79 feet in US waters (up to 3nm offshore) and on the Great Lakes.

Again, the effects on demand were not properly anticipated, causing a bottleneck in the supply of the biolubes in most of the required ports.

• The impact of new engine designs requiring specialised cylinder oils like the aforementioned BN 100/ BN 40 combination rather than universal-type lubes when burning

LSFO. Today, the availability of BN 100 cylinder oil remains extremely limited, even in main ports. This seems to be the same picture for the specialised SAE 50 BN 25 cylinder oil necessary when vessels burn distillates in ECAs. • The so-called ‘optimisation’ of marine lubricants providers’ supply networks, which has led a drastic reduction of the number of ports of supply and the range of marine lubricants available there.

The above factors also mean that lubricant supplies available in newbuilding and repair shipyards also tend to be limited in range and in product variety.

This applies not only in major shipbuilding countries like China, Korea and Japan but also in dry-docking countries such as Vietnam, Indonesia and Turkey.

In short, it seems that, over the past years, the marine lubricants market has become more fragmented and less cooperative than it was. In the past, the interests and objectives of suppliers were much more aligned with OEM requirements and the needs of owners and managers, guided by a general motto of “doing what needs to be done”.

Of course, another solution for owners is to use HFO with ‘scrubbers’ in ECAs, which would resolve issues such as availability and cost of distillates.

This would also allow use of universaltype lubes, but it remains to be seen how many owners favour this solution because of the problems of fitting and maintaining the scrubber technology.

Caroline Huot is managing director at UniMarine, an affiliate of Danish prominent group United Shipping & Trading Company, which offers a wide range of expert lubrication supply solutions, onboard and onshore technical services, as well as a global supply network

World Bunkering Spring 2015

IT

Sniffing out offenders As the new emission control areas come into force, Gothenburg has fitted sniffer technology to roust out offenders.

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halmers University of Technology, in collaboration with the Port of Gothenburg, has fitted a ‘sniffer’ at the entrance to the port. The port now hopes that this technology will prove effective.

The move came as stricter emission regulations for ships were introduced in the Baltic Sea, North Sea and English Channel from 1 January. “The potential for control was thought to be limited, but here at the Port of Gothenburg the technology is already in place to sniff out vessels that are cheating with marine fuel,” said Edvard Molitor, senior manager, environment, at the Port of Gothenburg.

The ‘sniffer’ has been developed

by Chalmers University of Technology with support from Vinnova, the Swedish Environmental Protection Agency, and Gothenburg Port Authority.

Johan Mellqvist, associate professor at the Department of Earth and Space Sciences at Chalmers University of Technology, said: “We have worked for almost 10 years to produce methods to monitor compliance with environmental regulations at sea, both from fixed measuring stations such as this and from aircraft.

We have monitoring technology that is unique and we are simply waiting for the go-ahead from the Swedish

World Bunkering Spring 2015

authorities before we can begin using the technology actively.”

The sniffer is about the size of a small fridge. The yellow box is 45 centimetres high and contains hightech equipment that analyses the sulphur content in the exhaust plume.

The sniffer measures the sulphur and carbon dioxide content in the gas emissions, thus revealing the sulphur content in the fuel.

Using sniffer technology, more than 5,000 exhaust plumes have been measured in recent years at the entrance to the Port of Gothenburg.

Following extensive trials, the technology is now ready for use to indicate if a ship is cheating with its fuel.

Edvard Molitor explained: “Serious shipping companies are actively looking for measures to ensure compliance with the sulphur directive. The industry is concerned that certain other parties will not follow the rules and that it will lead to a distortion in competition.

Our hope is that the technology will be used to monitor compliance with the sulphur directive.”

The port has been a pioneer in encouraging green shipping, and will from now on use two different environmental indices as a basis for the reward system – the Environmental Ship Index (ESI) and the Clean Shipping Index (CSI). In the new port tariff for 2015, ships that are classified

according to the ESI and which have 30 points or more will receive a 10% discount based on the gross tonnage of the vessel. Ships that achieve the CSI green standard will also receive a 10% discount.

Jotun contract with MSC

Although the fall in oil prices may bring shipping companies some relief from high bunker costs, energy efficiency continues to be an important issue.

Antifouling technology company Jotun has recently inked a deal with Mediterranean Shipping Company SA (MSC) to apply Jotun’s Hull Performance Solutions (HPS) on a number of existing and new vessels.

With almost 500 vessels, MSC has one of the world’s largest fleets of containerships. In 2011, to help the company manage rising bunkering costs and comply with increasingly strict emissions regulations, MSC undertook a comprehensive programme to improve fuel efficiency.

During this period it worked in close cooperation with Jotun to evaluate hull performance, and in 2013 agreed to launch a pilot programme, applying HPS on two vessels.

Jotun’s HPS concept combines premium marine coatings – SeaQuantum X200 – priority technical service and onboard monitoring tools to measure hull performance over time, providing

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IT an analytical basis for the company’s money-back guarantee that covers the entire period between dry-dockings.

HPS was developed in part to provide the industry with real time-data on long-term hull performance. That data allows owners to make more informed decisions about marine coatings and ship operations, and helps them distinguish between competing coatings suppliers and quantify the impact of antifouling products on fuel usage.

According to MSC, the trial period demonstrated the value of Jotun’s premium antifouling SeaQuantum X200.

“We not only recorded significantly lower fuel costs over time using HPS, we valued the quality of Jotun’s technical service during all phases of the project.

We have since chosen HPS for a number of other vessels.”

Roberto Multari, Jotun’s regional marine sales director, says that, so far, MSC has agreed to utilise HPS on 12 vessels, both for existing tonnage scheduled for dry-docking and for newbuildings, including a series of 18,400 teu container vessels now under construction at Daewoo Shipbuilding & Marine Engineering. “MSC has remained a true giant in the container segment by quietly making smart investments at the right time to improve their business,” he says. “We are confident that they have made the right choice with HPS.”

More ClassNK-NAPA systems for “K” Line

NAPA, the leading global maritime software house, and ClassNK, one of the world’s leading classification societies, recently announced a deal with “K” Line to install their comprehensive eco-efficiency and operational optimisation solution ClassNK-NAPA GREEN on three additional vessels.

The decision to fit the vessels with the software came after the ClassNKNAPA GREEN solution proved itself on a trial installation early in 2014. The self-learning component of ClassNK-NAPA GREEN, the dynamic performance model, was also found to be extremely accurate during the same trial.

Yasushi Nakamura, executive vice-president at ClassNK, commented: “I would like to thank “K” Line for choosing to expand ClassNK-NAPA GREEN to three additional vessels. Software solutions like ClassNK-NAPA GREEN offer a great opportunity for vessel owners and operators to accurately measure and understand the performance and fuel consumption of vessels, as well as to optimise their operations. Along with Wan Hai Lines and Shoei Kisen, “K” Line was one of the first operators to trial the ClassNK-NAPA GREEN solution, and that they have chosen to expand application to further vessels is the greatest proof that we are supplying the industry with an effective and valuable product.”

Naoki Mizutani, managing director of NAPA Japan, commented: “At NAPA, our goal has always been to offer solutions for safe and eco-efficient ship design and operations. ClassNK-NAPA GREEN is proving itself in all areas of this, including delivering proven bunker cost savings and feedback to ship designs to improve newbuilds in the future. The system’s increased adoption across vessel types and operational profiles, including Stena Line ferries, Bore ro-ro vessels and these “K” Line containerships, are reflective of this success. At NAPA, we understand that ship operators are under increasing public, regulatory and financial pressure to control their fuel costs and boost environmental credentials and are proud to be working with partners like ClassNK to help our customers meet these challenges.”

Braemar LNG licence agreement

Braemar LNG has signed a licence agreement with General Dynamics NASSCO to utilise its patents in the design and construction of flat-panel, semi-membrane, prismatic-shaped (FSP) liquefied natural gas (LNG) containment systems.

The new Type B containment system is designed to be constructed, outfitted, insulated and tested off hull and lifted complete into the vessel while the vessel is still in the construction dock. This leads to a significant reduction in vessel construction time. At the same time, the use of onshore construction facilities ensures the highest standards of quality, care and repeatability.

Approval in principle was obtained from both Lloyds Register and the American Bureau of Shipping (ABS).

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Real time monitoring and recording of ship and fleet data

World Bunkering Spring 2015

ECA solutions The new 0.1% sulphur limit in emission control areas has been concentrating the minds of shipowners, as Sandra Speares reports

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here have been a number of developments by shipping companies in northern Europe to start running ships using alternative fuels that are more eco-friendly.

Stena Line will the first operator in the world to run a large, 1,500 -passenger ferry on methanol, drastically reducing emissions. Stena Line decided to convert one of its ships sailing between Gothenburg and Kiel to methanol propulsion in a project being undertaken in co-operation with engine manufacturer Wärtsilä, the Port of Gothenburg, the Port of Kiel and the world’s largest methanol producer and supplier, Methanex Corporation.

The Stena Germanica is being converted at Remontowa Shipyard in Poland.

The project has obtained financing from the EU ‘Motorways of the Seas’ initiative, while the total conversion cost is put at about e22 million ($26 million).

“We are constantly evaluating different fuels for the future and to be first in the world with a methanol conversion is a big step towards sustainable transportation. The project has been possible thanks to the great teamwork and collaboration between our technical staff, Wärtsilä and Methanex,” said Carl-Johan Hagman, chief executive of Stena Line.

In parallel with the change to lowsulphur oils, Stena Line is running a

World Bunkering Spring 2015

number of projects to look at alternative fuels and different techniques for emission purification, such as liquefied natural gas (LNG), electric propulsion and scrubbers.

“Due to our size, we have a broad perspective on handling the new sulphur regulations, and it is likely we will use some different types of solutions in the coming years. However, based on the results of the methanol project, we are intending to convert additional ferries, says Hagman.

Another Stena company, Stena RoRo, has taken the scrubber route, contracting US firm CR Ocean Engineering, to design and supply two open-loop exhaust gas cleaning systems. The systems will be installed to reduce SO2 from two main engines aboard the Stena Forerunner, which operates primarily in the European emission control area (ECA).

Meanwhile, major ferry operator DFDS has been testing the world’s first large scrubber on the freightship Ficaria Seaways since 2009. It says that the results are often better than when using marine gas oil (MGO). DFDS is now investing up to e100 million to retrofit a number of vessels with scrubbers.

By selecting scrubbers, DFDS will be able to continue using heavy fuel oil, while still meeting environmental and legislative standards by cleaning the exhaust gases. The company believes

Northern Europe

Stena Line will be the world’s first operator to run a large,1,500-passenger ferry on methanol

this combination will have a better overall environmental impact than using low-sulphur fuel, because the central production of MGO requires more energy than the cleansing of the exhaust gases through scrubbers.

“The scrubber technology is an approved solution in order to comply with the EU Sulphur Directive.

However, not all ships can accommodate such an installation. It has to be adapted to every single ship, as it is not a one-size-fits-all solution.

Furthermore, a scrubber will increase operating costs as it is a heavy investment of e4 million-e7 million per vessel, and operating it consumes chemicals. Furthermore, there will be a slight loss of energy, increasing bunker consumption by 1%-2%. So, unfortunately, there are still many things to be decided, and our challenge is to adapt to this changing environment,” DFDS said in a statement.

Shipping company Spliethoff has been urging states bordering the European ECAs to uphold and improve enforcement of the sulphur limits that came into force on 1 January. To that end, it joined the Trident Alliance – a coalition of shipowners and operators who share a common interest in robust enforcement of maritime sulphur regulations.

The main focus of the Trident Alliance is clear communication

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Northern Europe

playing field and to secure the health benefits of the sulphur legislation.

“Spliethoff is glad to note that states like the Netherlands and Finland have sharpened their enforcement policy.

We are also pleased with the coordinating work on enforcement done by the European Sustainable Shipping Forum. Much work remains to be done, though,” says Sjoerd Hupkes Wijnstra, environmental strategist and spokesman for the Spliethoff Group.

He added that enforcement should be strong and robust; tracing and pinpointing those operators who ignore the stricter sulphur rules, in combination with a penalty structure that exceeds any financial gain of non-compliance. However, authorities should guard against inspectors concentrating too much on whether more than 0.11% sulphur is measured in fuel used. He said: “What should count is that operators provide their vessels with sufficient compliant fuel and that the vessels use it properly inside the

to raise awareness of possible weak enforcement of the marine sulphur regulations, supported by member companies’ transparency on compliance. In order to foster innovation in enforcement technology, members also share experiences of the different technologies and methods available to comply with sulphur regulations.

The Trident Alliance teams up with other stakeholder groups, who share a similar interest in robust enforcement, to work towards the same objective.

According to the company: “Enforcement policies differ considerably between countries so far. Sulphurrelated inspections are generally rare, and fines for knowingly not complying are often a laugh compared with the financial gains of continuing to sail on heavy fuel oil. If other operators cannot resist the enticement, they willingly break the rules and undermine the marine freight market. Frequent inspections and substantial fines are an absolute necessity to uphold the level

sulphur emission control area (SECA).

Authorities should act against those vessels that do not follow the rules by sailing on high-sulphur heavy fuel oil in SECAs without scrubbers.”

Tallink Grupp and Meyer Turku, meanwhile, have signed a letter of intent for the construction of an ‘environmentally friendly’, LNG-fuelled carpassenger ferry for shuttle operations on the Tallinn-Helsinki route. The ship will cost around e230 million and will be built at Turku shipyard for delivery at the beginning of 2017.

In another initiative, the conversion to LNG of the Fure West, owned by Furetank Rederi and designed by FKAB Sweden, will be completed by the end of 2015, says Lars Höglund, Furetank chief executive. The project involves German engine-maker MaK, supplier Pon Power in Denmark and US headquartered Taylor-Wharton, which will manufacture the tanks and LNG fuel system in Slovakia. The conversion will take place in a yard in northern Europe.

Your marine fuel partner Certas Energy can offer a complete marine fuel and lubricants package.

Distillate, IFO and MGO grade fuels and lubricants No minimum or maximum order requirement Bespoke ordering in litres, cubes or MT Payment accepted in USD, GBP or Euros Over 150 depot locations nationwide Ex-pipe facility in Aberdeen and the Port of Tyne Barging facility on the Thames IFO grades from Dundee Coverage across the UK and Ireland

Talk to the experts on 0845 601 1880

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07/01/2015 09:45:20

World Bunkering Spring 2015

Gary Byers, head of marine at UK-based Certas Energy, comments on fuel prices, the emission control area situation and the effect of cheaper oil on the marine industry

W

ith OPEC still refusing to curb oil production, the cost of fuel in the marine world has been left in a somewhat uncertain state. Worldwide energy levels across the industry were hit hard by the extraordinarily sudden drop in oil prices, leaving investors in the shale gas

Gary Byers, head of marine at UK-based Certas Energy

World Bunkering Spring 2015

market potentially open to huge financial losses. With the cost of crude oil at a five-year-low, fueldependent economies, such as Russia and Venezuela, are already feeling the effects.

On a more positive note, shipowners and operators in the marine environment may actually see some financial benefits from the latest developments. Before the 2014/15 drop in oil prices, many foresaw a significant increase in shipping costs as a result of the switchover to more expensive ECAcompliant low-sulphur fuels.

For this reason, shipping owners have been anxious about these changes, with many having to begin the process of switching from heavier fuels to marine gas oil (MGO) facing a potential 75% increase in bunkering costs. However, as the price of oil continues to fall, the expected financial impact on marine fuel costs has been somewhat mitigated.

Northern Europe

An unexpected start to 2015 At Certas Energy, throughout the past 12 months we have seen a notable upsurge in customer enquiries and orders for distillate fuels such as MGO. We believe this is a sign of things to come in 2015 and we expect to see a steady shift away from heavy marine fuels with an increasing uptake in MGO and distillate fuels, along with a possible price increase over the coming year.

In order to meet our customers’ increasing demands for MGO and to grow our portfolio, we continue to invest in extra storage at numerous locations around the UK that see heavy shipping activity. In the North East of England, one of our newest bunkering hubs is offering North Sea marine traffic low-sulphur MGO via pipeline and truck methods. With options such as this, and being readily able to offer our customers alternative lubricants, we can deliver a range of suitable bunkering methods for the offshore market and spot bunkers in major shipping ports across the UK. It has been a dramatic and unpredictable start to 2015, but, despite a fluctuating market, shipping operators are being presented with an increasing range of options when it comes to bunkering methods and types of fuel. Throughout the year ahead, we aim to support our clients with these options, keeping their costs low and our prices competitive.

45

Indian subcontinent: Sri Lanka 46

Colombo port’s fuel suppliers face increasing competition

© Indi Samarajiva

New port opens Hambantota port is now operational, but many questions about the future of Sri Lanka’s bunker industry remain, as John Rickards reports

T

he major development in the Sri Lankan bunker market over the past few months can only be the greatly delayed, and still controversial, opening of Hambantota port.

The new development, whose tank farm and bunkering facilities were originally supposed to have opened in 2011, but which saw endless problems, overruns and delays until finally beginning operations in June last year, is still loath to discuss numbers, however.

At the time the facility opened, the port’s chief engineer Agil Hewageegna, was quoted as saying that the port needed only three ship calls per day for bunkering to break even. The port passed the 100-vessel milestone in four months, suggesting that it is at least close to hitting the required mark, assuming the volumes of each match the (unstated) average level needed.

Nevertheless, serious questions remain over the viability of the port development, one of the largest infrastructure projects in Sri Lankan history, and its bunkering arm.

Not the least of these questions hangs over the structure of the port’s bunkering offerings, with private companies kept out and Sri Lanka Ports Authority (SLPA), via Magampura Port Management Company, conducting fuelling operations itself. The SLPA bunker fuel tank farm in Hambantota has eight tanks with a 51,000 cubic metre capacity, but the authority has been reluctant to discuss volumes supplied or how much of the available storage is, as yet, in use.

After the first two weeks of use, the new port had seen six ships call for bunkers (far shy of the 42 needed to reach its own putative break-even point), lifting 2,750 tonnes of fuel according to local press reports. Despite the slow start, ports and shipping minister Rohitha Abeygunawardena claimed the early calls rendered criticism of the port development – described by some Sri Lankan politicians as a white elephant – “null and void”.

The port has cost an estimated US$1.5bn to build, taking years longer than originally planned, and despite lying only 10 miles from main international shipping lanes at the far south-east of Sri Lanka has been slow to draw passing traffic. The coming 12 months are going to be crucial for the new port, with no sign as yet that major carriers are inclined to favour it over existing calls at Colombo. The port’s political backers are under heavy pressure to show its worth, especially after having to go to Chinese investors to complete backing for the huge project.

All this comes on the back of increased pressure on the Sri Lankan fuel market from India and other regional players. The national market took a heavy hit in annual figures released last year. Earnings from overall fuel exports, principally shipping and aviation, were down 47.5% year on year to August to just US$25.3m. While the opening of Hambantota has meant a small overall rise in marine sales, it remains to be

seen how the country will weather tougher competition from redeveloped Indian ports and its neighbour’s fuel duty tax waiver.

Colombo’s bunker suppliers have certainly endured a tougher year. The sector has become more crowded, with new players entering an already congested scene. Overall earnings at companies like Lanka Marine Services are falling noticeably as local competition increases and pressure from overseas begins to tell. If Hambantota becomes at least a marginal success, as its government backers must surely be hoping, it’s only likely to bite further into Colombo’s slice of the regional fuel pie, squeezing private operators more vulnerable to market variance than the SLPA-backed state provider.

Between the new port and India’s moves to greatly improve its own long-dormant offerings, Colombo’s crowded supplier scene could be in line to see numbers reducing and services consolidating if the market continues as it is. While greater local competition could mean boons for ship operators negotiating stems in Colombo, there is only so long that suppliers can sustain the financial strain involved and it might be that the weaker members of the herd are culled.

Of course, if Hambantota fails, and the Indian moves to lift the market come to nothing, Colombo could yet be spared the kind of downward pressure that has decimated suppliers in other ports facing similarly uncertain futures.

World Bunkering Spring 2015

Short-term boost?

The Indian bunker sector is waiting to see if a temporary duty waiver will be extended, as John Rickards reports

I

ndia’s bunker market has been shaken up in the past few months, with the national government finally caving in to lobbying from the transport ministry to scrap customs duty on 380 cSt and 180 cSt bunker fuel for Indian-flag vessels carrying transshipment box cargo. The waiver is, at present, only temporary, running out in May, but the country’s cabotage operators are pushing to see the limit extended or dropped altogether. The duty, between 25% and 30%, accounts for 10% of total operating costs, according to a Shipping Corporation of India official quoted in the local press.

This reduction has made pricing more competitive against foreign operators who were able to avoid the duty by bunkering outside the country.

However, six months’ grace may not be long enough to leave a lasting impact on the country’s bunker market, which is falling well short of where most analysts suggest it should be given India’s size and vessel traffic. In the Hindu Business Line, B K Mandal, managing partner of fuel trader Beekay Business Consulting, was quoted as saying: “The exemption is for a short period of six months and that is not long enough to attract fresh investment in this sector. I hope the government will review this aspect.”

World Bunkering Spring 2015

© Abhijit Kar Gupta

Indian subcontinent: India

India’s coastal carriers are benefiting from a fuel duty waiver, but for how long?

47

Indian subcontinent: India

The same sentiments have been echoed by the Indian Coastal Conference Shipping Association and by owners. With empty container congestion at Indian ports one of the contributing factors to the change, they are hoping to see the waiver continue and draw bigger box vessels to Indian ports instead of the Sri Lankan capital Colombo.

It is estimated that the six-month waiver will cost the government US$4.6 million in revenue, but if the tax is scrapped altogether reports suggest that greater box traffic could see indirect tax revenue generating US$116 million a year.

It’s not just owners and fuel traders hoping for government moves, either.

Many of India’s ports are in the process of upgrading their facilities and their bunkering offerings. Vizhinjam, on the south-western tip of the country, has already seen work begin on boosting the port’s bunker facilities in line with hopes of a broader upgrade to bring in larger box ships. With ships

operating between the Red Sea and Far East opting to take more northerly routes because of the threat of piracy, the port’s authorities feel it is well placed to take a slice of the fuel trade on the major trades from Colombo.

Likewise, Kamarajar Port, formerly known as Ennore Port, in the southeast of India is on course to boost bunkering services and port facilities.

A feasibility report won the port the blessing of the Pondicherry state government, and Kamarajar is now making detailed plans for upgraded bunker facilities, cruise ship berths, and greater wharfage for the cabotage box trade. The port greatly cut its shipping activities after going private in 2006 and currently sees mostly fishing vessel traffic. The US$0.5 million upgrade would see dredging and berth construction carried out, as well as bunkering, after safety studies are concluded.

Further up the same coast, Krishnapatnam Port, well into a second phase of development that should

see it become one of the world’s biggest ports, has reaffirmed its plans for bunkering facilities. The port’s management company, KPCL, expects to see the container terminal double capacity to 1.2 million teu and has launched its own feeder service. It wants to avoid the risk of losing trade as a result of inadequate bunker offerings.

These ports are not alone; coastal shippers in particular, and the Indian shipping ministry itself, have been vocal over the past year about the need for the country to greatly improve its bunkering options, port facilities and tax regime to fully take advantage of the huge country’s coastline, inland waterways and short-sea shipping potential, all under-used. And with India’s neighbours, particularly Sri Lanka, unlikely to relinquish their own shares of the available market without a fight, the country will need to ensure that measures like the tax waiver aren’t merely a flash in the pan and that real leadership carries the Indian bunker industry to a higher level.

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World Bunkering Spring 2015

© Faisal Saeed

A tale of two ports As John Rickards reports, Pakistan’s bunker industry remains held back by numerous factors, including a lack of 380 cSt fuel

P

akistan’s two main ports continue to see a slow but steady rise in trade from the dip of three years ago, with more to come through Gwadar as the Baluchistan newcomer is developed more. However, its bunker suppliers still face a challenging market.

On the back of continued government encouragement to foreign trade, Karachi Port saw total cargo up 6.4% last year to 41.35 million tonnes, much of it containers, with ship calls rising slightly to 1,673.

This level of performance was mirrored in nearby Port Qasim, which saw 25.77 million tonnes of cargo (up from 24.86 million the year before), and a steady 1,072 ship movements.

Gwadar remains under development and expansion, drawing investment interest last year from China and compatriot companies to the port’s Chinese state management firm. Having room to spread – with a maximum berth draft of 14.5m, it has 2-3m on its two older rivals and could conceivably take larger ships – could well see it take on a rapidly growing slice of Pakistan’s burgeoning trade.

Local bunker suppliers have certainly expanded their capabilities over the past 12 months, mirroring the slow increase in the country’s maritime trade. Karachibased Ocean Bunkers added a 750 dwt barge in October, bringing its fleet to five.

The vessel will offer intermediate fuel oil (IFO) and marine diesel oil (MDO) to all

World Bunkering Spring 2015

three main ports and nearby anchorages.

Likewise, Orion Bunkers has added a new 600 dwt barge to its fleet, serving Karachi and Port Qasim.

That said, while both the trust-run port of Karachi and the privately leased Port Qasim are performing well enough on the cargo side, the bunker sector has challenges of its own.

Orion Bunkers’ Adil Sher told World Bunkering: “Numbers of vessels calling at both ports are low. However, we hope trade will increase in the next few months, which would bring more vessels to Pakistan’s ports. In addition, another issue affecting the bunker market in Pakistan is that many customers do have [other options outside the country] because refineries in Pakistan only provide IFO 180 cSt.” This lack of local 380 cSt – a solution to which has been promised or hinted at by Pakistan’s refiners for five years or more without appearing – and the relative proximity of Fujairah and other Gulf ports, as well as other bunkering hubs on the main trades, means that operators calling at Pakistan’s ports have easy access to cheaper alternatives. And while ship calls may be slowly increasing – though not necessarily for fuel – Karachi and Port Qasim are limited to vessels of up to approximately 75,000 dwt, further restricting the market’s room to grow.

Elements of the country’s oil industry have been dogged too by accusations of poor-quality supply and

price-hiking. Eighteen months ago, the then head of Pakistan State Oil was ousted, claiming that a “cartel” of oil trading firms was dumping poor-quality furnace oil on buyers and bumping prices. Early last year, the Pakistani government initially rejected proposals to give the country’s Oil and Gas Regulatory Authority (OGRA) legal enforcement powers to control prices and prevent uncompetitive behaviour.

Following further pressure, in October the Economic Coordination Committee came out in favour of giving OGRA the ability to fine “oil barons” overcharging for products, and a stricter regulatory regime could yet be enshrined in law.

While bunker suppliers have not been implicated in either case, Sher did allude to quality concerns at some of Orion’s rivals.

“Many firms entered the Pakistani bunker market,” he told World Bunkering.

“They couldn’t resist, as their mission was different from ours, as... we do not compromise on quality.”

After a two-year downturn, Pakistan’s economy and maritime trade seems to be lifting slightly again. With Gwadar offering real potential to form a transshipment hub not far from the Iranian border and very close to key Gulf routes, it would seem that the pressure to supply all grades and ensure quality and reliability must be met if Pakistan’s bunker industry is to hit the heights it hopes for.

Indian subcontinent: Pakistan

Karachi’s port, old and new. While room for further expansion is limited, can rival Gwadar deliver on its promise as a transshipment and bunkering hub?

49

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International

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AuTuMN 2014

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lubricants: Slow steaming and fuel switching pose Far east: Singapo challenges re leads way on flowmeters, Hk russia: Crucial on emissions court case won by suppliers

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Activity in the ARA continues to progress,region with new developme nts at all three main ports, particularly in the use of LNG

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UAE

Dubai’s huge Jebel Ali Port continues to expand

Expansion mode again The main ports of the United Arab Emirates are all looking to expand as regional growth continues to pick up

T

he Middle East is investing heavily in its port infrastructure and shipping as it prepares to meet the dual challenge of changing global trade patterns and the continued increase in the size of cargo ships. That was the message from speakers at last year’s Seatrade Middle East Maritime conference in Dubai.

In his keynote address at the event, Jamal Majid Bin Thaniah, vice-chairman of DP World, explained the necessity for investment in port infrastructure to accommodate ever-larger vessels, noting: “We have invested a further $850 million to build the new semiautomated terminal 3 facility at our flagship Jebel Ali Port.”

He added: “We have built terminal 3 in response to both the increased size of our customers’ vessels and in response to changing trade patterns,” added Bin Thaniah, identifying Africa and South America as particular areas that call for greater infrastructure investment to facilitate their growth.

Rashed Al Hebsi, chief executive of the Emirates Classification Society (TASNEEF), commented: “I think this is going to be a long-term trend, especially with all the infrastructure developments that are happening. Bigger ships and increasing the size of ports is going to help to reduce costs and will have a positive impact on shipping in general.”

World Bunkering Spring 2015

Abdulkareem Al Masabi, vicepresident at Abu Dhabi Ports Company, said: “Ten years ago, a 6,000 or 8,000 teu ship was considered a large ship.

Now that is almost like a feeder vessel.

The trend of the growing size of vessels to 16,000, 18,000, 20,000, 22,000 teu puts a huge strain on ports as well.”

This expansion is being reflected in bunker activity both inside the Gulf and at Fujairah. At the same time, falling bunker prices are “good news for shipping”, according to DP World chairman Sultan Ahmed bin Sulayem.

He was quoted recently as saying: “The fall in oil price may stimulate particular economies, such as India and China, which are among the most energy-dependent countries, relying on overseas producers for much of their oil needs. When these engines of growth begin to rise, so does the rest of the world.”

While Jebel Ali is an important bunker port for containerships, Fujairah remains the key bunkering port for the United Arab Emirates (UAE) and the Middle East. The latest available figures, for 2013, show 13,493 vessel calls, while the port’s capacity was expected to increase to about 10.5 million tonnes by the end of 2014, up from 4.8 million tonnes in 2012.

The biggest external investor in oil storage capacity in Fujairah is Saudi Arabia, which accounts for 19%

of the total spending on oil storage.

Investments into the bunkering hub of Fujairah should play well for the port’s new oil terminal, according to Malek Azizeh, the commercial director of Fujairah Oil Terminal, which was set to become fully operational at the end of 2014. He said that investments such as the proposed liquefied natural gas (LNG) import facility, as well as facilities for very large crude carriers (VLCCs), are ensuring the expanding terminal is catching the attention of the energy industry.

Near the top of Azizeh’s list is the joint venture he helped launch in December with China’s Sinopec and Singapore’s Concord Energy.

Looking further ahead, if the sanctions against Iran are lifted following successful negotiations over its nuclear energy development programme, the port could eventually welcome Iranian crude.

Meanwhile, UAE minister of energy Suhail Mohammed Al Mazrouei said: “The infrastructure that Fujairah has today and will have in the future makes it a major city and a major destination for the energy sector.”

Fujairah has spent the past decade positioning itself as a major bunkering and storage centre. It is now building on this by expanding along the energy value chain, with VLCC berths and increased anchorage positions offshore, as well

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UAE

as refining, petrochemical and LNG regasification facilities in the pipeline.

The arrival of 1.5 million barrels per day of crude oil in Fujairah has enabled the emirate to develop the local energy chain by building storage and blending facilities, with refining and petrochemical projects in the planning phases.

In addition, Fujairah is home to one of the country’s largest power and water desalination plants, which receives natural gas feedstock via the Dolphin pipeline linking Qatar and the UAE. Fujairah's expanding infrastructure Storage capacity • Fujairah’s total storage capacity

is expected to reach over 10 million cubic meters by 2017.

Oil terminals • OT2 Berths 8 and 9 have been

completed in the first quarter of 2014. An additional Matrix Manifold 2 will cater for new storage facilities. Completion of the northern breakwater and construction of at least one VLCC berth is expected by mid-2016.

Abu Dhabi Crude Oil Pipeline • Onshore terminal has eight

tanks with a working volume of 1 million barrels and a 110m diameter. The offshore facilities include three single-point mooring buoys for VLCCs (320,000 dwt). It is an alternative to crude transportation via the Strait of Hormuz.

LNG-fuelled tugs for Dubai

Drydocks World (DDW), based in Dubai, has contracted Wärtsilä to design and supply the propulsion and other equipment for a new harbour tug that will operate on liquefied natural gas (LNG).

This will be the first harbour tug in the Middle East region to operate on gas. The order was signed in November last year.

The 29-metre-long tug is to be the first of a series of nine such vessels to be built and operated by DDW. The project is part of a ‘green’ initiative launched by the Dubai government, and is intended to set an example for promoting environmental sustainability throughout the region.

“We are happy to work with Wärtsilä to promote a green image for our harbour work. Wärtsilä is a solution provider with vast experience and expertise in gas fuel systems. The company has a strong local presence and is capable of providing the support needed,” said DDW chairman Khamis Juma Buamim.

Wärtsilä is to provide a full scope of solutions for this eco-tug, emphasising both the company’s leading position in enabling the use of LNG as a marine fuel, and its unique capability to provide a full range of solutions from initial design to life-cycle support. In all, Wärtsilä will supply the ship design, two 9-cylinder Wärtsilä 20DF dual-fuel engines, Wärtsilä Steerable Thrusters

(WST), type WST-18 Compact thrusters, the automation equipment and the Wärtsilä LNGPac system.

The Wärtsilä LNGPac is a complete fuel gas handling system for LNG-fuelled ships. It includes the bunkering station, the LNG tank and related process equipment, as well as the control and monitoring system.

With the Wärtsilä WST-18 thrusters, this tug will be equipped with one of the most advanced products in the marine industry. These units, which are part of the new Wärtsilä Steerable Thruster (WST) Compact series, provide optimal efficiency, high hydrodynamic performance and easier maintenance. By achieving outstanding efficiency at different power outputs, the WST Compact series reduces fuel consumption, thereby further lowering the vessel’s environmental footprint.

“The shift towards the use of LNG fuel is building up speed across the world.

We at Wärtsilä feel proud that we have been at the forefront of this movement, first through the development of dualfuel engine technology, and then by developing a full range of integrated solutions serving the complete gas value chain. This will be the first harbour tug in the Middle East to operate on gas, which indicates the growing importance of environmental issues everywhere,” says Ibrahim Behairy, Middle East sales director at Wärtsilä Ship Power.

Common user crude pipeline • VAMCO – creation of a

consortium to promote a common user pipeline, with connection to Matrix Manifold 2 and VLCC berth.

Increase in anchorage • Planned increases to anchorage

positions, increased berth capacity for supply and support vessels.

Fujairah Refinery and a new hydrocracker • The Fujairah Refinery is

designed to process a mixture of UAE crudes, with a processing capacity of 200,000 barrels a day. The hydrocracker is planned to produce diesel, kerosene and bunker fuel.

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World Bunkering Spring 2015

LNG

Shell’s LNG bunker barge In a move that will give a boost to the use of liquefied natural gas in Northern Europe, Shell has unveiled an order for an LNG bunker tanker

O

il major Shell plans to build a specialist liquefied natural gas (LNG) bunker vessel to deliver to LNGfuelled vessels in North-West Europe.

The new vessel will be based at the Port of Rotterdam, and will load from the new LNG break bulk terminal and jetty to be constructed by the Gas Access to Europe (Gate) terminal. She will also be sea-going and so able to supply bunkers at other locations.

Shell says: “Demand for LNG as a fuel in the shipping industry is increasing, due to emissions reduction requirements scheduled to come into force in January 2015. The new fuel will also enable the industry to comply with future regulations.”

“This specialised LNG bunker vessel is good news,” said Maarten Wetselaar, Shell’s executive vice-president, integrated gas. “Potential customers need to know that their LNG fuel will be delivered reliably and safely.

Shell’s investment in this vessel, as well as commitment to buy capacity at the Gate terminal, underlines our confidence in LNG becoming a bigger part of the fuel mix.”

Shell says the vessel will be “pioneering in design” and will be built by STX Offshore & Shipbuilding.

It will have a capacity to carry 6,500 cubic metres of LNG fuel and will be

World Bunkering Spring 2015

highly efficient and manoeuvrable.

Featuring an innovative transfer system and subcooler unit, it will be able to load from big or small terminals and able to bunker a wide variety of customer vessels.

Grahaeme Henderson, vicepresident of Shell Shipping & Maritime, said: “We worked closely with customers on the specifications of this exciting new bunker vessel and will use cutting-edge technology. I am delighted to be working with STX on this project and Shell is proud to be leading in the development of LNG fuel in shipping.”

ABS issues LNG guidelines

Classification society the American Bureau of Shipping (ABS) has published a “Guide for LNG Fuel Ready Vessels” to “support members and clients in preparing newbuildings for future conversion to gas propulsion”.

According to ABS, the guide formalises the process for clients who wish to plan for conversion to LNG fuel at a future date by providing a detailed review and approval and an associated class notation.

“ABS is a leader in LNG as fuel, with a number of newbuilding and conversion projects in progress, and there is strong interest in preparing for a future in which LNG takes a bigger role,” says ABS chairman and chief

executive Christopher Wiernicki. “The “Guide for LNG Fuel Ready Vessels” draws on our practical experience by providing a detailed approval process and a notation that clarifies the extent to which a vessel is LNG fuel-ready.”

The guide includes a basic level of concept design approval, with a design review for approval in principle (AIP), and two optional levels for general design approval and installed equipment, which constitute a complete review and survey of the system to be installed on the ship.

The first optional level is a general design review that allows an owner to approach a shipyard with a reviewed design package for the gas-fuelled system at the time of conversion.

The second optional level is detail design approval and installation, which constitutes a complete design review and survey of a system that will be installed on the LNG-ready ship in accordance with the “ABS Guide for Propulsion and Auxiliary Systems for Gas Fueled Ships”.

The first level provides an AIP and a descriptive note in the ABS Record, the second a statement of compliance with a descriptive note listing the parts of the system that have been reviewed. The third results in an LNG fuel-ready class notation for the parts of the system that have been installed, confirming that the system is in full

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LNG

compliance with the ABS guide at the time of the newbuilding contract.

“The projects ABS has already worked on demonstrate the variability from the designer’s and owner’s perspective

of the requirements associated with the term LNG-ready,” says Patrick Janssens, ABS vice-president, global gas solutions. “Rather than rely solely on current notations and descriptive notes

DNV GL in Qatar deal

Classification society DNV GL and Qatar shipyard NakilatKeppel Offshore & Marine (N-KOM) have signed a memorandum of understanding (MOU) to promote liquefied natural gas (LNG) as fuel within the maritime and offshore industry.

According to DNV GL, the MOU will further strengthen the position of N-KOM, which is a joint-venture between Qatar Gas Transport Company (Nakilat) and Keppel Offshore & Marine, in the areas of LNG-fuelled vessel conversions and construction of related floating assets.

N-KOM will capitalise on DNV GL’s deep competence and longstanding experience in LNG, working with shipyards, shipowners and other key stakeholders on a global basis to develop synergies related to the promotion of LNG as fuel within the maritime and offshore industry.

“Qatar is the single largest producer and exporter of liquefied natural gas in the world and has become a leading cluster for gas-related activities. Therefore, we look forward to establishing a valuable partnership with N-KOM, which further cements our strong market position on LNG as fuel

to express to what extent a ship is LNG-ready, the ABS guide and notation are powerful tools that go beyond the basics to help clients specify work to be done in the construction.”

in this region and benefits the environment by making the shipping industry greener,” said Henrik Madsen, DNV GL’s group president and chief executive.

N-KOM’s chief executive Chandru Rajwani said, “N-KOM has already established itself as a leading destination for gas carrier repairs in the region. With the signing of this MOU, we take a significant step further in becoming the preferred gas solutions provider on a global scale. Through mutually sharing our knowledge on latest technology, environmental, safety and quality issues with DNV GL, we will be able to offer our customers an even wider range of solutions and facilities for liquefied natural gas as marine fuel and other gas solutions.”

As part of the agreement, DNV GL and N-KOM will co-operate, among other things, on the development and newbuilding of bunker barges and coolant barges for temporary gas storage, as well as to promote the use of LNG as fuel in the offshore sector. In addition, a training programme is to be conducted in the N-KOM facility on repairs to LNG carriers or LNG-fuelled vessels. Lastly, both partners will offer project management support for conversion projects to third-party yards. © DNV GL

DNV GL has signed a co-operation agreement with N-KOM on LNG and gas solutions projects

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World Bunkering Spring 2015

Testing

Testing times World Bunkering takes a look at what is new on the testing scene

I

n view of the need to have low-sulphur fuel when passing through emission control areas (ECAs), testing has become all the more important, given the potential risk of fuels not meeting the new 0.1% sulphur requirements.

Veritas Petroleum Services group technical director Charlotte Rojgaard was quoted as telling commodities and energy analyst Platts recently that testing of marine distillates with 0.1% sulphur content was up about 32% in October and November last year compared with the previous year.

Correspondingly, testing of 1.0% heavy fuel oil (HFO) grades fell 2% to 30% in comparison with 2013 figures.

Meanwhile, there have been a number of new developments at quality and safety services provider Intertek, which recently introduced TurbineCHECK, a new global service testing oils, grease and related hydraulic fluids in large turbines.

Turbine oil testing is a proven lossprevention technique and forms part of an effective predictive condition-based maintenance programme.

TurbineCHECK provides a full suite of turbine lubricant, fluid, grease and particle analysis services to assist owners and operators in identifying potential component failures before they occur, helping to keep turbine systems up and running, reducing the risk of expensive damage, downtime and repairs.

World Bunkering Spring 2015

With a single point of contact for all turbine lubricant testing requirements, power generation and distribution, operators have simple, rapid, and easy access to Intertek’s full range of accredited testing, expert consultancy advice and interpretation of test results.

Robert Chapman, global business manager for TurbineCHECK, said: “Large turbines are in operation across the world, and in a wide range of demanding environments. Intertek’s global service footprint provides turbine clients in Europe, Africa, the Middle East, Asia Pacific and the Americas with reliable testing and trend analysis. By routinely testing turbine lubricants, we help identify potential oil-related problems before they occur, reducing disruptions and keeping unscheduled maintenance to a minimum.”

Intertek’s global team of lubricant testing experts provides clients with safe and secure online reports, delivering important condition and trending information with fully interpreted results, along with simple and easy-to-understand summaries and recommendations.

The company also recently announced a new business partnership with Letton Hall Group, a leader in oil and gas flow measurement technology, to provide advanced measurement and allocation services to the oil and gas industry.

Intertek and Letton Hall Group have signed a memorandum of

understanding (MoU), enabling the two companies to work together while bringing enhanced metering and allocation service capabilities to oil and gas clients in the US and worldwide.

Steve Marmillion, vice-president for Intertek Oil and Gas Measurement Services in the US, said: “We are pleased to launch this service alliance with Letton Hall Group. The Letton Hall team’s expertise in hydrocarbon allocation and measurement is a great complement to Intertek’s metering, calibration and laboratory testing services. The combined service offering provides a wider range of added-value measurement solutions for our clients working offshore and onshore.”

Winsor (Chip) Letton, chief executive for the Letton Hall Group, said: “Working with Intertek on joint service offerings allows us the ability to leverage their significant US and global service network to bring our unique portfolio of independent measurement and allocation expertise closer to the field operations, where measurement is applied on a daily basis, in order to quantify and allocate huge commercial values of oil and gas production. By teaming up, together we bring our customers a turnkey service offering to meet their measurement and allocation needs.”

Intertek has also entered into an agreement to provide analytical

55

Testing

laboratory services to Statoil in Denmark. Intertek will acquire Statoil’s analytical laboratory in Kalundborg . On the island of Sjaelland, Kalundborg is a hub for North Sea crude oil deliveries, refinery processing and, increasingly, for the production of new environmentally friendly ‘green’ fuels.

Intertek will also provide outsourced oil laboratory services under a contract with Statoil. These services and Intertek’s planned expansion of the laboratory will enable Intertek to support Statoil, its partners and the surrounding industry. It will offer analytical testing and consulting services on refining quality, fuel quality monitoring services, industrial-process quality assurance and petroleum testing.

Sigbjørn Nysæther, director of operations at Statoil Refining Denmark, said: “We are pleased to have reached

an agreement with Intertek, and we look forward to a good future cooperation on laboratory services to the refinery.”

Erik Landgren, country manager for Intertek Nordic and Baltic region, said: “We are honoured to partner with Statoil for this important laboratory services project to support the quality of their oil products and operations. In addition, we look forward to expanding the laboratory and working with its team to increase the services we can provide together to the wider industry in Denmark and the surrounding region.”

Meanwhile, testing equipment manufacturer Parker Kittiwake has issued guidance on essential checks to be carried out during bunker sampling.

It notes that regulations for bunker sampling are set out in MARPOL Annex VI, although specific rules drawn up by some ports and companies need to be

complied with too. The company says that, as well as inspecting equipment for any dirt or damage prior to sampling, the ship operating company should follow the regulations and take additional precautions to ensure both accountability and fuel quality.

Accountability

The following actions will minimise the chances of supplier-receiver disputes.

• Both the supplier and the receiver need to be on hand to confirm the completion of the process.

• The sample should be poured into several smaller containers and the labels signed by both parties.

• The seal numbers must be written on the sample labels as well as in the bunker delivery note (which both parties should sign and countersign).

USA: +1 713 407 3695 ASIA: +65 6322 8215 UK: +44 1325 390180 E-MAIL: marine.services@intertek.com WEB: www.intertek.com/marine

Profitable voyages depend upon bunker fuel quality.

Staying in business means staying on schedule. Poor-quality bunker fuel represents one of the biggest threats to keeping your schedule and profitability intact.

56

Intertek ShipCare provides fast, accurate testing for bunker fuel quality, helping avoid costly repairs and downtime.

World Bunkering Spring 2015

The cutter stock should be introduced very gradually to the residual fuel while the contents of the bunker tank are pumped around; insufficient blending will lead to inconsistent or unrepresentative samples.

Changes in the flow of the sample will alert the operator to possible blending problems.

Similarly, the mixture of new fuel and fuel already in the tank (if it is not completely empty) can be chemically unstable, which is why some form of on-vessel testing method can be useful.

If an analysis shows that the flashpoint temperature has fallen below 60°C (although there are certain exceptions), the fuel must be extracted from the vessel as soon as possible and put aside. A further flashpoint test should be carried out before the fuel is offloaded to avoid subsequent expensive pumping operations.

Even small improvements in fuel quality can make a positive difference further down the line in terms of prolonging the lifespan of pumps, pistons and other machinery. Time and energy spent spotting potential problems before the fuel is onboard makes sound financial sense.

Parker Kittiwake supplies lightweight, easily installed fuel drip bunker samplers, used by shipping companies across the globe.

The company has also launched a cold corrosion test kit, which allows shipowners and operators to obtain an accurate picture of the level of corrosive elements present in cylinder oil, potentially preventing critical damage before it occurs. The company says the kit provides accurate results onboard in less than five minutes, negating the need to send samples to a laboratory to be analysed.

The test kit goes beyond other cold corrosion tests, which only give a total iron figure, providing users with an accurate measure of the parts per million (PPM) value of Fe2+ and Fe3+ compounds in used scrapedown oil. Using a colour-matching test, the Parker Kittiwake Cold Corrosion Test Kit alters the colour of an oil sample, indicating the concentration of non-ferrous iron compounds. The resulting colour is matched to a reference colour wheel that provides a measurement of the corrosive wear present in the sample.

When used in conjunction with ferromagnetic analysers, such as Parker Kittiwake’s LinerSCAN or the Shell Analex Alert, the exact wear conditions within the cylinder chamber can be monitored.

World Bunkering Spring 2015

Testing

Fuel quality

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Russian update

The only way is up Olga Bogacheva rounds up the latest news from Russia, including a 32% hike in bunker sales by Gazprom Neft

Gazprom Neft Marine Bunker increases sales

Gazprom Neft’s media spokesman reported that bunker sales grew by 32% during the first nine months of 2014 against the relevant period of the previous year and reached 3.1 million tonnes. He added that, of this, 2.5 million tonnes was delivered onboard, a 48% increase.

The most significant growth was observed in far eastern ports. During the first nine months of 2014, Gazprom Neft Marine Bunker supplied vessels with more than 757,000 tons of motor fuel, twice more than in the previous year.

Andrei Vasiliev, chief executive of Gazprom Neft Marine Bunker, said:

Gazprom Neft saw sales rise 32% in 2014

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“We are going to double our fleet in the coming years. We will also increase investment in the modernisation of our terminals. New restrictions in emission control areas come into force in 2015.

The demand for low-sulphur fuel will grow.

“We are also aiming to develop a new market segment – liquefied natural gas (LNG) bunkering supplies – and we plan to become a significant player in this market.”

Yaroslavsky Shipbuilding delivers third bunker tanker

Yaroslavsky Shipbuilding Yard delivered the 526 dwt Pyatimorsk, the third in a series of ice-class bunker tankers that are being built as part of project RT18, on 20 November 2014, according to the designer of the vessels, Marine Engineering Bureau.

The three river bunkering tankers have been built within the framework of the “Internal Water Transport” subprogramme of the “Development of Russian transport in 2010-2020” federal programme.

The first vessel delivered as part of the project was launched on 26 June 2014, while the second was launched on 5 August 2014.

The Yaroslavsky Shipbuilding Yard is located in central Russia on the River Volga. The company builds ships for both civil and military use.

Transneft ponders new pipeline

Igor Katsal, deputy vice-president of Transneft, was reported as saying in December that his company was considering constructing a pipeline to Ust-Luga especially for the transportation of oil with a sulphur content up to 2.5%. The company said the move should improve the quality of the delivered raw material.

“Our goal is to improve the situation in all sectors, including refineries, by organisation of a separate high-sulphur oil flow with sulphur content up to 2.5%. The most feasible solution is the Ust-Luga destination,” Katsal said.

During the previous year, Transneft accepted 77 million tonnes of highsulphur oil. The forecast for 2014 is 81 million tonnes. “At the same time, there is no surplus of raw materials of higher quality. So we need to optimise normal flows and add high-sulphur oil into sulphur-containing flows”, said the Transneft official.

Bronka Port “is ready to take on Finnish ports”

Bronka Port, which starts operation in September 2015, plans to attract Russian transit cargo from Finnish ports.

However, respected business newspaper Delovoy Petersburg quotes experts who say this will only happen if custom clearance can be carried out more quickly and cheaply than at present.

World Bunkering Spring 2015

Vyborg Shipyard wins large contract

Vyborg Shipyard, in Leningradskaya Oblast, has received four subcontracts to build vessels for Sovcomflot, totalling e520 million. It has also announced a Basin/port

contract with Gazprom Neft to build two ice-breakers in a deal that could be worth between RUB14 billion and RUB16 billion. The ice-breakers are intended to allow tankers to carry crude oil from the Novoportovskoye oilfield in the western part of the Gulf of Ob to Europe along the Northern Sea Route.

At the end of November, Vyborg Shipyard, part of United Shipbuilding Corporation (OSC) began construction of a supply vessel for Sovcomflot, one of Russia’s largest shipping companies, specialising in oil, petroleum products and liquefied natural gas (LNG) transportation. These vessels are intended for the Sakhalin Energy project, which will explore the Piltun-Astokhskoye and Lunskoye oilfields on the north-eastern Sakhalin shelf.

Sovcomflot had concluded contracts worth e520 million with Arctech Helsinki Shipyard OY, also a part of OSC but now on the verge of bankruptcy, to build four vessels: a supply vessel and three rescue ships. But these ships will now be built at Vyborg Shipyard. The Finnish yard will transfer hull works to

Vyborg, at which point the Vyborg yard will be running at full capacity.

Year-on-year turnover from Russian sea ports increased by 6% during the first 11 months of 2014, according to statistics from the Russian Federation’s Association of Sea Commercial Ports.

The turnover from bulk cargohandling reached 265.7 million tonnes (+13.7%). This figure includes: coal at 107.5 million tonnes (+16%); containers at 43.1 million tonnes (+5.6%); grain at 28.4 million tonnes (1.7 times growth); ferrous metals at 21.4 million tonnes (+6.5%); fertilisers at 13.6 million tonnes (+15%); ferry cargo at 7.7 million tonnes (+30.2%); timber at 4.4 million tonnes (+8.3%); and scrap metal at 4.2 million tonnes (+31.4%). Mineral transshipment fell to 5.8 million tonnes (-15%), and non-iron metal transshipment to 3 million tonnes (-14.1%).

Transshipment of liquid bulk cargo increased to 305.7 million tons (+0.2%).

This figure includes: raw oil at 173.8 million tonnes (-8.7%); oil products at 117.4 million tonnes (+14.9%) and LNG at 11.1 million tonnes (+11.9%).

Turnover (million tonnes)

% against first 11 months 2013

Arctic basin • Murmansk • Arkhangelsk • Varadey

32,5 20,4 3,8 5,4

- 22,6 - 27,7 - 3,7 +10

Baltic basin • Ust-Luga • Saint Petersburg port • Vysotsk • Kaliningrad • Vyborg • Primorsk

206,7 82,5 56,4 16,2 12,7 1,5 50,3

+4,1 +20,8 +5.9 +16,2 +1,5 +12,6 -14,7

Azov and Black Sea basins • Novorossiysk • Tuapse • Taman • Kavkaz • Azov • Eisk • Temruk • Rostov-on-Don • Taganrog

175,3 112,2 20,5 9,3 9,4 5,8 3,7 1,8 9,6 2,6

+10 +9,2 +27,8 +27,8 +5,8 +16 +5,5 +0,5 -3,7 -1.2

7,2

-0,2

149,7 53,3 24,0 19,3 14.6 14,2 7,3 6,2

+13,5 +20.8 +11,0 +15,9 +0.3 +6,5 +15,1 +20.6

Caspian basin Far Eastern basin • Vostochny • Vanino • Nakhodka • Prigorodnoye • Vladivostok • De-Kastry • Posjet

Russian update

Bronka investor, Phoenix Ltd, a subsidiary of the Forum holding company, says the port will accept its first cargocarrying ships in September this year. It is expected that the new harbour will initially take cargo traffic from the port located in the centre of St Petersburg.

Then cargo flows from Baltic ports will follow and eventually cargo currently passing through Finnish ports.

Bronka, a new multifunctional handling complex, is under construction on the southern shore of the Gulf of Finland, next to St Petersburg’s flood water dam, ring highway and Lomonosov district. Total investment in the project is RUB60 billion. Currently, the quays are almost ready. The depth of the harbour is in excess of 10 metres, while the approach canal will be dredged to 14.4 metres by December, allowing 5,000 teu containerships to enter.

63 ports are included in the Russian Register of Seaports.

World Bunkering Spring 2015

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Bunkering company TransOilBunker Co., Ltd 53 of., st. Aleutskaya 11, Vladivostok, 690001, Russia Tel: +7 (423) 2642-449 Tel/Fax: +7 (423) 2642-448 Tel/Fax: +7 (423) 2610-537 Mobile: +7 914 704 2856 E-mail: bktob2006@yandex.ru

Logistic services/wholesale trade of fuel oil We supply vessels with the following oil products: MGO / IFO 30 / IFO (IFO 120 - IFO 180) bunkering in the ports of: Vladivostok Nakhodka Vostochny Slavyanka Zarubino Posiet Kozmino

w w w. t r a n s o i l b u n k e r . o r g

Bunker sales at the ports in Russia’s far east have grown dramatically.

David Hughes found out why when interviewing Denis Kalchugin, head of bunkering at key regional player Tranzit DV World Bunkering: The Russian far east has grown in importance recently. What in your view are main reasons for this?

Denis Kalchugin: First of all, the main reason for Russian far east attractiveness is relatively low prices for a product that complies with ISO8217:2010. Also, far eastern ports have a great location in the middle of Pacific trade routes. Another reason is a large concentration of ports located next to each other; most of them do not freeze during winter.

World Bunkering Spring 2015

WB: How has Tranzit DV responded to the development of this market?

DK: Tranzit DV was in this market right at the beginning and was largely responsible for making it what it is now. Around three years ago, when we started to actively develop our bunker branch, the annual Russian far east market turnover was about 2.5 million tonnes, but that has increased to about 8 million tonnes this year.

Tranzit DV was one of the first to start using large-capacity tankers,

Russian interview

Far eastern boom so that we could supply more than 10,000 tonnes in one shot. That made bunkering much more convenient for clients as well as giving us a significant competitive advantage. At that time, such bunker operations were handled by two or three tankers, while Tranzit DV was using just one.

Back then, the major far eastern bunker ports were Vladivostok, Nakhodka and Vostochny. But we already had a wider perspective and expanded our boundaries to such ports as Slavyanka and Zarubino.

As for our future plans, we also intend to offer container handling operations in Slavyanka and Zarubino simultaneously with bunkering. Also we have plans to launch feeder lines from South Korea and China to Zarubino for cargo shipping. For that reason, our company has recently purchased a floating crane, which will be put into operation at the beginning of 2015.

We also intend to open four new anchoring points in Slavyanka and Zarubino in January 2015. It will allow a significant switch in vessel calls from Nakhodka to Slavyanka.

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DK: Our underlying strategy is a creation of something more than just profitable business. We aspire to make life better for everybody by “building Singapore” in the Russian far east.

Tranzit DV is a group of companies.

Initially, its main business area was cargo shipping and coal supply to the north of Russia. Our bunkering branch has become as strong as it is now only over the past three years. Now we are also actively developing an agency business and have created the company’s own agency division. We are working hard to perfect its service quality.

One of our other main goals is to create united bunker outlets in the Russian far east, which will allow us to provide a stable quality of service and competitive prices.

Today, Tranzit DV provides services at all Russian far east ports except Vanino. We do have plans to create our company’s own bunker hub at Petropavlovsk-Kamchatsky port, but for now this is more a long-term goal.

WB: Environmental considerations are becoming ever-more important. What are Tranzit DV’s environmental protection policies?

DK: We created a special emergency response service for the company’s bunker hub at Slavyanka. Its purpose is to ensure the safety of bunkering operations and avoid oil spillage or any other type of environmental damage. There are 14 staff working in the emergency response team. We also use oil booms for every bunker operation.

WB: The role of the Russian authorities in the bunker sector has been controversial recently. What is your view of the current situation? Overall, is government policy supportive of the bunker industry?

DK: I can’t see any direct governmental interference in the Russian bunker sector yet. But the government is taking

World Bunkering Spring 2015

steps for changing a tax rate known as “tax manoeuvre” that will launch on 1 January and will cause significant changes in the bunker market. We cannot evaluate the impact yet but we know for sure that, for oil-producing companies, exporting will become more profitable than distribution in local markets. As a result, we expect less fuel to be available to the bunker market at the beginning of 2015.

We cannot say that the government is deliberately causing such an unwelcome effect on the bunker sector.

In the first place, it pursues a different goal. But, indirectly, it has negative consequences for the bunkering market as a whole. Nobody knows how long it will last and the final result is not clear yet either. We also expect there to be less competition as some companies will leave the market.

WB: Vessels trading to North America now have to meet the 0.10% sulphur limit.

What effect is that having on the market Tranzit DV operates in?

DK: Of course, the market will react to this innovation gradually, and our company will be ready to offer a new product that is compatible with new sulphur requirements in January 2015.

We do not expect a lot of changes in the market, but the discount for the new product will probably will be less than it was for high-sulphur fuel oil (HSFO). The price will still be lower than in Singapore, for instance. But access to this product is now limited, so not every bunker supplier will be able to offer it.

WB: The world crude oil price has fallen over recent months. Russian bunkers have been very competitive on price. Do the lower bunker prices worldwide make deviating to the Russian far east for bunkers less attractive?

DK: I don’t think Russian ports have become less attractive, because even now the difference between our price and Singapore’s is approximately $80 to $120. The discount that we provide is fixed, no matter what happens to prices at the moment.

The only difference for the clients now is that port call costs have almost halved, owing to the exchange rate.

But I have to admit this situation will change dramatically in January. We expect the maximum possible discount from Mean Of Platts Singapore (MOPS) HSFO 380 would be US$90.

WB: Tranzit DV’s upcoming conference covers a wide range of issues. Which do you think are the most important? Why is Tranzit organising this conference?

DK: The most important question for all suppliers and clients in the bunker market at the moment is what kind of changes the tax manoeuvre will cause in 2015.

Nobody fully understands what the picture will be next year. Therefore, we hope to meet all the suppliers and interested clients at the conference, so together we can discuss possible scenarios.

We would also like to show all our clients what in particular we are ready to offer, for what prices and on what terms. We will also show prospects for future development and our willingness to cooperate on long-term relations. Rather than taking advantage of situation in the tax area, we want to adjust to it and offer our own possible scenarios.

Tranzit DV is organising this conference because we wish to see a move from the spontaneous but uncontrollable bunker market that exists now to a well organised modern market with healthy competition and high-quality service.

We are encouraging our customers to make port calls here not just because the price difference is around $100 but because they also get a great service at a fair price. Our general goal is to make far eastern bunker business more transparent and more attractive to foreign clients.

Russian interview

WB: What is the underlying strategy behind Tranzit DV's expansion? How would you describe Tranzit DV – as simply a bunkering company or more than just that? Do you see your company extending its services to more ports?

WB: How do you see the future, for the bunker industry in the Russian far east and for Tranzit DV?

DK: First of all, we don’t see a future for the far east market without a Tranzit DV presence. So what we are going to do is to create a united bunker hub in the Russian far east, the largest in the region, to provide good quality at a fair price.

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Russian update

Protecting the bunker industry for 10 years In 2005, a meeting of Russia’s leading bunkering companies was held in St Petersburg and the Russian Association of Marine and River Bunker Suppliers was established.

As Olga Bogacheva reports, during the following decade the association has taken a major role at the centre of the industry. She has asked key bunker industry professionals for their opinions on the achievements of the association, the current market and how the companies are going to meet the challenges of the future Vitaliy Kovalev President, Russian Association of Marine and River Bunker Suppliers

There was a demand for collaborative action by bunkering operators in St Petersburg long before 2005. The emerging market offered challenges that companies were unable to meet individually. We were exploring various organisational models for combining our efforts.

Firstly, a bunkering section was organised in the local Oil Club, and then an idea to work out a regional law on bunkering operations in St Petersburg port emerged. We initiated the setting up of an interdepartmental commission of St Petersburg government. It took a long time to get all the necessary approvals and personal support from the governor.

This commission appeared to be far from an optimal solution as necessary changes in our market demanded that new national legislation was adopted.

However, we obtained precious experience by solving all those problems and learned how laws are worked out and approved and also general way the bureaucratic machine functions.

64

Establishing the association was not an easy process. It took a lot of effort to gain reputation and trust, achieve significant results and bring real benefits to our members. We started from working out the basic principles of operations for responsible bunker market players. Later, we organised the Bunker Company Registry.

Simultaneously, we were learning to deal with authorities, inspections and regulatory bodies. Initially, they just ignored us, but gradually they learned to regard us not as opponents but rather, to a certain extent, as allies.

Looking back, I understand that a lot of our actions which seemed important and complicated then, successes reached after considerable efforts, are forgotten today. And this is good. It means that certain problems have been solved forever and we are moving ahead.

Acting on behalf of the association, we are able to protect interests of individual companies, and this fact can be easily confirmed. On the other hand, we clearly understand the current situation in the Russian market and are able to intervene to defend interests of our members.

Andrei Vasiliev Chief executive, Gazprom Neft Marine Bunker LLC and board member of the Russian Association of Marine and River Bunker Suppliers

The association will celebrate its 10th anniversary in 2015. Such an age is already quite mature in terms of our recent history. We can see that the association is stable; it brings together major market players and has proved itself at different levels, which is an undoubted achievement. I would like to wish the Russian Association of Marine and River Bunker Suppliers

World Bunkering Spring 2015

Ivan Bogatyrev Chief executive, Andia Ltd, St Petersburg

The association is a union of likeminded professionals with common goals, focused on improvement of communications within the industry, with authorities and regulators.

Intensive communications improve the business environment and provide a positive influence on the performance of each supplier.

Andia is a small independent company. Membership of the association gives us a feeling of security; we know definitely that if a problem occurs which we can’t solve by ourselves we are always able to use association’s intellectual and legal resources.

We have already had such an experience. Recently, we had a serious disagreement with one of our foreign partners about fuel quality. They submitted a claim that was serious but baseless. They tried to involve authorities to solve the argument.

The association carried out an official investigation, which proved Andia was right. Thus, it helped us to protect our reputation as a fair supplier. This is important in our business.

World Bunkering Spring 2015

Vladimir Sergeev, Chairman of the council of the Russian Association of Marine and River Bunker Suppliers

The main chartered objective of association is the protection of the legal interests of its members. Currently, 39 recognised bunkering companies from all Russian shipping regions belong to the association. Their combined share of fuel sales in Russia is above 60%.

From the very beginning, the association actively protected the legal interests of its members in courts, the Federal Antimonopoly Service and in other state bodies and thus gained prominence and respect in a short period of time.

At the end of 2011, the association attained SRO status, which significantly improved its ability to protect its members and research the establishing of industrial standards and rules. At present, the association is the only selfregulated organisation in Russia’s sea and river transportation industries.

The biggest success the association has had in protecting competition among bunkering operators has been in disputes with the Federal Customs Service (FCS). As a result of our actions, FCS was found guilty of violating competition and customs law. All the rights of Russian bunkering operators have been confirmed. Following on from that, anti-monopoly and court practice in this field has recently been established.

The association actively participates in legislation development and discussions concerning regulation of bunkering operations. It took part in discussions with the Duma Transport Committee over amendments to the Merchant Shipping Code and the Inland Water Transport Code. In cooperation with the Ministry of Transport we established rules for maintaining the bunker suppliers register in compliance with the International Convention for the Prevention of Pollution from Ships, 1973. We also participated in working out various government regulations and institutional orders that influence bunkering procedures.

The association is permanently represented and active within the expert boards of the Duma Property

Committee and Transport Committee, the expert board of the Council of the Federation Committee on Economic Policy in respect of sea and internal water transportation, the expert board of the Russian Federal Antimonopoly Service and in the Maritime Board under the government of the Russian Federation.

It should also be noted that the association put forward an initiative to develop a new law on the compulsory presence of self-regulation in the bunkering industry to expand accumulated experience.

Members of the association are sure that this law will preserve competition in the bunkering industry, improve efficiency and also accelerate development of the Russian bunkering market. This legislation has been introduced to the state Duma and is now under consideration.

Russian update

success in becoming more and more important in Russia, because the interaction between state, business and society should undoubtedly be based on professional associations.

We have been a member of the Russian Association of Marine and River Bunker Suppliers for over seven years.

This is almost the same period of time that Gazprom Neft Marine Bunker has been operating.

I can say with all my authority that the association’s management has, from the very beginning, operated on a professional basis and the association is treated today as a respected expert community. It received the status of a self-regulatory organisation (SRO) in 2011, which was a major step. Of course, being a SRO in our country is still a hard duty. But where they have licensing powers they can be an effective lever of influence on the authorities and on individual members of the business community. This is what I sincerely wish for the Russian Association of Marine and River Bunkering Suppliers.

Natalia Shulyar Chief editor of InfoTEK, oil and gas journal, Moscow, and chair of the Motor Fuels Subcommittee of the Russian Chamber of Commerce

During the past decade, the Russian Association of Marine and River Bunker Suppliers has brought together all leading Russian bunkering suppliers, including independent companies and subsidiaries of large, vertically integrated companies. It is well known that professional associations are very efficient.

All legal initiatives proposed by the Russian government that may influence the bunkering industry are thoroughly analysed by the association. Our comments always attract the attention

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Dmitriy Postnov Manager, CMS Shipping Ltd

The Russian Association of Marine and River Bunker Suppliers was founded to share experience, knowledge, opportunities and support with all its members. Throughout its existence, it has strictly followed this principle, standing for the interests of bunkering market operators, and striving for optimal and fair compromises in the dialogue between market players and authorities. Weak players become stronger when they cooperate. Strong players become invincible when they cooperate! My wish is that all our members are able to survive this hard economical period and preserve their market position.

Victor Poutiayen Chief executive, Vapor ZAO

The relationship between Vapor and the Russian Association of Marine and River Bunker Suppliers began in 2014, when our company participated in the VII All Russian Forum, entitled “The

World Bunkering Spring 2015

Current State and Prospects for the Development of the Russian Bunker Services Market”. This is an annual event organised by the association in St Petersburg. We presented ship equipment manufactured by Clayton, a Belgium producer of steam generators and heat-recovery boilers.

Our first experience was positive, and the organisation of the event was to international standards. We plan to continue to participate in events held by the association in future.

Vapor ZAO is an engineering company offering solutions for energy supplies. We are a part of the Filter Group and an official distributor of Clayton boilers, GE Jenbacher and Waukesha gas engines and Vapor boilers.

Vladimir Belkovsky Head of Cophaspec Trading AG (Switzerland)

Last year, I participated in one of the events hosted by the Russian Association of Marine and River Bunker Suppliers in St Petersburg for the first time. It was an informal autumn party, and I would like to take this opportunity to note that the organisers managed to host not only a nice evening but one that turned into a meeting of colleagues and like-minded people. As an opportunity to meet face to face with anybody who is somebody in the market, discuss latest news and solve issues, this event is hard to beat.

Historically, Cophaspec Trading has been involved in the export of petrochemicals and refined products.

In 2014 our company, with our Russian partners, established a bunkering business in the far east. In my opinion, the Russian far east bunkering market is a very promising direction for business.

Despite the fact that the recent market situation is rather speculative, in the long term the far east bunkering market should become one of the leading bunkering markets in Russia.

Proximity to trade routes servicing the enormous trading turnover of the Asia Pacific and American regions and the shift of Russian hydrocarbon flow towards the east are just a couple of reasons for that.

At the same time, in order to compete successfully with, for instance, the Singapore market, a high level of attention has to be paid to far east infrastructural developments and improvement of the efficiency of bunkering operations.

We provide our Russian partners with uninterrupted product supply, financing and relationships with foreign partners.

Alexander Sobolev, Chairman, Nevsky Mazut Ltd, St Petersburg

I was one of those who took part in establishing the Russian Association of Marine and River Bunker Suppliers in 2005. Honestly, I wouldn’t meet that challenge today. We were very young and inexperienced, but absolutely sure we would overcome all problems. Ten years have passed and all those who worked in the bunkering business are still there.

The most important thing for the association’s members is to have full confidence that those setting the rules in our country will listen to our opinions.

Moreover, today we are able to influence the content of laws that determine rules covering bunkering operations. In fact, our professional community can influence politics from the point of view of our commercial interests.

Russian update

of the Federal Antimonopoly Service, the Federal Customs Service, the Ministry of Transport and the Ministry of Energy.

Marina Deryabina Chief executive, Petersburg Marine

It is difficult to imagine contemporary business, including the bunkering industry, without self-regulatory organisations. SRO status enables the Russian Association of Marine and River Bunker Suppliers to negotiate with authorities and solve acute problems directly with governmental structures, avoiding long delays. As a result, it can pursue fair decisions more effectively.

Another important function of SRO status is the ability to improve the quality of services provided by association members through internal mechanisms; and this is a noticeable step forward.

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Innovation The LNG fuelled ferry will have a minimal environmental footprint.

LNG for fast ro-pax Wärtsilä will supply an integrated solution, including a complete LNG-powered propulsion, for Rederi AB Gotland’s Chinese-built ferry

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new passenger ferry being built for Swedish operator Rederi AB Gotland will be fuelled by liquefied natural gas (LNG) and will feature a Wärtsilä integrated solution.

This includes a complete LNG-powered propulsion and fuel storage and supply system, as well as comprehensive project services. This will be the first Swedishflagged LNG-powered passenger vessel and the first LNG-fuelled high-speed ro-pax ferry in the world. The vessel is being built at the Guangzhou Shipyard International (GSI) yard in China and, when delivered, will sail between the Swedish mainland and the island of Gotland. GSI placed the contract with Wärtsilä in November.

By operating on LNG, the new 200-metre-long ferry will comply with the International Maritime Organization’s (IMO) Tier III regulations regarding emissions of nitrogen oxides (NOx). Furthermore, it will meet the sulphur (SOx) emissions limitations required for operating in the Northern European sulphur emission control areas (SECAs), while emissions of particulates will also be reduced to virtually zero.

In addition to its compliance with emissions legislation, the ferry will also meet the requirements of the IMO’s recently agreed International Code for Ships using Gas or Other Low Flashpoint Fuels (IGF Code) regarding the safety of LNG-fuelled ships.

“This vessel will have a minimal environmental footprint and we are proud to be working with Wärtsilä to make this possible. Wärtsilä’s know-how and experience with gas-fuelled vessels is unmatched in the industry,” says Håkan Johansson, managing director of Rederi AB Gotland.

Wärtsilä and GSI have successfully cooperated for many years on projects involving various vessel types. However, this is the first project between the companies involving an LNG-fuelled ship.

It is expected that as LNG becomes increasingly accepted as a marine fuel, and given Wärtsilä's capabilities in LNG solutions, such cooperation will continue into the future.

The Wärtsilä integrated solution will include services relating to project management, integration engineering, on-site support and overall commissioning responsibility.

The selection of Wärtsilä for the supply of a significant portion of the ship’s equipment, as well as for the project services, was based on the company’s vast experience in gaspowered propulsion and its capability to supply everything needed for operating on gas fuel, from the bunkering stations to the propulsion solutions.

No other company is able to match this level of experience.

Wärtsilä's unique LNGPac fuel storage, supply and control system

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World Bunkering Spring 2015

World Bunkering Spring 2015

Shaft generator promises fuel savings

Innovation

Wärtsilä’s responsibilities include four Wärtsilä 50DF dual-fuel engines, two gearboxes, two controllable pitch propellers (CPPs) with remote control system, two Energopac rudders, two tunnel thrusters, four Wärtsilä 20DF dual-fuel auxiliary generating sets, two Wärtsilä LNGPac fuel gas handling systems, gas valve units, a compact silencer system (CSS), an IMO- approved Wärtsilä Aquarius UV ballast water management system, an oily water separator together with a bilge water guard to monitor and prevent oily water being discharged to the sea, project management services, integration engineering services, commissioning services and on-site supervision during installation.

Delivery of the Wärtsilä equipment will begin at the end of 2015 and the ship is scheduled to be in operation in 2017.

“Rederi AB Gotland will introduce a ground-breaking vessel design for its crown route, and Wärtsilä is proud to take a large share of the responsibility for its accomplishment.

Together with Guangzhou Shipyard International in China and Danish designers OSK-ShipTech, we will realise the first of an entirely new generation of fast, yet environmentally sound, ro-pax ferries.

“Not only will Wärtsilä deliver the entire LNG fuel-handling and power and propulsion system, we will also provide comprehensive project management services, such as integration engineering, on-site support and extended commissioning.

“We believe that this combination is a key success factor for this and other challenging shipbuilding projects. It highlights Wärtsilä’s position as the marine industry’s leading provider of integrated solutions,” says Wilco van der Linden, director, business development, merchant cruise and ferry, at Wärtsilä Solutions.

The ship will carry approximately 1,650 passengers, will have 1,750 trailer lane metres and can accommodate a corresponding number of cars and other vehicles.

It has been designed to meet the DNV-GL classification society’s high comfort ratings for climate, noise and vibration.

New system to be fitted to a Wallenius Lines post-Panamax ro-ro

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innish company The Switch has successfully tested a megawattclass permanent magnet (PM) shaft generator in a “rigorous” bench test carried out in Vaasa.

The specialist PM manufacturer says the first pair in an order of four PM shaft generators is part of a complete system being delivered by WE Tech Solutions of Finland to Wallenius Lines of Sweden.

It adds that the PMM 1000 direct-drive marine shaft generator certified by Lloyd’s Register is “the first of its kind to take advantage of PM technology, allowing ships to gain greater efficiency over the entire speed range”.

At the end of November, the first two of four PM shaft generators successfully passed the rigorous back-to-back bench test. Each machine weighs 18 tonnes without the shaft and features a nominal power of 1.5 MW and speed range of 0 to 100 rpm. Nominal speed is 80 rpm.

“The efficiency performance during testing was an outstanding 97% over the entire speed range, even surpassing our expectations,” says Mika Koli, business development manager of marine at The Switch. “What’s unique about our bench test set-up is that we can immediately do full-power testing to check the efficiency across the entire speed range. In fact, we carried out extremely comprehensive testing to receive certification from Lloyd’s, one of the top authorities in the marine sector. This has indeed been worth the effort, because we strongly believe this product will be seen on many ships in the near future.”

The PMM 1000 direct-drive marine shaft generator will be located on the propeller shaft between the prime mover and the propeller. No bearings are needed.

The generator rotor is connected to the propeller shaft with a shrink disk-type coupling. The Switch offers PMM 1000

shaft generators in various power ranges from 0.5 to 7 MW at speeds of 100 rpm to best adapt to various requirements.

The shaft generator from The Switch will be delivered with the WE Drive™ variable frequency drive from WE Tech Solutions to allow the ship’s electrical network to be generated with the same high efficiency throughout the full speed range of the main engine.

“This is the next big thing in marine,” says Mårten Storbacka, managing director of WE Tech Solutions. “Over the past three years, we’ve been developing our solution together with The Switch and other close suppliers. The main advantage of this technology is that it significantly increases marine energy efficiency.

Depending on how you calculate it, fuel savings are approximately 20%-30%.

Since this technology lowers the need for installed power on a ship, energy generation and weight are reduced significantly, thereby lowering fuel consumption and the need for maintenance.”

The Switch comments: “Permanent magnet technology has been proven in numerous industries and under extremely harsh operating conditions to provide unmatched power density, energy efficiency, design flexibility and operational reliability. Now it is possible for shipbuilders and shipowners to gain from true fuel savings by upgrading to PM technology for shaft generators.”

The first four PMM direct-drive marine shaft generators will be delivered to the Wallenius 8000 pure car truck carrier, a post-Panamax high-efficiency roll-on roll-off (ro-ro) vessel newbuild series being built in China. The first vessel is due for completion in Q4 2015.

Additional orders have been placed by WE Tech for delivery to Terntank Rederi AS of Denmark and Torvald Klaveness of Norway.

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Legal

Sulphur talk As Sandra Speares reports, the much-heralded new sulphur regulations are now in force. The question will be how owners react to them in the months to come

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hips trading in designated emission control areas (ECAs) have had to use board fuel oil with a sulphur content of no more than 0.10% as of 1 January, against the limit of 1.00% in effect until 31 December 2014.

The stricter rules come into effect under the International Convention for the Prevention of Pollution from ships (MARPOL) Annex VI (Regulations for the Prevention of Air Pollution from Ships), specifically under regulation 14, which covers emissions of sulphur oxides (SOx) and particulate matter from ships.

These requirements were adopted in October 2008 by consensus and entered into force in July 2010.

The emission control areas established under MARPOL Annex VI for SOx are: the Baltic Sea area; the North Sea area; the North American area (covering designated coastal areas off the United States and Canada); and the United States Caribbean.

There have been suggestions that port states will not have the necessary infrastructure to police the new requirements. It has also been suggested that owners may try to ‘wing it’ rather than lay out large sums of money for scrubbing systems.

Speakers at a seminar organised recently by law firm Norton Rose Fulbright suggested that if, in

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the event of having difficulties in obtaining supplies of low-sulphur fuel, owners were seen to have tried to comply with the new rules they might be treated more tolerantly by the authorities than those who had made no attempt to comply.

On the reverse side of the coin, those owners who were caught in a non-compliant situation and shown to have made no serious efforts to comply were likely to face large fines – particularly for early cases as a means of ‘encourager les autres’. The Port of Gothenburg, which has a reputation for strictly monitoring environmental issues, has said it is introducing “sniffer” technology to locate those not abiding by the rules.

Skuld P&I Club has warned that the new ultra-low-sulphur fuel rules “will require more than shipside preparations; they will also require existing and future charterparties to be reviewed and claused appropriately in order to reduce the risk of disputes between owners and charterers from a number of angles”.

Skuld, which got advice from New York-based law firm Chalos on legal aspects says there are a number of issues that have their root in the new MARPOL Annex VI that could give rise to disputes between owners and charterers.

According to Skuld, those issues include: trading warranties; readiness

of the vessel to enter an ECA; fuel specifications; delays and fines if a violation is alleged; and deviations to avoid ECAs or limit time therein.

The club highlights the fact that: “Charterers will typically specify the geographical range in which a vessel can trade, and usually provide a list of expressly excluded ports, countries and areas. Indeed, this is very important or the shipowner may find the charterer at liberty to trade without limit.

“If a charter excludes North America and Northern Europe, then the impact of the new MARPOL Annex VI regulations should not be an issue unless it is decided between the parties to alter the trading range to include areas that are ECAs. Should such decision be made then, in particular, the shipowner will have to carefully review the position to ensure the vessel can physically fulfil any contractual promise to lawfully trade to such areas.

“If a vessel is chartered out on the basis that ECAs are within the agreed trading range, then an owner will have to comply with charterers’ lawful orders to go there, even if that is not the trading pattern she previously was employed for, [except for] special factors or contractual variations. English and US legal positions will be similar on this.”

Other issues include the readiness of the vessel: “The shipowner typically

World Bunkering Spring 2015

arrangements as well as capacity will allow this to be done safely.

“Modern ships may have the luxury of numerous fuel tanks with separate lines, but older vessels may have less capacity that can be dedicated to the use of ULSF, and, indeed, tanks that previously carried residual fuels are likely to require extensive cleaning prior to switching to ULSF. Modifications and cleaning are likely to mean cost and time and it is not a straightforward question as to who would be responsible for this.

According to Chalos’ advice to the club, it is likely that, under both English and US law, a vessel will be contractually compliant if she can, as a matter of fact, safely carry ULSF separate from residual fuel, even though she may have limited tank capacity and may need to bunker repeatedly while in an ECA. It would, however, fall to the shipowner to ensure that some tank capacity was available and ready to be used.

Despite the very significant price fall this autumn for bunkers following the drop in the cost of crude oil, fuel is still a very large factor in a

Avoiding a double whammy

The Baltic and International Maritime Council (Bimco) has launched the Bunker Non-Lien Clause, aimed at reducing bunker suppliers’ reliance on ship arrest as a means of resolving claims for bunkers ordered but not paid for by time charterers, often the result of bankruptcy.

If a time charterer goes out of business during the currency of a charter, owners can sometimes face a ‘double whammy’ of loss of hire for the balance of the contract and then subsequent arrest of their vessel by bunker suppliers pursuing a claim for unpaid bunkers.

Bunker suppliers are able to arrest a vessel (in some, but not all jurisdictions) by enforcing a right of lien or retention over the bunkers for the money they are owed, even though the owners, under a time charter, are not a party to the bunker supply contract.

The Bunker Non-Lien Clause is an attempt to change this process by requiring time charterers to notify their suppliers prior to purchasing bunkers that they will be bought solely on their own account, not the shipowners’, and that no lien will arise against the vessel.

Although bunker delivery notes are frequently stamped by masters with a statement that the bunkers have been purchased by the charterers and that there is no lien against the vessel, because the delivery of fuel has already taken place, this notice is often ineffective.

World Bunkering Spring 2015

vessel’s daily running costs, and ULSF costs can be double that of residual fuels. Bunker clauses will have to be carefully drafted, the club warns.

If a vessel is inspected by Port State Control (PSC) or another authorised government agency, such as the Environmental Protection Agency in the US, and fuel onboard is found to violate the MARPOL standards, then it is not unlikely that a dispute may arise between the shipowner and the charterers as to whether or not contractual / compliant fuel was supplied and what may have caused the fuel to be off-specification.

Given the very low margin for error in ensuring fuel is at no more than 0.1% and the relative ease with which ULSF could be contaminated at some stage, this is going to be an area of concern.

Shipowners should expect that the enforcing government agency will focus first and foremost on the vessel for enforcement action and penalties. This would be the case even if the ultimate issue were the fuel supplied, given that contractual disputes between an owner and charterer will be an unlikely way of raising a defence in such a situation

Legal

undertakes, to a certain degree, that the vessel is physically and otherwise ready to perform the lawful orders of the charterers, trade within agreed ranges and carry agreed cargoes.

“The nature and extent of this obligation, including whether or not it is in the nature of a continuing warranty, will very much depend on individual charterparty terms, but it is typically taken to be an obligation that goes beyond just seaworthiness, condition and equipment to encounter the ordinary perils of the voyage, to follow and perform contractual lawful orders, and to be fit for the receipt and carriage of cargo.”

One question, however, which has come up repeatedly in the run-up to 1 January 2015 is how extensive the obligation may be on a shipowner to take steps to modify a vessel to make her ready for trading in the ECAs while using ultralow-sulphur fuel (ULSF), the club says.

“Given that the ULSF will in all likelihood have to be kept carefully segregated from any residual highsulphur fuels, or risk cross-contamination and possible MARPOL violation, vessels will have to check whether tank and line

Grant Hunter, chief officer of legal and contractual affairs at Bimco, explained: “This clause acts as a useful safety net for shipowners because solid time charterers should have no problem agreeing it – they fully expect to pay for the bunkers they order. If the financial standing of a charter is in doubt, they may be more reluctant to accept the responsibilities and liabilities imposed by the clause – acting as a warning flag to shipowners. Ultimately, if a charterer fails to comply with this clause, a master has the right to refuse to take delivery of the bunkers – so it is a provision with some teeth.”

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Equipment and services 72

Switching safely Classification society DNV GL warns that stricter limitations on sulphur emissions will pose many challenges to ships operating in emission control areas

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hile, until recently, it was standard for ship’s engineers in many fleets to switch from heavy fuel oil (HFO) to marine gas oil (MGO), if not handled with care this can put equipment at risk and increase operational costs.

In its new publication “Sulphur Limits 2015 – Guidelines to Ensure Compliance”, DNV GL’s experts provide a general overview of the regulatory background, describe potential difficulties associated with the fuel change-over procedure and discuss which technologies can best help vessels fulfil the new requirements.

DNV GL has also developed a ship-specific fuel change-over (FCO) calculator to help shipowners and operators determine the ideal parameters for their vessel’s fuel change-over.

Under Annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL), ships operating in an emission control area (ECA) will have to use fuel that does not contain more than 0.10% sulphur from 1 January onwards. Switching to MGO is, DNV notes, currently the most viable option for following the new threshold limit. This may appear to be a simple task, but the changeover procedure actually requires

significant attention from crews during operation as well as extensive onboard preparations before the entry into force date.

“Taking into account variables such as a vessel’s fuel system layout, any constraints on temperature and the variable sulphur content of fuels, the FCO calculator can significantly reduce the risk of human error during preparation for the change-over process,” says Jörg Lampe, senior project engineer risk and safety, systems engineering, at DNV GL. The software uses a complex numerical simulation that is more accurate than previous linear models and delivers insight into the optimised lead time for the change-over process, its costs and the maximum hourly consumption to meet constraints. “This kind of data ensures a cost-efficient, reliable fuel change-over and can also help demonstrate compliance for the respective authorities,” Lampe adds.

Factors such as the temperature and viscosity of the two fuels as well potential incompatibilities are critical to performing the changeover procedure successfully. As the operating temperature of HFO and MGO differs by about 100°C, the change-over may cause a rapid fall in temperature and increase the danger of thermal shock to the equipment.

Fuel systems also have to account

for their difference in viscosity during operation, in order to avoid fuel pump failures and leakages. The fact that HFO and MGO are mixed in all ratios during the change-over procedure increases the risk of the fuels becoming incompatible. This may clog filters, causing the engine to shut down.

Such complications can be avoided by preparing detailed guidelines for the fuel change-over, training crews to take a measured and careful approach to the procedure and by making informed decisions about the capabilities of a vessel. DNV GL’s fuel change-over calculator can provide customers with the basis for these informed decisions – supplying them with the ideal parameters for the change-over procedures onboard their vessels.

“Sulphur Limits 2015 – Guidelines to Ensure Compliance” is available for download on the DNV GL website at: www.dnvgl.com/maritime/Low-sulphuroperation.aspx

World Bunkering Spring 2015

Niigata Power Systems launches dual-fuel engine

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apanese classification society ClassNK says it has granted approval to the design of the new 28AHX-DF dual-fuel engine developed by Niigata Power Systems.

The new engine is intended to be used as the main engine on a new tug that will run on liquefied natural gas (LNG). The vessel, which is being built by Keihin Dock Co Ltd for NYK Line, will be Japan’s first LNG-fuelled vessel, apart from LNG carriers. ClassNK says that demand for new engine and emission control technologies is being driven by new regulations for emission control areas, including stricter limits on sulphur emissions as well as the International Maritime Organization’s (IMO’s) Tier III emission limits on mononitrogen oxides (NOx). It adds that the high costs associated with low-sulphur fuels, and the increasing availability of LNG, is driving both vessel owners and machinery manufacturers to consider the use of LNG as a vessel fuel.

Niigata’s 28AHX-DF is a medium-speed dual-fuel engine with a maximum rated power per cylinder of 320kW. It was developed primarily for use in offshore support vessels and tugboats. The engine, which operates on both diesel fuel and LNG, will meet the strict 0.1% sulphur emissions regulations in ECAs, as well as complying with IMO’s stringent Tier III NOx emission requirements. Technologies used in the new engine were developed with the support of Japan’s Ministry of Land, Infrastructure, Transportation and Tourism, as well as ClassNK, as part of the society’s joint research and development for industry programme.

Yukihisa Shibata, general manager of ClassNK’s machinery department, said: “The demand for dual-fuel engines is increasing as IMO restrictions tighten and the industry recognises the importance of environmental accountability.

Supporting the development of such low-emission engines is one way we can help ship operators and manufacturers practically address the challenges of these new regulations, and encourage the widespread use of this new technology.”

The new engine has a maximum rated speed of 800 min-1 with a cylinder bore of 280mm and a 390mm stroke. The prototype engine will undergo trial operational testing and is expected to receive type approval from ClassNK in December.

World Bunkering Spring 2015

LNG bunker tank New design can be pre-assembled and lifted into a newbuilding

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n innovative flat-panel, semi-membrane, prismatic-shaped (FSP) tank containment system for liquefied natural gas uses new flat plate technology to overcome the issues associated with partial filling and sloshing and can be used for ships’ bunker tanks.

Braemar LNG, a wholly owned subsidiary of UK-based Braemar Shipping Services, has signed a licence agreement with General Dynamics NASSCO to utilise its patents in the design and construction of FSP LNG containment systems.

A statement says: “This agreement is the culmination of years of sophisticated development work undertaken by the two parties, and Braemar is seeing strong potential demand from the marketplace.”

“We are delighted that this key stage in the FSP project has now been reached,” says Geoff Green, managing director of Braemar Engineering. “The industry is asking not if but when FSP will come to market, and I am pleased to now be in a position to deliver a positive response.

He added that FSP can be used in a wide range of applications, including floating production, storage and offloading (FPSO) units; floating storage regasification units (FSRU), LNG transportation and LNG marine fuel tanks. It can even be used as offshore storage.”

The new Type B containment system is designed to be constructed, outfitted, insulated and tested off hull and lifted complete into the vessel while the vessel is still in the construction dock. This leads to a significant reduction in vessel construction time. At the same time, the use of onshore construction facilities ensures the highest standards of quality, care and repeatability.

Approval in principle has been obtained from both Lloyd’s Register and the American Bureau of Shipping.

Equipment and services

Dual fuel approval

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Preview: FUJCON

FUJCON 2015 A chance to catch up with developments in the Middle East

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or a long time now, the bi-annual FUJCON event has been the best place to find out what is happening in the Middle East bunker scene. Formally known as the Fujairah Bunkering & Fuel Oil Forum, FUJCON also gives the industry a chance to see how much Fujairah has changed since the early days.

And there will plenty of new things to see and hear about at FUJCON 2015, the anchor event held for Fujairah Bunkering Week.

FUJCON take place from 23 to 25 March at the Al Diar Siji Hotel, Fujairah.

The forum is held under the auspices of the Government of Fujairah, with the patronage of His Highness Sheikh Hamad bin Mohammed Al Sharqi, member of the Supreme Council and ruler of Fujairah.

This year’s theme will be ‘Fujairah – towards diversification and expansion: bunkering, crude, refining, LNG and petrochemicals’. As in previous years, FUJCON 2015 will be an opportunity for active dialogue between leading oil and bunker producers/traders, oil majors, shipowners, terminal operators, refiners, banks, shipowners and classification societies, providing insights into the latest developments.

The organisers expect to welcome over 350 participants from 45 countries from bunkering and allied industries.

Fujairah Bunkering Week will offer

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four industry events, 12 social functions, two site visits and 30 hours of networking time.

Topics discussed at FUJCON will include: opportunities and chal­ lenges for shipowners, the bunker market outlook, bunker operators’ and terminal operators’ issues, growth and use of LNG as a marine fuel, the challenges of marine fuel quality, environmental regulations and compliance, and fuel efficiency and technology A distinguished panel of 30 speakers includes Fereidun Fesharaki, chairman, FACTS Global Energy; Ali Obaid Al-Yabhouni, chief executive, ADNATCO and NGSCO, and chair of UAE Shipping Association; Jitendra Misra, managing director, Emarat Maritime, and Bimco board of directors/executive committee; Peter Hall, chief executive, IBIA; Carlos Torres, global chartering manager, BP Shipping; Paul Richards, vice-president, operations, Singapore LNG Corporation Ltd; and Antoni Floors, commercial director, Vopak LNG Projects.

An offshore site visit arranged for the afternoon of 25 March and hosted by the Port of Fujairah, will offer attendees an opportunity to visit the Port of Fujairah, its offshore anchorage and installations.

Three pre-conference workshops from 23-25 March will offer intensive

coverage and in-depth analysis of bunker measurements, LNG bunkering and bunker fuel blending, covering the impact of new maritime regulations, while providing great learning opportunities with plenty of case studies, guest presentations and a specially arranged laboratory visit as part of the curriculum.

FUJCON continues to enjoy the support of the authorities and leading companies in the bunker trade community in Fujairah and the region.

The Port of Fujairah, Akron Trade & Transport, Fujairah Oil Terminals, National Bank of Fujairah, Vopak Horizon Fujairah, VTTI Fujairah and Fujairah Petroleum Products have taken a high profile at FUJCON 2015.

The organisers say that, against the backdrop of Fujairah’s importance as an international anchorage and crude oil hub, FUJCON 2015 and Fujairah Bunkering Week will provide an exciting venue for key players to meet and interact with a distinguished array of marine experts and industry leaders addressing the bunkering community.

World Bunkering Spring 2015

Gibraltar and it neighbouring ports on both sides of the Strait come under the spotlight in February

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BIA launches the first of its regional events for 2015 in February. Entitled ‘Gateway to the Atlantic and Mediterranean’, the event takes place in Gibraltar and covers both current regional and international issues.

The regional event combines training, a forum, exhibition and social and networking opportunities.

Preceding the forum on 24 February is the opportunity to undertake IBIA’s sought after basic bunkering course.

This course gives an overview of the whole bunkering industry, allowing people from all parts of the industry to see how it all fits together. The course will conclude with a test and presentation of industry recognised certificates.

The course will be hosted by IBIA’s Robin Meech and Peter Hall, along with regional experts.

The morning of the 25 February starts off with a seminar given by the Gibraltar Port Authority, detailing the latest developments in the area.

With the forum starting officially at lunchtime on 25 February, aboard luxury floating hotel The Sunborn Gibraltar, an opening address from the captain of the port, Commodore Bob Sanguinetti. This will be followed by sessions looking at the regional picture in bunkering and the issues and challenges facing the industry.

The collapse of OW Bunker will also be covered, including what happened

World Bunkering Spring 2015

and how to guard against it, due diligence and best practice.

The final afternoon session will cover an update from the International Maritime Organization and the latest on the IBIA Port Charter.

Then buses will take everybody to the Top of the Rock, where a spectacular and unique picture of bunkering in the Strait of Gibraltar can be seen, as well as the meeting point of the Atlantic and Mediterranean. Here in the stunning Mons Calpe Suite, HM Government of Gibraltar will welcome delegates to the forum with a champagne reception and finger buffet.

On 26 February, which is dedicated to the regional scene, IBIA’s Robin Meech will give a view on the Mediterranean bunkering market, followed by Wade Declaris of World Fuel Services (WFS), who will give a presentation on world bunker supplies and the Mediterranean.

The second session of the day will see presentations on quality and quantity and the changing regulatory requirements.

The morning will be finished off by the Gibraltar Port Authority and the Gibraltar Maritime Administration explaining how they work in partnership to deliver transparency, quality and quantity.

The afternoon session will see a change of venue, as we take all the delegates to the Gibraltar Cruise Terminal, where the sessions will be hosted by the area’s bunker suppliers, with an opportunity to go onboard a bunkering barge and see how it works firsthand.

There will also be an exhibition area for maritime services available in Gibraltar.

After this session, we will take all the delegates back to the Sunborn, where they can prepare for the Gala Dinner at the spectacular St Michael’s Cave, where the audience will be addressed by senior Gibraltar government officials.

Friday 27 February is reserved for delegates to set up one-to-one meetings with the suppliers.

All in all, this will be a excellent opportunity for you to meet the movers and shakers in the region, catch up on the latest developments in the Mediterranean and learn how to protect yourself against another OW scenario.

Preview: Gibraltar regional event

View from the Gateway

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Preview: Europort Istanbul

Gateway between East and West Over 200 exhibitors are expected at Turkey's leading maritime exhibition

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rom 11-14 March 2015, the international maritime industry will gather once again in the Istanbul Expo Centre, for the 13th Europort Istanbul event. This leading maritime exhibition in Turkey has a scope that reaches beyond the host country. As a gateway to Europe, central Asia and the Middle East, Europort Istanbul creates opportunities to expand maritime trade throughout these economically important regions.

The Turkish maritime industry has over 600 years of history behind it, and Turkey is now one of the largest shipbuilding and shipping nations. Since 2005, the Turkish-owned merchant fleet increased 40% to 2,237 vessels by January 2013, representing 6.6% of the world fleet.

In the past 12 years, the number of Turkish shipyards has nearly doubled from 37 in 2002 to 71 in 2014. These yards tend to be multipurpose, often offering conversion, repair and maintenance as well as newbuilding works. Newbuildings include oil tankers, chemical tankers, bulk carriers, containerships, heavy-lift vessels, multipurpose vessels, platform supply vessels, navy and coast guard vessels, tugs and workboats, mega-yachts and fishing boats. Nowadays, many yards aim to diversify to non-cargo ships, such as passenger ferries, tugs, split barges, energy platforms, navy vessels and non-propelled offshore structures.

The status of Europort Istanbul is underlined by the strong support of many Turkish and international associations, including the Turkish Undersecretariat for Maritime Affairs (UMA), the Turkish Shipbuilders’ Association (GISBIR), the Turkish Association of Ship Industrialists (GESAD), KOSGEB, the Romanian Shipbuilders Association (ANCONAV), Netherlands Maritime Technology (NMT), Danish Marine Group, the French Marine Industry Group (GICAN), the UK’s Shipbuilders & Shiprepairers Association (SSA) and Norwegian Maritime Exporters (NME).

More than 200 exhibitors representing 30 countries and 500 brands will be present, with international pavilions from China, Greece, the Netherlands and Romania. Highlights of the programme include the Europort Istanbul buyer’s summit on 11 March and, on the following two days, the ship recycling seminar and the LNG shipping seminar.

World Bunkering Spring 2015

Singapore conference seeks to chart Asian shipping’s future growth

T

he organisers of Sea Asia, an international conference and exhibition for the maritime and offshore industries, say it will feature debates and thought-leadership sessions on all vital issues currently influencing the maritime markets, projecting a bold and definitive Asian voice.

The three-day event is returning for the fifth time from 21-23 April 2015 at the Marina Bay Sands, Singapore. Sea Asia serves as a focal point for both the global and local maritime communities to network, explore new businesses and showcase the latest maritime innovations, equipment and services. Co-organised by Seatrade and the Singapore Maritime Foundation, Sea Asia is held in conjunction with the Singapore Maritime Week.

The Sea Asia Global Forum focuses on the outlook for the shipping industry in light of the global economy, the lingering oversupply of capacity in some sectors, the fluctuation in crude oil prices and the tightening regulatory framework. Moderated by renowned journalist and broadcaster Stephen Sackur, this session promises to be a thought-provoking debate on burning issues such as: • The shale revolution and its effect on crude oil and gas trades.

• The future of Asia’s offshore industry against falling oil prices.

• The re-alignment of trade in a postrecession world, and the growth of

World Bunkering Spring 2015

north/south and intra-regional cargo movements.

• How reductions in bunker fuel prices will affect the industry.

• Moves towards a more orderly relationship between supply and demand and rationalisation in shipbuilding capacity.

• Protectionism in shipping and offshore services and the escalation of demand for local content.

• Ship finance and private equity.

• Sustainability and regulation for shipping: the Asian voice.

Speakers include: Christian Clausen, president and group chief executive, Nordea Bank; Khalid Hashim, managing director, Precious Shipping; Tom Boardley, marine director, Lloyd’s Register, and vice-president, UK Chamber of Shipping; Andreas Sohmen-Pao, chief executive, BW Group; and SS Teo, managing director, Pacific International Lines.

There was a taste of what the discussions could cover at the 25th Association of Southeast Asian Nations (ASEAN) Summit in Myanmar. Leaders from across ASEAN discussed progress to date towards the creation of a single ASEAN shipping market – a key pillar in the establishment of the ASEAN Economic Community (AEC) – but said there is still more to do to realise this goal.

Teo said the AEC will open up significant opportunities for the region’s maritime industry: “ASEAN is the new

Preview: Sea Asia

Projecting the Asian voice growth frontier – it is a region of 600 million people, with a fast-emerging middle class, young populations and an expected GDP growth rate of around 5% for the next five years. The AEC will remove trade barriers, encouraging further regional growth. This will lead to greater intra-and-extra-regional cargo movements, which creates opportunities for the broader maritime industry. It’s clear that a lot has been achieved, but we need to work together to take the final steps in realising the goal of a single ASEAN market.”

The maritime industry across the region is undertaking a number of activities to ensure it is ready to capture the benefits that the AEC will present.

The Philippines, for example, is pursuing several major port projects. These include deploying more technologydriven processes to improve the delivery of the country’s port services and reforming the model of cargo-handling tariffs. At the same time, countries like Malaysia and Brunei are holding discussions on increased maritime cooperation.

“Activities and discussions such as these will ensure the region’s facilities, processes and services will be ready to take advantage of the immense opportunities that the AEC will offer,” said Teo. Industry experts agreed that while significant progress is being made, there are still some challenges to navigate. The discussion will continue at Sea Asia.

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Preview: International Bunker Conference 78

The 0.1% limit This year’s International Bunker Conference will focus on the new emission control area sulphur limit and its implications for the industry

T

he 36th International Bunker Conference (IBC) will be held at the Radisson BLU Scandinavia Hotel in Oslo from 22-24 April 2015.

The theme for IBC 2015 is ‘Improve your reality’. The event will focus on the experiences of shipowners and the bunker industry following implementation of the 0.10% sulphur limit in emission control areas (ECAs) from 1 January this year.

What did we expect and what are the experiences so far? What are the options for any late movers? And what are the consequences of noncompliance?

•

• • • • • •

Confirmed speakers include: Thomas Verheye, head of unit on industrial emissions, air quality and noise, European Commission Dorte Kubel, chief adviser, Danish Ministry of the Environment Tomas Aminoff, director, technology strategy, Wärtsilä Ship Power Robin Meech, managing director, Marine and Energy Consulting Niels Bjørn Mortensen, director, A P Moller Maersk Klaus Stamp, chairman, bunker subgroup, Intertanko Roger Strevens, VP, global head of environment, Wallenius Wilhelmsen Logistics

• Per Holmvang, programme

director – environmental protection technologies, DNV GL • Peter Andersson, head of ship management / project manager, newbuilding, United European Car Carriers (UECC) • Tim Wilson, principal specialist – fuels, lubes, exhaust emissions, Lloyd’s Register Marine The conference chairman will be Keith Forget, marine fuels consultant, S K Forget.

The full programme will be released at the beginning of February and will available at www.bunkerconference.com

World Bunkering Spring 2015

A unique Electronic Trade System for online trading offers accessibility, convenience and fair deals

I

n October 2013, the Russian firm Merkator Co. Ltd launched a demo version of Electronic Trade System (ETS) by RusBunker. By May 2014, the full version was freely accessible to the public and working at full power. ETS is a bunkering exchange that allows users to make online trades. Experts believe that such a system can significantly change relationships among members of the bunkering market, taking it to a more global level.

How does it work? Vessel owners or charterers start a Dutch auction and provide details of date, time, product and bunkering location. Bunkering or trade companies that show the name and location (harbour) of their service automatically receive an email with these details and then register for an auction.

At the selected time, when trades start, participants bid freely, with all users able to see the offers of their competitors. The firm offering the best price wins. In order to improve competition and decrease the chances of collusion, participants cannot see the names of their competitors, who are only labelled Participant 1, Participant 2, etc.

It is all fairly simple. The main principles of the project are accessibility, convenience and fair deals. Anti-corruption policy is very important nowadays, and high fuel prices can result in vessel owners spending a huge amount of time searching for the best offers to save money. ETS helps them

with this process. Vessel owners who use ETS RusBunker get a real view on prices.

It is no secret that today’s fuel trade often causes tension between different firms, some of which use their market power to put pressure on other fuel suppliers. Suppliers do not have confidence that the vessel owner will get the lowest price from competitors. This means that participant’s offers are made based on intuition.

In an experiment in Singapore, workers from one firm were separated into two groups. The first group used a traditional method of trading, using Skype for communicating with potential consumers.

The second group used ETS. The results exceeded all expectations. Everyone was satisfied with results and pleased with the fairness of the prices.

All companies who participate in trades have access to the trading process and, at the end of every trade, statistics of prices based on real offers are calculated.

Everything that companies need is accessible on the internet, so it does not matter where the firm is situated. Internet spaces have no borders.

However, ETS was not created solely for vessel owners. In the section called Resources, oil companies and firms that have any relation to oil are able to make offers. All trades are done in the same way: simply, quickly, efficiently. This section will always be interesting for traders and other

TENDER SCHEME Electronic tender

Registration of tenderers

Fuel supplier No2

Fuel supplier No1 During the tenders, tenderer’s offers are anonymized

RusBunker

Ship-owner’s details

Auctioning Winners details Entering into direct contract Tender Winner

World Bunkering Spring 2015

participants in that sphere.

Some traders are not pleased by the possibility that such a system could disadvantage some intermediaries – it is likely that mediators who do business only by phone will exit the market. Nevertheless, qualified intermediaries will strengthen their position.

It is no secret that vessel owners try to avoid prepayment, just as the majority of oil companies do not offer payment in instalments. This is one of the advantages of trading, along with the high speed of transactions. As a result, traders do not need to panic. Moreover, if a participant has registered as a “Trader”, they can act as a supplier or a vessel owner.

A similar project was attempted 15 years ago, but failed – in our opinion, mainly for technological reasons. But we believe the future for ETS is bright. The most frequently asked question about the system is “Does something similar exist?”. The answer is no. RusBunker’s is the only one.

Another factor that has slowed down market development is that fuellers wait for the registration of vessel companies, while those companies are waiting for them. As a result, it is a closed circle.

Registration for the RusBunker ETS is free and fairly simple, so do not waste time. First come, first served.

Our first observations of and consultations with the largest participants in the bunkering market showed a great interest in and need for such a product.

The market is ready for a higher standard.

Since, traditionally, such high prices are involved, participants spend a great deal of time examining all possible ways to optimise production processes; however, we hope that our system will improve the efficacy of such operations. ETS by RusBunkering is simple, convenient, fair, and cost efficient. ⏏

Company news

RusBunker

Ship-owner, charterer

If you have any questions do not hesitate to contact us at Merkator Co. Ltd, 690022, Vladivostok, 12, Lesnaya St. Tel: +7 (0) 4232 2499671, Fax: +7 (0) 4232 2499672 E-mail: office@rusbunker.com Website: www.rusbunker.com

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Company news

Welcome to Kamchatka 2015!

Tranzit-DV Group is hosting its second International Business Conference – “Russian Far East Bunker Outlet: Present and Future” – in March 2015 in Petropavlovsk-Kamchatsky

C

onference organiser Tranzit-DV Group is a leader on the Russian Far East bunker market.

Representatives from shipping companies, international traders, fuel oil producers and government authorities will participate in the conference.

Tranzit-DV Group conferences are a new platform for exchanging views and sharing relevant information about the Russian Far East bunker market. In today’s fast-paced world, changes constantly occur, followed by changes in legislation. The bunker market, one of the emerging segments of the Russian economy, is no exception. During the past year, this sector of the economy has been affected by changes that were supported by the government, and the organisers of the conference will explain them to the participants.

Experts and industry specialists will present reports on the following issues: • Russian Far East united bunker outlet.

• Analysis of the Russian and international bunker market.

• Production issues concerning lowsulphur fuel oil (producers, production volumes, market trends).

• Emission control technologies (scrubbers, liquefied natural gas).

• International bunkering standards.

• Bunker fuel oil quality issues in the Russian Far East.

• Implementation of new environmental standards in Russia.

The first International Business Conference – “New Vision for Sea Shipping Routes: Europe – Asia – North America” – was held in March 2014 in Petropavlovsk-Kamchatsky and hosted over 70 representatives from both Russian and international companies.

The participants noted the tangible benefits of the conference, which provided them with relevant information about bunker market conditions from direct market participants and gave them an opportunity for networking.

As a result of the conference, Tranzit-DV Group and other participants signed a number of agreements.

Our conference is a good opportunity to combine business and recreation.

The participants can enjoy the beauty of Kamchatka’s volcanoes, bathe in the hot springs and engage in pleasant conversation with each other.

“Many thanks to the organisers.

Everything was excellent! I was very grateful for the opportunity to see Kamchatka. We received a lot of useful information for our work and met with knowledgeable professionals.”

Galina Gavrilova, commercial director, JSC DITEKO

“Thank you for your company’s warm hospitality. I greatly enjoyed the conference and other programmes.

I appreciate everything and we look forward to seeing you and your colleagues again.”

Je-Young Lee, senior manager, administration division, Korea Maritime Institute

“Thank you for your valuable, well organised conference.

Please give my best regards to all the Tranzit-DV Group team.”

Sergei Mezenin, territorial director of the Far Eastern federal district, SOGAZ Insurance Company 80

Why Kamchatka?

Petropavlovsk-Kamchatsky was chosen as the conference site because it gives the participants an opportunity to view the city’s non-freezing deep-water sea port, situated near active sea trade routes. The port is an “eastern gate” for the Northern Sea Route and has the potential to become a major bunker hub.

Petropavlovsk-Kamchatsky port has strategic significance for the development of sea trade routes in the Pacific and the Arctic oceans. At present, our company is implementing a new container line project for transit cargoes. This uses a transport corridor from the northeast provinces of China through ports in the south of the Primorsky region to Europe (along the Northern Sea Route), the US and Asian-Oceania countries. Thanks to this project, Petropavlovsk-Kamchatsky port will become attractive for sea bunkering and transit cargo transshipment.

Both the business world and the local government are interested in creating a bunker hub in Petropavlovsk. The regional authority has high hopes of increasing the volume of cargo shipped by the Northern Sea Route and is planning for further development of the port. The Ministry for the Development of the Russian Far East listed Petropavlovsk-Kamchatsky as a territory of advanced social and economic development (TASED) in the framework of the federal draft law on TASED. The conference will span three days, with working sessions on 18-19 March, followed by recreation and sightseeing around Petropavlovsk-Kamchatsky on 20 March.

To attend the conference you need to register by 27 February. If you apply by the end of November 2014, you’ll get a 30% discount on your registration fee.

CONTACTS: Tel: +7 (423)249-11-99, 243-28-28 mailto: conference@tranzitdv.ru http://milc.biz

World Bunkering Spring 2015

Portugal's premier supplier of fuel services

G

alp Energia listed on the Euronext Lisbon stock exchange in April 2006, consist of several energy companies from oil and gas exploration and production, refining, supplying, distribution, trading, etc., as well as electricity and renewable energy.

With two refineries, Matosinhos and Sines, Galp Energia processes 330,000 barrels a day of crude oil, being the only refiner Portuguese company.

What concerns bunkering, Galp Energia is able to offer fuel supply services to all ships visiting Portugal and also several Spanish ports.

The bunker business was certified by Bureau Veritas in 2014 and the company’s bunkering products fulfil the ISO 8217:2012 specification in all grades. As result, Galp Energia bunkering team provides customers with high-quality fuel services and safety standards. The tree barges with a total capacity of 10,500 MT fuel and 2,100 MT distillates are operating, one in Lisbon only and the other two in Setubal

and Sines and Lisbon. The bigger barge Bahia Tres is equipped with anti- pollution measures and is covered by European Maritime Safety Agency regulation in the Atlantic Ocean and Mediterranean Sea. RTW supplies are also an option in all ports, as well as pipeline at the tankers terminal in Sines.

Being aware of the new ECAs regulations, Galp Energia is prepared to response to the growing market demand of 0.1%S distillates keeping the all grades residual fuels offer.

Customers can find with Galp Energia competitive prices without compromising the quality of products and on time efficient service. Specially for bunkers only call, Galp Energia offers in Lisbon a sheltered and safe port, including calling costs and agency fees much more attractive than in the past making the choice of this company, as supplier in the Atlantic North, a wised decision.

Furthermore, Galp Energia is developing new challenged projects to achieve market new demands and targets. ⏏

Company news

Galp Energia - Portugal and Spain bunkers supplier

For more information, contact: Galp Energia SA Tel: +3512 1724 0637/654 Fax: +3512 1724 2957 E-mail: bunkers@galpenergia.com Web: www.galpenergia.com

Share our bright vision of the future Traditional values and premium service have sustained Orion Bunkers throughout its first decade

O

rion Bunkers is a growing force in Pakistan’s bunker sector. We have just celebrated our first decade in business, having been formed in 2004.

Orion Bunkers has always adhered to its vision and mission, and has a number of satisfied customers around the globe who enjoy quality fuels and timely service at a competitive price.

Keeping customer’s needs in mind, Orion has expanded its fleet of barges with the addition of Falcon 1. Capable of supplying 600 metric tonnes, this addition means Orion now has the largest fleet of barges in Pakistan’s bunker sector. It was already a step ahead, because it offers the maximum pumping rate of 120-180 metric tonnes per hour. Moreover, Orion is the only bunker company in Pakistan that has its own offshore tanks for oil storage, plus a fleet of lorry tankers, all of which helps Orion to fulfil even urgent orders.

A rush of new entrants into the market marked the start of a price war, with many World Bunkering Spring 2015

players compromising on fuel quality by offering lower prices.

Orion, however, has always prided itself on protecting the environment as well as looking after its customers, and so always delivers quality and environmentally protected fuel. Despite the added competition, Orion Bunkers still has more than 60% of market share.

Although all grades of fuel prices have been slashed internationally, Orion Bunkers is still able to offer attractive prices for all grades of fuel.

Furthermore, we aim to build on the cooperation, understanding and trust that allows us to offer you a premium service as a valued customer. We welcome customer feedback as a means of continually improving our service.

The whole team at Orion Bunkers would like to thank existing customers for all their support over the years. In addition, we would be delighted to welcome new customers to be part of Orion Bunkers and share our bright vision of the bunker sector. ⏏

ORION BUNKERS 503, 5th floor, Horizon Tower Block – 3 Clifton , Karachi, Pakistan Tel: +92 (0)21 35292523 Fax: +92 (0)21 35292527 E-mail: Orionkhi@cyber.net.pk Website: www.orionkhi.com.pk

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Company news

Gazprom Neft Marine Bunker Ltd Tasks for a leader

G

azprom Neft Marine Bunker’s total sales of marine fuels for 2014 amounted to more than 4 million tonnes, which is 28% higher than in 2013. Moreover, the share of direct-to-vessel bunker fuel sales was 3.4 million tonnes, 41% more than in 2013.

These results have been achieved by strengthening collaboration with existing customers, as well as gaining new ones, and by growing the number of vessel calls at ports operated by the company.

Andrey Vasiliev, chief executive of Gazprom Neft Marine Bunker, commented: “A broad geographical range, ownership of our own bunkering fleet and various terminal assets, high service standards and direct contracts with the most significant consumers of marine fuels — it’s precisely these advantages that mean our company can be confident of maintaining its leadership of the Russian market. In the long term, we plan to more than double the size of the fleet.

We are also lining up investment in the modernisation of our terminal complexes.

Next year will see the introduction of stringent fuel standards in emission control areas, which will increase demand for low-sulphur fuel. To that end, we are focusing on the development of a new market sector in liquefied natural gas bunkering by 2025.”

In 2014, the company began bunkering in Latvia and plans to actively continue

in the coming year. Today, Gazprom Neft Marine Bunker provides bunkering in 19 sea and 13 river ports in Russia, as well as in the European ports of Tallinn, Riga, Constanta and Lithuania.

In 2014, Gazprom Neft Marine Bunker conducted active preparatory measures to acquire a new large bunker tanker for working in Black Sea ports. Today, Gazprom Neft Marine Bunker’s fleet consists of eight bunkers complying with international conventions. The fleet is licensed to transport goods by sea and to perform loading and unloading operations for hazardous goods in sea ports. The operating area of the company’s vessels is not restricted.

In 2014, the company expanded its presence in Russian ports, starting with bunkering vessels in the river ports of Novosibirsk and Tomsk.

The acquisition of transshipment assets in Novorossiysk was a major step for the company, securing the whole logistical network for storage and transshipment of marine fuel in all Black Sea ports. Having its own transshipment assets strengthened the company’s leading positions on the Black Sea. Gazprom Neft Marine Bunker provides bunkering services to over 250 customers, most of them international companies. The company works with all the major Russian river and sea shipping companies.

Since February 2008, Gazprom Neft Marine Bunker has been a member of the Russian Association of Marine and River Bunker Suppliers and the International Bunker Industry Association (IBIA).

Gazprom Neft Marine Bunker has been ISO9001:2008 certified since December 2012 for “petroleum product sales in the bunker market”. ⏏

Gazprom Neft Marine Bunker Ltd Bolchoy Prospect 80 block R, Vasilevskiy Ostrov, St Petersburg, 199106, Russia, Tel: +7 812 4494970 Fax: +7 812 4494628 E-mail: marinebunker@spb.gazpromneft.ru bunkers@spb.gazprom-neft.ru www.marinebunker.gazprom-neft.ru

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World Bunkering Spring 2015

Next issue

World Bunkering Summer 2015 issue Oil Majors Our annual survey of the Oil Majors scene. We look at the new fuels developed in response to the 0.10% sulphur limit in Emission Control Areas.

Fuel Management The need to switch fuels when entering or leaving Emission Control Areas means ships engineers now have to ensure the smooth transition between the use of fuels with very different characteristics. How well has world's merchant fleet responded to this challenge?

Scrubbers The use of abatement technology ('scrubbers') is increasingly being seen by shipowners as a viable option for complying with ultra low sulphur limits. There are still some uncertainties but will this be the way forward for much of the commercial fleet?

Geographical Focus: Mediterranean The big story in the region is the introduction of the 0.10% sulphur limit.

How robustly will the new limits be enforced in the early months of the New Year.

Turkey Turkey is an important bunker supply country but its bunker is under pressure both from strong competition from Russian Black Sea ports and due to the need to replace the remaining single hull bunker tanker fleet.

Australia Our annual look at this unique market where domestic trades account for a significant share of marine fuel demand while the oil majors still have a major role.

SPRING

RUSSIAN UPDATE

2015

News, Views, Analysis

SPRING

REGULAR FEATURES

s Issue:

World BUNK

Interview, Industry News, Environment,Testing, LNG, Risk Management, Innovation, Legal News,Equipment and Services, Diary

InsIde thI

EU forges ahead on reporting Traders pick up OW piec O.1% ECA es rule com es in

ERING

Prices

head so Goodby

e slow ste

uth

aming?

THE ONLY OF FIC MAGAZIN IAL E OF

w w w. wo r ldbunker ing .com World Bunkering Spring 2015

83

2015

Diary

21-22 May 2015

9 February 2015

IBIA Annual Dinner 2015 – LONDON Drumroll please – we have a new venue for the 2015 Annual Dinner.

We will be at the Park Plaza Westminster, a stunning venue on the banks of the River Thames.

www.ibia.net

24 February 2015

Platts 6th Annual European Bunker Fuel Conference – Rotterdam The European Bunker Fuel Conference European Bunker Fuel Conference will bring together the leading ship operators, owners, brokers, fuel suppliers, refiners and other marine fuel organizations .

www.ibia.net

2-6 June 2015

Gibraltar Forum

Nor Shipping – Oslo

IBIA are running the inaugural regional forum in Gibraltar in February 2015. The focus of the forum is on the Gibraltar Straits and Gibraltar as a hub for Bunkering and Marine Services.

Nor-Shipping is the leading maritime event week. Its top-quality exhibition, high-level conferences and prime networking opportunities attract the cream of the international maritime industry to Oslo every other year.

www.ibia.net

www.messe.no/nor-shipping

24-25 February 2015

LNG Shipping Conference 2015 –London Financing structures, trade routes and technical solutions for the LNG carrier fleet.

www.informamaritimeevents.com/event/LNG-Shipping-Conference

27-31 July 2015 BUNKERS FOR MANAGERS – Singapore Bunkers for Managers is a comprehensive 5-day all-inclusive bunker industry management training course.

www.petroedgeasia.com/brochures/PD170.BunkersforManagers.JUL.SIN.pdf

2-6 March 2015

European Shipping Week – Brussels European Shipping Week will take place over the course of the week of 2-6 of March 2015 and will feature a variety of events.

www.europeanshippingweek.com

11-15 March 2015

23-25 September 2015

INMEX INDIA SMM – MUMBAI INMEX-SMM India is the number one meeting place for the maritime and shipping community in South Asia. The event attracts over 650 exhibitors from around the world including international pavilions from Germany, Singapore, Holland, Norway, Korea, Finland, and The Netherlands.

inmex-smm-india.com

Europort Istanbul – Istanbul Exposhipping - EUROPORT ISTANBUL 13th International Maritime Exhibition is being organised between 11th and 14st March 2015 at the Istanbul Exhibition Centre on behalf of the IMEAK Turkish Chamber of Shipping with the cooperation of UBM NTSR International Exhibition and Congress Organisations and AHOY ROTTERDAM.

www.europort-istanbul.com

7-9 October 2015

INDONESIA MARITIME EXPO – JAKARTA IME is the most anticipated exhibition and conference in Indonesia for the world's maritime players. It's where you need to be to connect with 4,105 decision makers, shipowners, shipbuilders and other key players.

www.maritimexpo.co.id

23-25 March 2015 FUJCON – FUJAIRAH

FUJCON is the pre-eminent & most prestigious bunker forum for the Middle East bunker markets. The anchor event held during the “Fujairah Bunkering Week”, it has grown to enjoy international recognition and attendance from over 45 countries covering the full supply chain of the bunkering industry.

www.fujcon.com

23-25 March 2015

27-30 October 2015 Gastech – Singapore

One of the world’s largest and most prestigious LNG and natural gas conferences and exhibitions, Gastech, is coming to Singapore in 2015, reflecting the country’s growing strategic importance as a regional hub for the Asian gas market.

www.gastechsingapore.com

2-5 November 2015

CMA – Stamford

Where experts from around the world speak on many issues that will shape the future of the maritime industry.

www.shipping2014.com

IBIA Convention – Cancun Information – Communication – Education There will be something for everyone.

www.ibia.net

21-23 April 2015

3-5 November 2015

Sea Asia – Singapore "Since its launch in 2007, Sea Asia has firmly established its place in the marketplace as the platform for industry to do business, network and unveil new products and services in the Asia Pacific region.

www.sea-asia.com

19- 21 May 2015

84

Europort – Rotterdam Europort has a strong focus on special purpose ships including offshore vessels, dredging vessels, construction vessels, naval vessels, workboats, inland vessels, fishery vessels and super yachts.

www.europort.nl

16-18 March 2016

IMDEX ASIA – Singapore

Asia Pacific Maritime – Singapore

IMDEX Asia is Asia Pacific's premier international maritime defence show and a must-attend event in the global naval and maritime security calendar.

Meet 15,000 decision makers, shipowners, shipbuilders and other key players from the maritime and offshore community in 3 days.

www.imdexasia.com

www.apmaritime.com

World Bunkering Spring 2015

ADVERTISEMENT

Introducing ExxonMobil Premium HDME 50 A Q&A with Iain White

Q: What options do marine operators have available to them

ExxonMobil Premium HDME 50 also has enhanced ignition

to comply with the new sulphur cap?

characteristics compared to typical HFO.

From 1st January 2015, sulphur levels in marine fuels will

This helps to optimise combustion, reduce deposits and

be limited to a maximum of 0.10% in the existing Northwest

minimise wear on the fuel system components.

Europe and North America ECAs. In practice, this means that vessels will have to use a distillate, an alternate fuel, or install exhaust gas cleaning systems (also known as scrubbers) that remove sulphur from the exhaust after combustion.

Q: What is Premium HDME 50?

A: Premium HDME 50 is a new category of marine fuel formulated to meet the 2015 Emission Control Areas (ECA) sulphur limit. It has been specially designed to help marine operators comply with the 0.10% sulphur cap to be introduced in the ECA from 1st January 2015.

Q: What performance and safety benefits does Premium HDME 50 offer?

Premium HDME 50 offers potential performance and safety benefits versus distillate marine gas oil (MGO) and heavy fuel oil (HFO). It has the performance benefits associated with both MGO and HFO, including: • A low sulphur content associated with MGO • The higher flashpoint and lower volatility properties typically found in HFO

Q: How can Premium HDME 50 help to maintain safety and reliability on-board?

With vessels using MGO, some operators chose to install chillers in their systems to increase the viscosity of their fuel. This costly process is avoided with the use of ExxonMobil Premium HDME 50.

The higher viscosity of ExxonMobil Premium HDME 50 makes storing and handling the fuel on-board similar to HFO. A benefit of having to heat the fuel is a reduction in the risk of thermal shock during fuel switchover when entering and leaving an ECA. This issue can result in pump seizures and engine shutdowns.

Q: What ISO standard(s) does ExxonMobil Premium HDME 50 comply with?

With ExxonMobil Premium HDME being a new category of fuel, there is not an appropriate ISO standard to which it can be held.

However, prior to its introduction, ExxonMobil Premium HDME 50 was tested with Wallenius Wilhelmsen Logistics, one of the world’s leading shipping and logistics groups, and is suitable for use in main and auxiliary engines and marine type boilers.

Q: Is this product approved for use in marine engines?

The properties of ExxonMobil Premium HDME 50 allow

The new fuel has received no objection letters from MAN

marine operators to simultaneously:

Diesel & Turbo (MDT) for use in MAN B&W two-stroke and

• Comply with the upcoming ECA sulphur cap • Reduce the risk of engine and boiler damage In addition, ExxonMobil Premium HDME 50 avoids a number of issues that can be associated with HFO. For example, it does not typically contain catalytic fines (aluminium and silicon within marine fuel) or lead to issues with deposits.

exxonmobil.com/premiumhdme50 Copyright © 2014 Exxon Mobil Corporation. All rights reserved.

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MAN B&W Holeby genset designs, provided MDT’s specific engine type guidelines are followed.

Q: Where is Premium HDME 50 available?

It is available for vessels operating in the Amsterdam, Rotterdam and Antwerp region. ExxonMobil also offers MGO at more than 40 ports worldwide.