World Bunkering - Summer 2011

World

SUMMER 2011

SUMMER 2011

Bunkering

World BUNKERING

Competition rules in Turkey Russian resurgence

l Singapore boom continues l Oil majors cut risks l Surveyors in demand

THE ONLY OFFICIAL MAGAZINE OF

World

SUMMER 2011

Bunkering Publisher: W H Robinson Editor: David Hughes (editor@mar-media.com) Deputy Editor: Sandra Speares (sandra.speares@mar-media.com) Sales Manager: Taj Oberai (taj.oberai@mar-media.com) Project Manager: Dawn Barley (dawn.barley@mar-media.com) Project Consultant: Alex Corboude (alex.corboude@mar-media.com)

The views expressed in World Bunkering are not necessarily those of IBIA, or the publishers unless expressly stated to be such. IBIA disclaims any responsibility for advertisements contained in this magazine and has no legal responsibility to deal with them.

The responsibility for advertisements rests solely with the publisher. World Bunkering is published by Maritime Media Ltd on behalf of IBIA and is supplied to members as part of their annual membership package.

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Editor’s Letter

T

his issue is the first following Japan’s devastating earthquake and tsunami. World Bunkering’s condolences go out to the Japanese bunkering and shipping industries as they continue the effort to restore normality.

The effects of the Japanese disaster are reported in several of this issue’s articles, including Industry News and our South East Asian and Russian features. There are of course short and long term effects of trade but the real story is the determined and methodical way Japan is picking itself up and carrying on.

IMO is also doggedly carrying on with its efforts to put together a package to reduce greenhouse gas emissions in time to contribute to the UN’s next Climate Change Conference, being held in Durban at the end of the year. There is an update on developments at IMO in Environmental News.

Not surprisingly, high bunker cost are focusing the minds of owners on just what sort of marine fuel they are getting for their dollars.

Our testing feature makes for fairly reassuring reading in that regard.

Less reassuring at a time of volatile markets are the high financial penalties for bad decisions. Our Risk Management article looks at how companies are becoming increasingly risk averse.

This is particularly the case than with the oil majors, who we also feature this issue. They are still working under the shadow of last year’s Deepwater Horizon disaster; an event that will have lasting effects on the maritime industries.

Still on the broad theme of risk, our Surveyors feature finds that the high price of bunkers has spurred demand for surveyors’ services.

Sometimes, of course, risk avoidance does not work and disputes arise and the lawyers are kept busy. This issue’s interview is with prominent shipping lawyer Jonathan Lux of Ince & Co who co-wrote the first legal book on bunkers.

Our Geographical Focus on South East Asia features the continuing and amazing rise of Singapore’s bunker industry but also looks ahead at the much-talked about possibility of switching to LNG bunkers and the prospects for going for gas in the Asian region.

We also have a Regional Focus on Australia, where offshore activity seems to be pushing up bunker volumes. This issue’s Port Focus looks at Turkey, and Istanbul in particular, where the competition is becoming even fiercer. There is also, preview of the upcoming Istanbul Bunker conference, which is now a well-established feature of the bunker industry calendar.

Talking of events, it was good to see so many IBIA members at the Dinner. Take a look at the pictures on pages 16 to 19. I met quite a few members for the first time and many familiar faces. It was our new deputy editor Sandra Speares’ first chance to meet IBIA members, who will now be able to put a face to the new name appearing in our bylines.

The other big IBIA event is now drawing closer and on page 94 you will see the first details of the November Annual Convention to be held in Barcelona. Make sure you keep you diary clear for that.

Best wishes David Hughes

World Bunkering Summer 2011

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Contact: Shazmeer Jiwan Alba Petroleum Ltd PO Box 97155 Mombasa, Kenya Tel: +254 41 2317001/2/7/8/9 Fax: +254 41 2317006 +254 41 2317010 Mobile: +254 720 630000 or +254 721 786310 E-mail: sales@albapetroleum.com

World

SUMMER 2011

Bunkering 16

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IBIA Reports Editor’s Letter 3 Chairman’s Introduction 7 Industry News 9 Chief Executive’s Report 15 IBIA Dinner 16 Noticeboard 21 New Members 22 Membership Application 24 Interview 26 Environment 31

Special Features Testing 34 Risk Management 36 Oil Majors 41 Fuel Management 44 Surveyors 47

Geographical Focus South East Asia 50 Australia 56 Turkish ports 59 Russian Update

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Legal News Equipment and Services

74 75

Review: Fujcon Review: IBC Preview: Istanbul Bunker Conference Event IBIA

88 90 92 94

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Diary

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www.ciinternationalfuels.com

No. CO232317

REPORTS

Chairman’s Introduction

A

mongst my responsibilities as Chairman of IBIA is the writing of the ‘Chairman’s Introduction’ to our publication, World Bunkering. In this task I am carrying on a tradition of being late in meeting the publisher’s deadline! My apologies to my predecessor Mike Ball for immediately failing to meet his aspirations on my behalf!

Anyone not completely at ease giving speeches will be familiar with the hand that grasps ones entrails immediately prior to mounting the rostrum. I can attest that the hand clenches and goes into spasm when you realise that you failed to put your speech notes into your tuxedo pocket. Thankfully, my inaugural effort as Chairman before almost 1,000 members and their guests at the Grosvenor House Hotel was deliberately short. As Thackeray observed, “Dinner was made for eating, not for talking”.

The new venue for our annual dinner is clearly more appropriate now that attendance has reached epic proportions. The socialising and networking segments of the evening were far less fragmented and the additional space at both floor levels was most welcome. The open nature of these areas was slightly confounded by the bottleneck staircases and the ensuing stampede possibly occasioned by the fear of chastisement by our able, if loud, Mistress of Ceremonies.

Everyone involved in making the evening a success deserves congratulations, not least our Events Manager, Charlotte Egan.

World Bunkering Summer 2011

The theme of my speech was our somewhat lop-sided membership. To be specific, we have rather more members who are on the sales and supply side of our industry together with traders and brokers than we do from the purchasing and consumption side. The Board is a good industry cross section; however, the membership would benefit from having more shipowners and charterers among its number, essential to balance the input we receive from you, our members. We would particularly like to receive input on the practical issues involved in handling the fuels and associated regulations now increasingly mandated for use in ECAs. The more information we have – no matter what the topic – the better the Bunker Industry’s view can be expressed.

Ultimately, this accrues to the benefit of all of us.

IBIA is ever more involved in industry and political forums such as IMO and, more recently, the European Union. The Board and IBIA’s Chief Executive Ian Adams and his team devote much time to assessing, formulating and presenting the views and objectives of our membership. Most recently we have addressed issues concerning greenhouse gases and, a proposal to include min-max limits within ISO-8217 and enforce these as part of MARPOL, Annex VI. IBIA is viewed as a respected, well represented and valuable contributor.

Ladies and Gentlemen, this is your association. It has grown from small beginnings

Bob Lintott

into a recognised and worthwhile organisation; one with reasoned and informed contributions to make in shipping related and political environments. I’m looking forward to my year as Chairman and, in that regard, I’d like to add that your continued support is invaluable. Please, if you have topics you wish to air or concerns you wish to express, your Board wants to hear from you. You can contact us via our Website at www.ibia.net, on Twitter or on Linkedin at http://lnkd. in/xQypyZ. Your opinions are important to your Association being representative.

Our Convention this year will be at the Hotel Juan Carlos 1 in Barcelona from Wednesday, 2-4 November. I issued a challenge at the Annual Dinner to have as many Convention Delegates as we had dinner guests. That’s almost 1,000 and the Hotel could not accommodate that many – but let’s see how close we can get! I look forward to seeing you there.

Finally, I’d like to thank our retiring Chairman Mike Ball for his guidance and leadership during this last year. IBIA’s Board comprises, as I mentioned, a good industry cross section. This can – and does – give rise to spirited debate on occasion. Mike has been able to steer us into making decisions from which IBIA will continue to benefit. I’m happy to say that Mike will continue to be a Board member.

Bob Lintott

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Tel: +65 6344 1108 Fax: +65 6344 1128 email: bunkers@searights.com.sg www.searights.com.sg

Industry news

Global round-up Africa n another sign of a buoyant West African bunker market, Global bunker supplier and trader OW Bunker says that it plans to deploy two newbuildings to further strengthen its operations in the region.

OW Bunker says that it was one of the first suppliers to seize the opportunities of the growing market, and is “looking to consolidate its leadership position within the region”. Current supplies in the region will be supported by OW Bunker’s global network, with limited availability until the new build vessels are brought into service.

The company reports that it saw a significant increase in volumes in the region following the escalation of piracy incidents in the Gulf of Aden and off the Horn of Africa, with many shipoperators taking the decision to re-route vessels and secure reliable and safe bunkering alternatives.

I

Americas

US-based Alexander & Baldwin says that the recent surge in global fuel prices “related to the unprecedented unrest in the Middle East and North Africa is negatively impacting” the results of its container shipping line subsidiary Matson Navigation Company, which was expected to post an operating loss for the first quarter of 2011.

The company said in a statement: “We expect to recoup a large percentage of fuel cost increases through surcharge mechanisms in 2011; however, an environment of continually escalating fuel costs could impair timely recovery of these costs and further impact financial results.”

A&B president and chief executive officer Stanley Kuriyama said: “Increased fuel prices are having a disproportionate effect on transportation companies as fuel is an unavoidable and significant component of operating costs. Matson’s ability to employ fuel price adjustment mechanisms to limit the impact of price fluctuations on its first quarter earnings has been outpaced by the steep acceleration in fuel prices.”

He added: “We are carefully monitoring the impact of fuel, as well as the ongoing freight-rate environment in China, where spot-market container rates are relatively soft. We expect to have more clarity on China rates with the commencement of the new annual contract cycle in May and the beginning of the peak season this summer.

World Bunkering Summer 2011

In addition, we are paying close attention to the potential impacts of the recent tragic events in Japan on the Hawaii and Mainland economies, and how that may affect our businesses. There was no damage to A&B’s assets following the Pacific tsunami triggered by the earthquake. An update of our full-year outlook, including an assessment of the impact of the factors described above, will be provided on our first quarter earnings call.”

Asia Japan adjusts following March catastrophes

Japan’s bunker industry suffered along with the rest of the maritime infrastructure when the March 11 8.9 magnitude earthquake and 10m tsunami hit north-eastern Japan. The port of Sendai in particular was severely damaged. Bunkering operations in Tokyo Bay were stopped right after the earthquake but resumed to a limited extent.

A month on, the bunker industry was functioning more or less normally but with both avails and demand at lower than usual levels, reflecting both a reduction in shipping traffic and reduced output of bunker fuel from those refineries that were functioning. Cosmo Oil’s Ichihara refinery in Chiba prefecture, which caught fire as a result of the earthquake, was still out of action in mid-April as were JX Nippon Oil & Energy’s Negishi, Sendai and Kashima plants.

However, the lack of bunker fuel in eastern Japan was being offset by increased production at refineries on Japan’s west coast.

To some extent bunker activity in Tokyo Bay was being impacted by container ships avoiding the regions because of radiation fears due to the damage to the Fukushima nuclear power station.

DNVPS goes green

DNV Petroleum Services (DNVPS) is to use international courier company DHL Express’s DHL GOGREEN Carbon Neutral shipping services across DNVPS’ global markets, including its specialist laboratories in Singapore, Oslo, Rotterdam, Houston and Fujairah.

The multi-million dollar contract encompasses the DHL GOGREEN Carbon Neutral service and covers the outbound transport of DNVPS’ sampling equipment and the inbound regional transportation of bunker oil samples for testing. For a surcharge, DHL will measure and offset carbon emissions for international air express

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Industry news

shipments and provide DNVPS with a certification stating the total amount of CO2 offset on their behalf each year.

DNVPS says it is the first auxiliary service provider in the global maritime industry to sign up for the DHL GOGREEN service. DHL GOGREEN calculates carbon emissions generated from the transporting of each shipment and offsets emissions through carbon management projects such as a wind park in China or a hydro plant in Brazil.

Weak margins hit Chemoil

Singapore Stock Exchange-listed global bunker supplier Chemoil made a full-year net loss in 2010 of US$9.5 million, due mainly, the company says, to first quarter losses and “the slow pace of margin recovery throughout the year”.

Chemoil has a strong final quarter to 2010 with a profit before tax of $3.7 million but one-time write-offs, including $5.1million for deferred tax assets of a subsidiary, resulted in a net loss of $1.8 million for the quarter. The company says its gross contribution per metric ton (GCMT) in Q4 was US$ 6.70.

Chemoil’s full year sales volumes rose by 3% to 15.6 million tonnes for FY2010. Chemoil’s Executive Chairman, Mr Mike Bandy, said: “In the fourth quarter of 2010, we produced our best quarterly operating results for the year as the fruits of our operational improvements and cost cutting efforts began to take shape. However, we also decided to take conservative actions by making one-time write-offs which will better position the Chemoil Group going forward financially as the marine fuel margins begin to recover.”

He added that direct bunker sales grew 6% and ex-wharf sales, which are ultimately sold to the shipping market, grew 60%.

“However,” he said, “our business continued to be exposed to weak wholesale-retail margin spreads, although signs of improvement have been showing during the latter part of 2010, as reflected in our Q4 results.”

Ceylon Bunkering Corporation set to re-enter market Sri Lanka’s state-owned Ceylon Bunkering Corporation (CPC) is set to re-enter the bunkering business soon, initially at Colombo. Asian Tribune reports that Secretary to the Ministry of Petroleum Industries, Titus Jayawardene, has ordered CPC to re-enter the bunker market at the “earliest possible instance”.

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The report says that it is likely that CPC will revive its defunct subsidiary, Ceypetco Marine Services (Pvt) Ltd incorporated in 2007, to carry out deliveries.

There are eight licensed bunkering companies in Sri Lanka but the market is currently dominated by three players, Lanka Marine Services; Indian Oil Corporation’s Sri Lankan subsidiary Lanka IOC; and Lanka Maritime Services, all with about the same market shares last year, although the Asian Tribune report puts Lanka IOC ahead.

CPC’s move will intensify competition at Colombo but the big issue in the Sri Lankan bunkering scene now is the SLPA’s determination to be the sole bunker supplier at the massive new port at Hambantota in the south-east corner of the island. The first phase of the 15-year project was completed last year. The US$450 million project, funded by China, is expected to be completed in four phases and will take 15 years for the completion of the entire project. In addition to the port project, China is also funding a $1 billion new refinery at Hambantota.

From the start, Hambantota, now formally known as Magampura Mahinda Rajapaksa Port, has been seen as a bunkering centre, located much closer to the shipping lanes than Colombo.

However, the SLPA has also made it clear from an early stage that it wants to be the monopoly bunker supplier. At the opening of the port last year, SLPA chairman Priyath Wickrama told a press briefing that bunkering would be the one area not open to foreign investors at the new port of Hambantota near the country’s southern tip.

He told Reuters: “We will handle oil bunkering. We don’t want to give it outside. But bulk cargo handling, storage facility, warehouses, transhipment, and all others are open for investments,” This January Mr Wickrama said: “We’re hoping to start bunkering

by May this year. We’re going to buy four self-propelled barges to start this business.” It is understood that the SLPA has taken this stance as it sees the bunker business as an important way of earning the cash required to repay the Chinese loans.

Unsurprisingly, the Sri Lankan bunker companies are not happy about this and want a share of the action. Lanka Business Online (LBO) reports that the firms argue that increased competition and efficiency will expand the market. Sri Lanka Shipping as already submitted a proposal to the SLPA to sell ship fuel in Hambantota when it invited investments for industries in the new port, according to LBO. Europe Bunker costs hit DFDS

Major European ferry operator DFDS has reported increased revenue and EBITDA for 2010 and also a significant cut in fuel consumption but this was heavily outweighed by increasing bunker costs. Total earnings grew 33.5% to Dkr9.86 billion (US$1.9 billion), against Dkr6.55 billion in 2009. EBITDA was up 36.8% to Dkr1.27 billion.

A company statement said: “The increase reflects the improvement in market conditions, the acquisition of Norfolkline in July 2010 and the extensive work done over the past couple of years to adapt operations and make them more effective.”

In its annual report the Danish-based company says that aver-

World Bunkering Summer 2011

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LUKOIL-BUNKER The Mauritanian ports of Nouadhibou and Nouakchott (West Africa) New bunker supplier in the Mediterranean region Lukoil-Bunker is now providing bunker services out of Port Augusta in Italy IFO 380 HS and MGO 0.1% to be supplied At your service, 24 hours a day, 7 days a week LUKOIL-BUNKER OOO Ul. Fokina, 5 St. Petersburg 194044, Russia Tel: + 7 812 346 8130 Fax: + 7 812 346 8132

E-mail: bunker@lukoil-bunker.com (for all enquiries)

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LUKOIL-BUNKER ITALY S.R.L. Gelone str., 36 96100 Siracusa Italy Tel: +39 0931 207620 Fax: +39 0931 207621 E-mail: office@lukoil-bunker.it

This subsidiary is already operating in Sicily and is fully-owned by LUKOIL-BUNKER OOO, St. Petersburg

Industry news

age bunker consumption per crossing was reduced by 6% in 2010 through a number of efficiency measures. However total fuel cost grew by 30% compared to 2009 due to the rising oil price and appreciation of the US dollar. It noted: “An organisational and operational restructuring process implemented better practices on board in 2010 to improve productivity and revenues. Benefits from this ongoing process are envisaged to be recorded in 2011.”

On its website the company says that DFDS has been undertaking a series of technical and operational initiatives to reduce fuel consumption. Technical initiatives include, for example, improved engine efficiency, the recycling of excess heat and better management of onboard energy consumption. The operational aspect involves changing departure and arrival times in order to reduce the ships’ service speed as much as possible. The long-term goal is to move the fleet towards bigger ships. Concentrating freight volumes on larger but fewer vessels will also reduce energy consumption and emissions per transported unit.

IMO

IMO’s subcommittee on Bulk Liquids and Gases (BLG 15) decided at its February meeting not to proceed on work on proposals that would impose mandatory marine fuel standards. However, it seems likely that there will be an attempt to revive the issue at July’s Marine Environment Protection Committee meeting.

Norway and Intertanko wanted bunkers to be pre-tested on a range of parameters and for a ban on on-barge blending to be imposed. Their paper argued that a lack of mandated minimum

World Bunkering Summer 2011

quality requirements on the fuel supplied to vessels causes preventable risk to the safety of shipping, the environment and the health of seafarers. They suggested adopting the quality provisions detailed in ISO 8217 as part of the requirements of Annex VI. The International Bunker Industry Association (IBIA) raised a number of practical issues but, together with BIMCO, put forward a detailed paper proposing that a correspondence group be established to select those parameters and elements of fuel quality which have the greatest impact on safety, environmental pollution and health, and can be readily quantified and assayed at the delivery location.

Currently, the quality of bunkers is regulated by national authorities but in practice, almost all marine fuel ordered and supplied worldwide is contracted to meet the requirements of one of the grades detailed in ISO 8217:2005 and increasingly by its recent replacement, ISO 8217:2010.

IBIA and Bimco were concerned that the application of legislation to what has previously been a commercial contractual issue could cause genuine problems in the logistical supply chain by imposing a disproportionate increase in the regulatory and operational burden on ports and ships relative to the anticipated benefits of the proposed legislation.

In the end, however, a majority of states at BLG decided there was no need to proceed on the Norwegian/Intertanko proposals.

BFC’s new barge

Russian-based Baltic Fuel Company (BFC) has brought into service a new 5,000 dwt double hull tanker. The 106 metre loa Captain Ponikarovsky meets the requirements of MARPOL Annex VI to MARPOL. Classed with the Russian Maritime Register of Shipping the tanker will be used for taking petroleum products export cargoes from the St Petersburg to European ports, for supplying bunkers at St Petersburg, Primorsk, Ust-Luga and to fishing vessels in Russian offshore waters.

The company’s CEO, Stanislav Korneev, says: “Transportation of oil products, including exports, is one of the key activities of our company. We plan to develop the business through expanding our own logistics solutions. From June this year we start shipment of oil products from refineries in central Russia by our own oil barges through the country’s inland waterways.

That will allow us to reach the guaranteed delivery volumes.

With the commissioning of the Captain Ponikarovsky we plan to expand the geographical scope of deliveries outside the Russian Federation.”

BFC runs a bunkering fleet of more than 25 vessels around Russia’s North-West coasts.

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Reliable, efficient service in ARA and beyond Quick and timely delivery of a wide range of grades WE ARE MOVING TO A NEW OFFICE See new contact information below: Office address: Wilhelminakade 85, Building “De Maastoren�, 36th floor, 3072 AP Rotterdam, the Netherlands Post address: PO Box 24065, 3007 DB Rotterdam, the Netherlands Tel: 24/7: +31 10 264 27 00 E-mail: Bunkers@lukoil.nl

Chief Executive’s Report Board Elections

A

t the AGM held on Monday 21 February the Board Election results were announced. There were three vacancies this year due to the retirement of Chris Fisher (Brookes Bell), Angus Ogilvie (Cockett Marine Oil Ltd) and John Stirling (DNVPS) at the end of their terms of office.

Only John was eligible to stand for another term. The result of the election was that Eugenia Benavides (Organizacion Terpel S.A.), Paul Dyke (Oak International Ltd) and John Stirling (DNVPS) were elected to serve on the Board for three years commencing 1 April 2011.

Annual Dinner

This year’s Annual Dinner exceeded all expectations. To have an attendance of almost 1,000 people is impressive and extremely pleasing from our perspective.

I would like to thank all the attendees for respecting the formal part of the evening and look forward to next year being even better attended. The feedback has been really positive regarding the new venue and we intend to return to the Grosvenor House again next year, date to be confirmed in due course.

Annual Convention

Our attention now turns to the Annual Convention which is being held in Barcelona. This is the first time since 2006 that the IBIA Annual Convention has been held in Europe. It is IBIA’s policy to rotate the location around the world, utilising the three main time zones of Europe/Middle

World Bunkering Summer 2011

East/Africa (EMEA), the Americas and the Far East. The last EMEA Convention was in Cape Town, South Africa in 2008. The programme is currently being developed and we would welcome any input from the membership regarding content. Remember the conference is for your benefit and so if there is something you feel needs to be addressed then please let us know.

The conference will provide the membership with the opportunity to debate issues which affect the industry and will also afford you the chance to invoke a vote to guide the association in its policy. No other conference that you will attend can give you the opportunity to actually influence policy makers, whether that is at a European or global scale. This concept was introduced last year at the IBIA Convention in Stamford and will be an enduring theme in this and subsequent events. IBIA’s Convention, along with the Annual Dinner, enable us to maintain relatively low membership fees while continuing to represent our members at the highest level of regulation. IBIA is uniquely placed to provide that representation so please support the event and make your views known. We have a number of very important issues already on the agenda, with some highly respected figures who will speak. Unfortunately, the venue can only hold 300 people so it is important to book early in order to avoid disappointment. I sincerely look forward to seeing as many members there as possible as this is the only way that we can ensure that the policies which emerge from the debates are genuinely representative of the membership.

Ian Adams Tel: +44(0) 23 8022 6555 Fax: +44(0) 23 8022 1777

International Maritime Organization (IMO)

At the time of writing we were preparing to attend an Intersessional meeting of the Greenhouse Gas (GHG) working group (WG) of the Marine Environment Protection Committee (MEPC) at IMO. This meeting was due to discuss the proposals regarding Market Based Measures (MBM) which are currently under consideration.

Last year’s Convention guided IBIA regarding this issue and we shall maintain a neutral position at this time. However, we will also keep the membership informed of developments.

Chairman

I would like to finish by welcoming our new Chairman. Robert ‘Bob’ Lintott, who assumed the Chairmanship for the ensuing year on 1 April. I would like to take this opportunity to congratulate him on taking up the post; I look forward to an enjoyable working relationship for the good of the Association and I feel sure that Bob will be a great ambassador for the organisation. I would also like to record my thanks to our outgoing Chairman, Mike Ball, who has had a great year and whose support has been greatly appreciated by the Secretariat.

Whilst Mike may not be Chairman anymore he will remain on the Board for a further year as Immediate Past Chairman, where his skills will continue to be utilised, not least of all in Chairing the Board Development Committee.

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DINNER

IBIA Chairman - Bob Lintott

The Great Room

Main Sponsor - Akron

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World Bunkering Summer 2011

IBIA Champagne Reception & Post Dinner drinks Sponsor - Platts

IBIA Chairman - Bob Lintott and guests

Chairmans Table

IBIA Dinner Menu Sponsor - BP Marine Ltd

World Bunkering Summer 2011

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IBIA Dinner Invitation Sponsor - Addax Bunkering Services

IBIA Dinner Guest List Sponsor - Aegean Marine Petroleum

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World Bunkering Summer 2011

Chanette Roughton – IBIA

World Bunkering Summer 2011

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REPORTS

IBIA Noticeboard Benefits to members as at 1 May 2011

THE IBIA COURSES:

IBIA Guide to Avoiding and Resolving Bunker Disputes

One Day Basic Bunkering Course

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

The charge for the Basic Bunkering Course is £200 per head for Members and £300 for non-Members.

These Courses are intended for those who already have at least one year’s experience in the bunker industry. £425 per head for Members and £625 for non-Members.

IBIA PUBLICATIONS IBIA World Bunkering Magazine – Free copies for Members of IBIA

Please note non-Members are requested to subscribe to the magazine at a cost of £45.00, £60.00 or £80.00 depending on location.

Up to 20 additional free copies of the magazine are offered to buyer Members of IBIA for forwarding to their vessels.

This CD is available on request. Members – please contact administration for your free copy/copies.

IBIA Safety Cards for Vessel’s crews

IBIA Guide to Bunker Samplers Advanced Courses

IBIA Fuel and Lube Oil Training CD

Sale price to non-Members £50.

IBIA Guide to Arbitration.

A loose leaf book giving Arbitration procedures in 13 countries written by lawyers.

This is now available free to IBIA Members.

Non Members may purchase at a price of £50 + postage.

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.

IBIA Annual Report

Vanadium and Sulphur in Marine Fuels

The 2009/2010 report is now available. All Members will have already received their copy. The report is available free of charge to Members and non-Members. Please ask IBIA administration for a copy.

What everyone should know about these two important elements in marine fuel bunkers. For sale to non-Members at £35.

IBIA Logo

Evaluate the Merits of a Bunker Claim

Free PDF supplied for use by Corporate Members only.

Interpretation of specifications for bunker fuels and a guide to the question of repeatability. For sale to non-Members at £35.

IBIA World Bunkering Magazine – Discounts on Advertising

IBIA Glossary of Bunker and Lubricating Oil Terminology

Please contact the Advertising Sales Team at Maritime Media Ltd, London on + 44 (0) 207 7386 6100

A comprehensive guide to all those complicated terms which are in daily use in the bunkering industry. For sale to nonMembers at £45.

IBIA List of Members

If your details are not correct then please let the IBIA Administration know. This publication is only available to Members.

World Bunkering Summer 2011

IBIA Guide to Good Commercial Practice

On sale to non-Members at £50 per copy.

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New Members Corporate

BUNKERNET LTD

Bunker Broker Christina Christofidou MBC Business Centre 3rd Floor 17 Spyrou Kyprianoou Avenue Mesa Yeitonia 4003 Limassol Cyprus Tel:+00357 2582 8915 E-mail: operations@bunkerpoint.com.cy

GT BUNKERS

Bunker Supplier Rolando Garzaro Calzada Aguilar Batres 45-54 Zona11 Empresariales Monte Maria, Office 224 1011 Guatemala Tel:+502 24790392 E-mail: info@gtglobalservices.com

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MA RAZAK & CO. LTD

ENVIRONMENTAL FUEL SYSTEMS LTD

P&O FERRIES HOLDINGS LTD

MONSELL INTERNATIONAL (PVT) LTD

Bunker Broker Thariq Thulba Razak P.O. Box 989 No. 7, 19th Lane Colombo 03 3 Sri Lanka Tel: +941 1257 5404 E-mail: bunker@marazak.com Buyer Glyn Jones Channel House Channel View Road Dover Kent CT15 7QJ United Kingdom Tel: +441304863229 E-mail: glyn.jones@poferries.com

YOU-TRADING COMPANY FZE Bunker Trader Aris Karabit Unit No. 26 Block C, Al-Qasba, Shj Sharjha 82337 UAE Tel: +9715 0363 3576 E-mail: info@you-bunkering.ae

Bunker Supplier Stuart Yates Robin Hill Water End Stokenchurch Buckinghamshire HP14 3XQ United Kingdom E-mail: stuart.yates@envfuel.com Bunker Broker Rizvi Sameem 10 B, Ground floor Y.M.B.A. Building Colombo 1 100 Sri Lanka E-mail: bunker@monsell.lk

ABD FUEL LTD

Bunker Supplier Lawal Juwon Razaq Suite C5, Polysonic Mail 1B, Point Road Apapa, Lagos P.O. Box 72 Nigeria Tel:+234 807 739 6977 E-mail: juwon@abdfuels.com

World Bunkering Summer 2011

individual

Valentin Revuelta

Service Perez y Cia Fortuny 9 Madrid 28010 Spain Tel: +349 1308 6210 E-mail: valentin.revuelta@perezycia.com

Jorgen Hojgaard-Nielsen Bunker Trader N/A Spicavej 7 Aalborg DK-9200 SV Denmark Tel: +453 072 3400 E-mail: thit17@besked.com

Olayinka Alade

Service INFORMA Telephone House 4th Floor, 69 - 77 Paul Street London EC2A 4LQ United Kingdom Tel: +44 207 017 3788 E-mail: olayinka.alade@informa.com

Theodoros Aravanis

John Clark

Lawrence D. Malizzi

Thazhessery Sadhasivan Samarnath

Bunker Trader BELAROSA ENERGY DIVISION 9 Giannou Kranidioti Street 2nd Floor, Office 201 Nicosia 1065 CYPRUS Tel: +357 2 246 5104 info@belarosa.gr

Bunker Broker ACM SHIPPING LTD Kinnaird House 1 Pall Mall London SW1Y 5AU United Kingdom +44 207 454 6393 jclark@acmshipping.co.uk

Service MATRIXNEWORLD 1521 Concord Pike Suite 301 Wilmington DE 19803 USA Tel: +1 30 2824 7074 E-mail: lmalizzi@matrixneworld.com

Bunker Supplier FAL ENERGY CO LTD Mina Khalid Road Layyah Sharjah P.O. 6600 UAE +971 50 635 9044 SAMAR@FALOIL.CO.AE

Daniel Loughran

Ara Barsamian

Bunker Supplier LCC LIMITED 16 Churchtown Road Cookstown Tyrone BT80 9XD United Kingdom +44 288 676 0640 sales@lccoil.com

Service REFINERY AUTOMATION INSTITUTE LLC 6 Leslie Court Morristown New Jersey 7960 USA Tel: +1 973 644 2270 E-mail: jabarsa@refautom.com

Oil Marketing

& Trading International (Europe MARINE FUELS

in UAE

and now

in CEUTA - Spain 14 Tzavela str. 166 74 Glyfada ATHENS GREECE TEL: 0030 210 96 09 860 FAX: 0030 210 96 09 861 TELEX: (0510) 94078550 OMTI G E-mail: bunkers@oil-marketing.com Web: www.oil-marketing.com

World Bunkering Summer 2011

Office 2001, Saba Tower 1, Jumeirah Lakes Towers, Dubai, United Arab Emirates TEL: +971 44350500 FAX: +971 44350505 E-mail: bunkers@oil-marketing.com

23

REPORTS

The International Bunker Industry Association Ltd The Aims of the Association

this category does not allow delegation.

• To provide an international forum to

• Corporate membership: open to com-

address the concerns of all sectors of the bunker industry; To improve and clarify industry practices and documentation; To represent the industry in discussion with relevant governmental and nongovernmental bodies and to make the concerns of the industry known to such bodies; To assist members in the event of disputes by identifying the options and exploring the alternatives open to them and eventually to provide a panel of experienced mediators and arbitrators; To increase the professional understanding and competence of those working in the industry.

panies and associations with an interest in bunkering, whether they are involved in the day-to-day business of bunkering ships or have an interest in the industry.

Each member has one vote in association business, but corporate membership has the advantage of allowing companies to delegate different members of their company to participate in different working groups.

• Corporate sponsor: this is the newest category and allows a company to contribute any sum they see fit to the association. In return they receive the same benefits as a corporate member but in addition have their logo printed on all IBIA publications and are offered further sponsorship opportunities ahead of other members.

• •

•

•

In the beginning

Eight members of the industry conceived the International Bunker Industry in October 1992, and the association was formally registered on 29 January 1993. Since then it has expanded steadily with a worldwide membership comprising shipowners, charterers, bunker suppliers, traders, brokers, barging companies, storage companies, surveyors, port authorities, credit reporting companies, lawyers, P&I Clubs, equipment manufacturers, shipping journalists and marine consultants.

In 2008, our membership stands at over 500 and is spread over 67 countries.

There are three categories of membership, namely: • Individual membership: open to all people with an interest in bunkering, whether they are involved in the day-today business of bunkering ships or have an interest in the industry. Each member has one vote in association business, but

24

Education • Run further IBIA Basic Bunkering courses

worldwide; • Implement the running of IBIA’s two-day

Intermediate Bunkering courses; • Run further IBIA half day Ships Agents

courses.

Safety • Investigate the issue of Safe Access; • Produce a best practice for pre-delivery

checklists.

Operational Standards and Procedures • Looking at turning ISO(TR)13739 into a

bunkering procedure.

Technical • Continue to provide answers to technical

enquiries from members; • Report on the latest technical issues to

the members.

The board

The board is constrained to have a balance of members from each sector of the industry in order to preserve the industry-wide representation and approach of the association.

The board regulates the association and is elected by the membership to perform that role.

The working groups

Because IBIA is an association dedicated to its membership, it must reflect members’ wishes and react to their needs. In the past this has been achieved by the formation of Working Groups. These groups reported back via IBIA’s official magazine, World Bunkering, or through special circulars where appropriate. There were six Working Groups, as listed below, with the issues that they each addressed.

Environmental • Discuss IBIA approach to EC initiatives; • Develop environmental policy.

Commercial Working Group • Has been responsible for the production

of the IBIA Guide to Good Commercial Practice; • Cooperated with BIMCO on the Standard Bunker Contract.

World Bunkering Summer 2011

Membership application

PLEASE PRINT VERY CLEARLY Applicants must fill out all appropriate sections including method of payment.

Corporate members must give the name of the individual contact.

Name of individual

Title (eg Mr, Mrs, Miss, Dr, Capt)

Company name Address

Zip (Postal) code

Country

Tel No

Fax No

Cell/Mobile

E-mail Please indicate your company’s principal business activity: (please mark one only) Owner/Charterer/Buyer Supplier

Trader

Port Operations/Storage/Delivery Broker

Services (eg Legal/Financial/Analytical)

Please indicate the type of membership being applied for: Individual Member £110 Free (please state reason)

Corporate Member £550

Corporate Additional £

Please state amount being remitted to us in Sterling £ Individual members must provide the following information: Home address

Zip (Postal) Code

Country

Payment instructions

Payment must be made free of all charges at both the paying bank and its overseas correspondent where applicable.

Amex Telegraphic Remittance

Cheque

UK Sterling

Visa

Amex

Switch

1. Credit card payment. Please complete following details: PLEASE PRINT VERY CLEARLY

Cardholder’s name

Card number

Billing address

Zip (Postal) code

Country

Signature

Date

Expiry date

/

2. Telegraphic remittance Clydesdale Bank plc, Mountbatten House, Grosvenor Square, Southampton SO15 2JU, England

IBAN SWIFTBIC GB£ Sort Code Sterling Account Number Account Name

GB95 CLYD 8260 0410 247 629 CLYD GB2S 82-60-04 1024762 IBIA Ltd

3. Cheque: Made payable to The International Bunker Industry Association Ltd. Application forms must be sent by mail or by fax to the

IBIA Administration Office.

ALL APPLICANTS MUST SIGN AND DATE HERE:

Signature

Date

The Administrator, The IBIA Ltd, Ground Floor, Latimer House, 5-7 Cumberland Place, Southampton, Hampshire SO15 2BH, United Kingdom.

Tel: +44 (0) 2380 226555 Fax: +44 (0) 2380 221777.

World Bunkering Summer 2011

25

INTERVIEW

Bunker disputes: who pays the price?

Jonathan Lux

As bunker prices continue to rise, so does the likelihood of bunker disputes and litigation.

Sandra Speares talks to Jonathan Lux of law firm Ince & Co, who co-wrote the first legal book on bunkers.

I

nce & Co partner Jonathan Lux was in at the birth of IBIA in 1992 when he was the legal voice on a working group formed to take the association forward, having been involved in some big bunker legal cases.

At his suggestion, among the objectives of the fledgling IBIA was dispute resolution in bunker cases and he served as IBIA’s first secretary. Others in the working group included IBIA’s first chairman, currently Maritime London chief executive Doug Barrow, who apparently put about the story that IBIA actually stood for ‘I believe in action’.

One of IBIA’s first conferences was in Orlando at a hotel shaped like Micky Mouse, Mr Lux recalls. It was there, he says, that a poolside conference with Chris Fisher resulted in him making a decision to co-author the first legal book on bunkering, Fisher & Lux on Bunkers, now in its third edition. At the beginning of the project, he says the preoccupation was to get the acceptance of the industry – while bunker traders and brokers were receptive, “it was more difficult to get owners and charterers interested”.

26

The working group on dispute resolution has been a force for good in terms of monitoring regulatory developments, not least as far as air emissions and other environmental issues are concerned, notably the development of Sulphur Emission Control Areas – now transformed into ECAs. Ian Adams, he says, does a good job in keeping the membership abreast of developments at the International Maritime Organization.

Education is an issue, he stresses, as “there are quite a few cowboys out there” and IBIA of course runs its own bunker education programme.

Although IBIA developed arbitration and mediation terms for the bunker industry with a view to enabling quick and cheaper mediations, for the most part there has not been much take up, Mr Lux says. He is not sure, but thinks that parties might have decided to use other rules laid down by bodies like the London Maritime Arbitrators Association.

“The idea was judgement from your peers,” he explains, with experts in the bunker arena dealing with the disputes.

As bunker costs have become the first or second most expensive item in running a ship, disputes have blossomed. Whereas in years gone by there were few quality issues to speak of, one exception being a 1922 legal case where a bunker full of best Welsh coal ignited, buying unsuitable fuel is now a source of many legal disputes.

With a number of different commodities being blended to create the fuel supplied and fuel of cutter stock being introduced to adjust viscosity, disputes are perhaps inevitable.

Unscrupulous traders, mixing in low grade products to enhance the profit margin, is one possibility.

Another problem area which reached the courts was the use of automotive lube oil on ships, which resulted in a dispute between FOBAS and DNV, called as experts in the case, as to whether the use of automotive fuel oil in bunkers was permissible or not according to ISO standards.

Evidently one issue at the moment exercising the bunker industry is whether ships may have to carry different grades of fuel oil to meet with legal requirements in ECAs

World Bunkering Summer 2011

and the EU. This adds to the difficulties of voyage planning, and has prompted comments from cruise lines, for example, that they will have to adapt itineraries when the US ECA comes into operation, with possible redeployment in Europe.

Economical steaming is one of the areas being considered, or already in operation by companies. By steaming at less than the maximum speed one can evidently save on fuel costs but it is the ‘virtual arrival’ issue that may swing the balance, Mr Lux says. In cases where ships are chartered to deliver at utmost despatch, as charterparties would generally indicate, what is the position if the ship travelling at optimum speed arrives at the discharge port and is unable to discharge the cargo because of congestion?

If the situation is known in advance, the vessel could slow down and reach the berth when needed, but contractual issues and liabilities would need to dealt with – not least the “with utmost despatch” clause in the charterparty.

The industry is examining whether there could be standard industry clauses to cover the economical steaming issue.

Disputes have arisen over the ownership of bunker supplies, for example in cases where a charterer orders fuel and then goes bust but the vessel has consumed the fuel.

Is the owner in such a case liable to pay the bunker supplier? In the 1993 Saetta case, for

World Bunkering Summer 2011

example, the bunker supplier successfully relied on his retention of title clause and the owner was required to pay the value of the bunkers. A more recent case, the Fesco Angara, went the other way, Mr Lux explains.

As Fionna Gavin of Ince said in the firm’s shipping e-brief last year, “The case is a warning to bunker suppliers. Drafting tighter clauses in the supply contract may not get round it. It may be possible for the bunker suppliers to include terms in their contracts requiring charterers to account for the proceeds of sale, but how effective this will be will heavily depend on how tight the wording is and if the buyers agree to it”.

However the case did not end there.

Although bunker suppliers Oceanconnect failed in the London Mercantile Court to recover losses from the Fesco Angara’s owner Angara Maritime, the case went to the Court of Appeal on a different issue.

Oceanconnect had originally arrested the vessel in Amsterdam, the parties entered into an escrow agreement and the ship was released after the owners put up security.

Under the terms of the escrow agreement, it was to be governed by English law and “any dispute arising hereunder or relating thereto or arising in connection herewith shall be referred to the exclusive jurisdiction of the High Court of England and Wales”.

The agreement also stated that the claim was payable to Oceanconnect “by virtue

of a judgment (which is not or no longer subject to appeal) rendered against Angara by a competent court of law having jurisdiction ... or by virtue of a valid arbitration award which is not or no longer subject to appeal...”

Angara started proceedings for negative declaratory relief, Ince’s January 2011 e-brief explains, seeking a declaration that it was not liable to pay Oceanconnect for the bunkers. Oceanconnect then arrested the vessel in the US, seeking to found jurisdiction for an in rem claim based on a maritime lien under US law.

The owners then applied to the English court for an anti suit injunction claiming that England was the forum conveniens for the dispute.

Mr Justice Simon allowed the anti suit injunction but this was set aside by the Court of Appeal, which held that the escrow agreement taken as a whole did not provide for exclusive jurisdiction by the English court as far as the underlying claim for unpaid bunkers was concerned.

Under English law, a bunker supplier cannot obtain a maritime lien, and the Court of Appeal took into account that it was unlikely that the bunker supplier would have restricted itself to a court where it was unlikely to succeed when it had good prospects of winning its case in the US courts.

Other legal issues relating to bunkers involve cat fines, a by-product of the cracking process that can damage fuel lines, and the long chains of brokers and traders between the ultimate buyer and suppliers of bunkers. It can be difficult to determine if intervening parties are acting as brokers or traders, Mr Lux says. While a broker is just an agent, a trader is a principal, buying and selling on his own account and risk.

One example he cites is the Spet-Scollay affair which involved buying on extended credit terms at one price and selling on cash terms at less than that price in the hope that the money in hand would have generated considerably more than by the time it came to pay the supplier or intermediate trader.

Another problem, he says is the theft of bunkers by vessels.

Mr Lux feels environmental pressures will “become stronger rather than weaker” in the years to come and even if there is a switch to distillate fuels, it is unclear whether a new set of problems will not arrive.

The final word goes to Mr Lux’s son.

When comparing the literary achievements of their fathers with the son of Poet Laureate Andrew Motion, Lux junior declared: “My dad wrote a book on bonkers.”

27

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environment

No progress on MBMs The IMO appears no nearer to reaching an agreement on market-based measures to curb emissions from ships and, as David Hughes reports, the big question is what will the EU do?

I

t surprised few involved in the process that an intersessional meeting of the International Maritime Organization’s (IMO) Working Group on Greenhouse Gas Emissions (GHG) from Ships, held at the end of March, made little headway towards developing of suitable market-based measures (MBMs) for international shipping.

In private, at least, there is a general consensus that July’s IMO’s Marine Environment Protection Committee (MEPC) is unlikely to result in agreement on MBMs. If so, the big question will be what will the EU do?

While IMO issued a statement claiming that “steady progress” had been made, reports from those present suggest there was no consensus on the way forward, with IMO split between those who see a compelling need to act and those who do not. The main issue is still whether non-Annexe 1 countries, according to the Kyoto Protocols, should be treated in the same way as the industrialised countries under any IMO legislation on greenhouse gases. Kyoto talks about “common but differentiated responsibilities” (CBDRs) while IMO conventions always apply equally to all flags. The strong impression of insiders at the IMO process is that countries such as China, India and Saudi Arabia are not prepared to sanction any deal at IMO which does not recognise CBDRs, at least not before an overarching deal under the UN Framework Convention on Climate Change is achieved at the Climate Change Conference at Durban at the end of the year.

The GHG Working Group will report its conclusions to the July MEPC meeting when technical measures will also be under consideration.

The Working Group, which was attended by more than 200 experts from all over the world, was tasked with providing advice on, among other subjects, the compelling need and purpose of MBMs as possible mechanisms to reduce GHG emissions from international shipping and further evaluating the outcome of work conducted

World Bunkering Summer 2011

last year by an Expert Group, which had carried out a feasibility study and impact assessment of several possible measures previously submitted by governments and observer organisations. The aim of the Expert Group study was also to assess the impact of the proposed MBMs on, among others, international trade, the maritime sector of developing countries, least developed countries (LDCs), and Small Island Developing States (SIDS), as well as the corresponding environmental benefits.

IMO says that, following completion of the Expert Group’s study, some of the proposed MBMs have been combined or further developed by their respective proponents and, in examining the proposals, the Working Group held an extensive exchange of views on issues related to, inter alia, the desirability of MBMs providing: certainty in emission reductions or carbon price; revenues for mitigation, adaptation and capacity building activities in developing countries; incentives for technological and operational improvements in shipping; and offsetting opportunities.

This situation poses the question what will the EU do? The European Commission has made it clear on many occasions that if IMO does not reach an effective agreement on emissions by the end of 2011 it will take unilateral action. Certainly environmental groups, including Seas At Risk (SAR), Transport and Environment (T&E) and Environmental Defence Fund (EDF), responded to the lack of progress at the IMO meeting by calling on the EU to go ahead with threats to bring shipping within the European Emission Trading System (ETS).

However, the International Chamber of Shipping (ICS) says that it believes there is an increasing understanding within the European Commission of the problems associated with trying to bring shipping into the ETS. The EC has recently adopted a comprehensive strategy – Transport 2050 – for what it describes as “a competitive transport

31

system that will increase mobility, remove major barriers in key areas environment and fuel growth and employment”. At the same time, the proposals are meant to dramatically reduce Europe’s dependence on imported oil and cut carbon emissions in transport by 60% by 2050.

The EC claims its target of reducing emissions by at least 40% from bunker fuels can be met by “operational measures, technical measures, including new vessel design, and low-carbon fuels”. It says that, given the global nature of shipping, these measures need to be worked on in the international context of the IMO to be effective.

In January, Brussels was presented with a clear indication of the difficulties associated with a unilateral EU approach. A European Commission Joint Research Centre (JRC) Reference Report claimed to provide the first comprehensive overview of methodologies for estimating air emissions from shipping. The JRC Reference Report “Regulating air emissions from ships: the state of the art on methodologies, technologies and policy options” describes technological solutions and proposes policy options for reducing carbon emissions and air pollution in this sector.

Among many other things the report details the legal and economic/commercial problems associated with any attempt to bring shipping within the EU Emissions Trading System.

The following is a JRC report extract:

“It has to be taken into account that trading and other transaction costs could place a large burden on small emitters such as single ships, making trading inefficient. Another threat to the functioning of the EU ETS is that of incomplete information or insecurity about future policy decisions, which can lead to volatility and investment risk in the carbon market. A threat for the maritime sector is loss of competitiveness for companies that don’t fall under the scheme.

“In contrast to the conclusions drawn from the external features of the EU ETS [which are in favour of applying it to shipping], the internal features of the maritime shipping sector do not lend themselves favourably to inclusion in the scheme. Although the sector has a significant abatement potential, meaning that environmental gains can be realised, and large ships are already obliged to hold bunker

32

notes with information about bunker fuel sold, there are some challenges that need to be overcome in order to make membership of the scheme a success.

“First and foremost, the participating countries need to decide on an allocation method, which raises political issues and has been the major bottleneck for over a decade in the international debate.

A number of studies comparing market-based and command-andcontrol instruments for different pollutants found that, in all cases, the cost of achieving the same reduction in pollution are between 1.72 and 22 times higher for command-and-control instruments.

“The mobile nature of the sector creates a risk of carbon leakage, which is a major concern for the environmental effectiveness of the policy and needs to be addressed with great care.

“In addition, there are administrative difficulties due to the fact that the ships vary considerably in size, type and use. This means that deciding on the specific policy design, mainly with respect to the distribution of allowances (grandfathering based on an historic or benchmark approach, or auctioning), will face the challenge of getting all stakeholders to agree while still coming up with an ambitious policy.”

The JRC study also looks at the legal constraints on EU environmental policy regulation of air emissions from ships. It notes: “Developing a regional (European) Emission Trading Scheme for international shipping is a challenging task given the constraints which regulate the international legal framework of the maritime sector. Indeed, any EU environmental policy regulating air emissions from maritime transport has to comply with the International Law of the Sea and, in particular, with the United Nations Convention on the Law of the Sea 1982 (UNCLOS) to which the EU is signatory.”

Overall, this study underlines the desirability of reaching an international agreement at IMO rather than trying to bring shipping into the European ETS. The ICS believers relevant officials in Brussels do broadly agree with that view and that the technical measures, on which IMO has made significant progress and is likely to reach agreement in July, may be sufficient to at least buy some time before the political pressures to act unilaterally become overwhelming.

World Bunkering Summer 2011

environment

To scrub or not to scrub?

A new US guide to abatement technology says that cost savings are so significant that some shipoperators may find installing scrubbers to be a competitive necessity.

A

s the 2015 deadline for ships to use fuel with less than 0.1% sulphur content within Emission Control Areas (ECAs) draws closer, shipoperators need good information on which to base their decisions.

One option is to install one of the several exhaust gas cleaning systems, or ‘scrubbers’, now on the market or under development.

A new US publication, written by Glosten Associates for the government-funded Ship Operations Cooperative Program (SOCP), goes a long way towards explaining the considerations operators need to bear in mind.

The Exhaust Gas Cleaning Systems Selection Guide notes that, after the 2015 deadline, a shipoperator may meet RCA requirements by burning high-sulphur fuel at sea, and then switch to low-sulphur fuel within the ECA. Or they can change to always burning lowsulphur diesel fuel oil or use natural gas that has almost no sulphur content.

Alternatively, the guide notes, international convention MARPOL Annex VI allows a shipoperator to burn high-sulphur fuel if using an exhaust gas cleaning system (EGCS) that can reach an equivalent level of emission reductions.

The guide has been developed to assist shipoperators who are members of the SOCP to determine their emissions requirements, calculate potential cost savings, and understand the integration and operational challenges of various EGCS technologies.

The author of the guide, Kevin Reynolds, stresses that each shipoperator will need to consider the discussions for and against each EGCS in the light of their own specific situation. The guide says that “shipoperators considering this option should conduct an individual analysis, and consider a prototype installation in the near future”.

The guide notes cost of 0.1% distillate fuel oil has historically been 50% higher than high-sulphur marine grade residual fuel oils.

An analysis of fitting scrubbers on three ship types, each of which operated at least partially within an ECA, predicts net present values between $5m and $20m, and internal rates of return between 20%

World Bunkering Summer 2011

and 53%. This assumes operations from 2015 through 2025, and an 8% fuel escalation rate. If fuel prices were to escalate at a rate of 11% annually, the net present value would increase by almost 50%.

The guide concludes: “These cost savings are so significant that some shipoperators may find installing an EGCS a competitive necessity.”

The guide does also flag counter arguments and also the numerous uncertainties surrounding the various new technologies.

It notes: “Most systems are still in their prototype development phase, and therefore carry with them technical risks. Even assuming early technical issues are overcome, the ongoing impact of these large and complex devices may include: heavy fuel oil heating, purifying, and waste stream management; treatment and waste chemical handling and storage; approximate doubling of the engine stack size to accommodate scrubber units; weight and stability issues; and additional engineering staff to run the machinery and monitoring equipment.”

The guide also notes that it is not yet clear if wet scrubbers can remove fine particulates to an equivalent level of reduction as is achieved by switching to low-sulphur fuel oil. That could be an issue under future legislation.

It puts the dilemma like this: “The shipoperator considering an EGCS faces a conflicting pair of recommendations. On the one hand, the fuel cost savings for those operating within an ECA is so substantial that an EGCS may be a competitive necessity. On the other hand, installations are discouraged because the technology is not yet fully mature, places a significant burden on ship arrangements and operations, and raises some environmental impact concerns.”

The guide makes clear fitting EGCS is no small matter, cautioning: “The impact of an EGCS on ship arrangements, operations, and logistics is both broad and pervasive. The machinery is very large, impacts key mechanical, electrical, and control systems, and in the case of chemical-based systems requires impacts logistics for bunkering and safety response.”

Nevertheless, the conclusion is: “In spite of these challenges, the cost savings potential remains significantly high.”

33

testing

No need for alarm

Michael Green, Lintec Testing Services

Michael Green, Technical Manager, Lintec Testing Services, reports that quality levels changed little in the first quarter of the year compared to 2010.

F

uel quality is always a contentious issue, and the end of the first quarter of 2011 seems like a reasonable time to examine any issues the year has provided so far.

The final half of 2010 showed approximately 18.2% of all submitted samples tested to have one or more parameters in excess of the limits prescribe by the ISO 8217 specification. In comparison to recent years this figure does not deviate significantly from the average and, that being the case, does not provide significant cause for concern.

In looking at the specific off-specification parameters, it is worthy of note that the most prevalent issues are of the non-critical variety. Of the 18% of fuels that have shown out-of-specification characteristics, viscosity is far and away the biggest culprit, with approximately 46% off-specs being viscosity-related. Density was also a significant contributor in that it accounted for approximately 21% off all off-specs.

Critical issues such as sulphur content and combined aluminium and silicon content accounted for 9% and 1.5% of all off-spec samples respectively.

So how does quality compare based on submissions so far in 2011? Up until the current time, the overall level of off-specification samples tested has risen slightly, to 18.8%. In looking at the specific parameters it is still the case that both density and viscosity take up the lion’s share, with 22% and 48% respectively. Both parameters show a slight increase from the 2010 figures, but the overall variance is such that there is little cause for alarm.

34

However, when we examine sulphur and combined aluminium and silicon, it is important to note that the overall numbers fell compared to 2010. In the first quarter of 2011, sulphur issues accounted for around 7% of all off-spec fuels, while combined aluminium and silicon content accounted for less than 1% of all off-specs.

It is therefore fair to surmise that, on the whole, overall levels of quality have remained fairly constant. However, a small reduction in ‘critical’ off-specs will provide some welcome relief to shipowners and operators alike.

World Bunkering Summer 2011

testing

Owning up

Dr Vis, head of Viswa Lab, recounts a recent contamination case with some unusual features.

H

ere is a story on off-spec fuels tested by Viswa Lab from the Houston area that is very interesting for more than one reason. Refreshingly, a supplier/barge operator admitted the possibility of delivery of a contaminated fuel around the same timeframe. At least five ships tested by Viswa Lab between 4 January and 13 January in the ports of Houston, Pasadena, Texas City and Freeport reported machinery problems.

All the fuels conformed to the ISO 8217 specifications. These fuels had a Acid number (AN) of 3.0 mg KOH/g to 6.85 mg KOH/g.

Normal fuels have a AN of 0.2 to 0.3 unless the fuel comes from a naphthenic base in which case an AN of 3.0 is considered acceptable.

Viswa Lab also carried out a pH on the extracts of these samples.

The values went as low as 5.9 (normal around 7.0), clearly indicating that the samples were acidic. Another important constituent was asphaltene, which was also high in the samples from 8.6% to 13% (normal 2 to 6%).

GCMS analysis (including quantification) revealed presence of styrene up to 11,63 ppm (normally less than 20ppm); DCPD up to 7,050 ppm (normally less than 20ppm), Indene up to 2,635 ppm (normally less than 20ppm), Butoxybutanol up to 170 ppm (normally less than 20ppm), Dihyrdro-DCPD up to 203 ppm (normally less than 20ppm) and C16 FAME up to 357 ppm (normally less than 100 ppm).

With the contaminants, high asphaltene and high acid number, fuel users complained of piston ring breakage, rapid wear out of fuel pump and fuel nozzles, and gummy deposits choking filters and purifiers. All problems were experienced only after 15 to 20 days of usage of the contaminated fuel.

Viswa Lab closely followed up the analysis and reports from the vessels in order to confirm that these contaminants resulted in problems in the engine. Usually, if the fuel does not present any problem in the first few days, the ship staff assume that there is no fuel related problem. Viswa Lab, based on the detection of the contaminants,

World Bunkering Summer 2011

Dr Vis, head of Viswa Lab

anticipated problems, and continued the follow-up. In some cases damages occurred after 20 days of usage of this fuel.

The supplier/barge operator circulated a note in which he admitted to the possibility of contaminated fuel deliveries in the port of Houston.

The lessons to be drawn are: • Without qualitative identification and quantification of contaminants as carried out by Viswa Lab, it is difficult to prove that a fuel is contaminated.

• Enough empirical data connecting machinery problems to quantified contamination will help in proper diagnosis of the problem.

• If every supplier/barge operator admitted mistakes, the bunker business world would be a much happier and stress free place!

35

risk management

Playing safe is not easy At a time of volatile markets and high penalties for getting it wrong, companies need to be as risk averse as possible, Sandra Speares reports.

R

isks associated with bunkers cover a number of different areas, from limiting exposure to fuel price fluctuations, to credit risk if the charterer defaults. As bunker prices continue on their upward trend, managing the risk of getting the calculations very wrong is a key consideration.

Different companies have devolved different strategies for managing the risk of fuel spikes with some opting to hedge their exposure, and others taking their chance in the open market.

A case in point is the cruise industry, where different companies have taken widely different approaches to hedging against fuel increases. If shipping is by its very nature a cyclical business, owners and operators need to manage the risks they face in order to survive in business. If the use of financial instruments like derivatives is relatively new to the shipping industry, the take-up of such options is now extensive.

On the other side of the equation, owners and operators will have a risk exposure for non payment of bunkers and this is an issue that had been featuring in the English and US courts most recently.

In the case of a default by a charterer, which leaves the bunker supplier unpaid, under English law, for example, a maritime lien cannot be sought where that is possible in the US. Another area to be highlighted is credit risk management, and as head of Ocean Intelligence Pte Ltd, Adam Dupre comments on his new book An Introduction to Bunker Credit Risk: “Anyone selling fuel to ships almost always does so on credit. The amounts of money involved can be substantial. There is no security of payment and margins can be thin, so customer default is always a danger and can be very serious for the supplier. For anyone involved in the business, it is essential to understand the dynamics of credit risk.�

If bunker suppliers are risking delays in payment or defaults from charterers when they offer credit terms, there may be other remedies they can consider, although they need to be conscious of jurisdic-

36

tional differences in the treatment of bunkers. Contractual clauses could include the bunker supplier retaining title to the bunkers until paid, or clauses to prevent a claim late in the day that the fuel is offspec. Prepayment for bunkers, or ship arrests are two other remedies.

However, jurisdiction has a key role to play as do tightly worded contacts. As can be seen in the Fesco Angara case (see page 27), whether or not a lien can be obtained over bunkers will depend on the jurisdiction in question, and retention of title clauses do not always work in favour of the supplier.

Disputes over quality, quantity and ownership in the event of a default look likely to continue. The Standard Club has issued a fuel oil guide to assist masters with bunker quality and how the fuel arrives on board and is handled. It also outlines such issues as emission control areas and low-sulphur fuels.

Poor quality bunkers can lead to severe engine damage or failure and therefore testing fuel quality ahead of its use is an essential part of the risk management process.

Pre-testing of bunkers was on the agenda at the Bulk Liquids and Gases subcommittee meeting at the IMO in February when Intertanko and Norway submitted proposals for pre-testing and a ban on barge blending.

IBIA and BIMCO responded to the proposals suggesting that a correspondence group should be established to establish pre-testing parameters. BLG decided that there was no requirement for a working group to be set up and also decided not to proceed with the Noway/Intertanko proposals.

Singapore-based shipmanager Thome was recently quoted in the trade press as saying that off-spec bunkers was to blame for engine failure on the Blue Emerald.

Concerns have been addressed by organisations like Fobas about the deficiencies in training of crew members in the correct handling of bunkers before, during and after they arrive on the ship.

World Bunkering Summer 2011

Bunker fuel spilt into the harbour while loading bunkers could result in an expensive claim, not least if the hulls of other vessels in the port are affected and need to be cleaned.

Although the most recent spill statistics put out by the International Salvage Union suggest that figures for salved bunker fuel last year were down 10% on 2009, it only takes one incident to expose owners to a sizable clean-up bill.

Strict application of regulations like the International Safety Management Code, and not just a tick box approach are therefore essential so that owners and operators limit their chances of a catastrophic spill.

One high profile bunker spill case in recent times was the 2009 Pacific Adventurer case off the Australian coast, which saw 270 tonnes of heavy fuel oil lost in addition to 31 containers of ammonium nitrate.

In the case of the Pacific Adventurer, master Bernardino Gonzales Santos, his employer Swire Shipping, Swire Navigation, Bluewind Shipping and China Navigation each face one charge of discharging oil into coastal waters. All parties plead not guilty.

Over $17m has already been paid out in clean-up costs. Risks faced by owners over clean-up costs and compensation for spills now tend to go way beyond their obligations under the civil liability, fund and bunker spill conventions.

As a result of the spill, Australia wants to see an increase in the limits of liability under the 1996 protocol to the Limitation of Liability for Marine Claims convention 1976. Australia is pushing for the maximum possible under the rules.

According to International Tanker Owners Pollution Federation statistics, nearly half of spills of less than seven tonnes were caused by loading and discharging (40%) and bunker operations (7%) between

1973 and 2010. The vast majority of spills over seven tonnes are as a result of accidents and not operations.

Uncertainties over supplies from the Middle East is pushing prices higher, making the need to look at hedging strategies all the more necessary.

According to Torbjorn Bak Jensen of Global Risk Management the outlook Libyan oil supplies is postponed and there are worries about possible damages to the oil facilities as the front line moves backwards and forward.

He also notes recent suggestions by NATO commander Admiral James Stavridis that the opposition may have links to Al Qaeda, which would make arming them an unlikely prospect and if the rebels fail to control oil supplies in Libya – Gaddafi will face sanctions against oil exports.

According to Torbjorn Bak Jensen, the recommendation is to use options to hedge future exposure. “Focus on the technical side is a potential break of the 118.4 level on the Brent. In addition we recommend hedging the price difference between fuel/gas oil and crude oil as a direct result of the nuclear disaster in Japan.”

Global, which is part of United Shipping and Trading Company, one of Denmark’s biggest concerns, offers clients customised hedging solutions to fuel price risk.

Singapore Stock Exchange-listed bunker supplier Chemoil says that offering risk management tools to its customers has two-way benefits. It says in its online newsletter that supplying risk management services to its customers helps them control their risk while at the same time Chemoil benefits in managing risks on its physical inventory in storage.

It also maintains that as a physical supplier it can offer more flexibility and hedging on a geographical or port by port basis.

It only takes one incident to expose owners to a sizable clean-up bill

World Bunkering Summer 2011

37

FREIGHT

EXPECTATIONS ELLIE WEIR QUIZZES INDUSTRY EXPERTS ABOUT THE OUTLOOK FOR THE GLOBAL BUNKER MARKET

Ian Adams Chief Executive International Bunkering Industry Association

Alvaro Diaz Marine and Aviation Manager Cepsa

Crispian Hurley Bunker Broker Lindsay Blee

Angus Ogilvie Technical Director Cockett Marine

Platts: The past year has seen enormous change in the bunker market, not least with new legislation and specifications.

How do you think the market has adapted to these specs and the continuing changes ahead with ISO:2010 fuel changes and the continually decreasing sulfur limits?

Crispian Hurley: As worldwide bunker brokers we have certainly seen a definite increase in owners/operators trying to switch to the ISO: 2010 specs. In many of the mainstream ports some suppliers can quote products that conform to the new specifications but many are still not making the adjustments as demand is not great enough yet.

This is clearly visible in Singapore where the Maritime and Port Authority have extended applications of the ISO: 2005 for marine fuels for another two years, until June 30, 2012. Additionally the specifications of new standard marine fuel do not accord with actual demand of ship owners. The new standard has not restricted the aluminium, silicon, ash and vanadium content. In the present Singapore bunker fuel market, for example, the specifications of marine fuel provided by suppliers are usually superior to those set in the ISO 8217:2005 standard.

Alvaro Diaz: [We’ve found] the transit from 1.5% to 1.00% in Emission Control Areas [see box] has been probably smoother than expected and the previous offer levels for 1.5% have been substituted now with similar offers for 1.00%.

2015 will be an interesting year, with ECAs going to distillates or abatement technologies or both! This big change will give us an idea about availability and price differences up to 2020-25 and what the impact will be on the shipping industry. As for ISO 2010, we will see differences depending on ports and suppliers, some adapting faster than others.

Cepsa is already supplying according to ISO-2010.

Ian Adams [In our view] the switch to ISO8217:2010 will be a gradual change as operators renew their charter parties. I believe that in the most part suppliers have been able to comply with the new specification when requested to do so.

Angus Ogilvie: The EU-mandated switch to maximum 0.1% sulfur on all fuel used in EU harbors saw a direct increase in marine gasoil buying. The increase in MGO consumption had a minor effect on bunker prices at the start of the year but with tankers laden with MGO lying offshore NWE, there were few shortages and prices remained stable.

When the use of LSFO (1.5%) was first introduced many pundits declared that a premium of $100/mt over HSFO (3.5%) would be the norm. As it turned out, premiums rarely strayed above $50/mt, and when the new 1.00% LSFO became the norm they fell as low as under $10/mt.

This past summer oil traders brought cargoes of LSFO from many places including Brazil and the US East Coast. However, it was a relatively cold summer and less LSFO has been used by electricity generators. Moreover, there have been significant quantities of locally refined LSFO available. The consequence has been to store LSFO for sale later in the year.

When the new ISO standard for marine fuel quality was published it contained four new test parameters and many changes to the limiting values. To date there are few suppliers willing to guarantee their products within the latest standard but it is early days.

History has shown that new standards are hard to popularize when the market is flush with ships looking for employment.

The only one suffering from the introduction of the new standard has been the time charterer whose bunker quality clause refers to the third or latest editions and a lot of work is still required to guarantee that the quality is reached.

2010 has seen the prices of bunkers increase to the point where they are now the highest proportion of shipping costs they have ever been. What sort of impact has this had on the bunker and shipping markets?

AO: For a long time, bunkering has been a significant factor in a vessels daily running expenses. Bunkers typically represent 40-60% of ships’ running costs. Ship operators have learnt to live with high prices as long as the price hike is not too rapid or is matched by increased revenue. From recent history, the market was able to bear soaring bunker prices as freights increased.

Prices fell rapidly [later] in 2008 on the back of a collapse in charter hire.

Ship operators are looking at ways of economizing on fuel costs such as slow speeding among others. For the bunker industry the introduction of slow speeding has made a large cut in fuel consumption, particularly for ships which normally travel over 15 knots.

IA: Prices were higher in 2008 which was when we saw credit become more difficult.

CH: When Brent and WTI hit their price peak in 2008 the shipping industry was in serious danger of collapse as operators were not only hit with increasing costs for their fuel but also increasing charter rates on their vessels.

During the global recession there was a visible slowdown in container shipping in U.S, Europe and Singapore.

However, once the economic situation started to improve in 2009, slowly but surely operators were making profits again and the container market started to grow at a slow rate once more.

At this stage bunker prices were at lows not seen for decades and this helped to boost the recovery in the shipping markets.

2009 and 2010 saw relentless growth from the Far East and newly industrialized economies. This has bolstered crude demand massively and as a result has helped to push prices up the $100 mark again. This will no doubt start to impact daily shipping costs once more and could even damage the already fragile global economic recovery.

AD: [As the others say] this is of course not just about bunker prices, but a global energy issue. As crude prices go higher, overall prices go higher, which may affect consumption and in turn transportation. For the time being bunker sales are holding their ground, but at current price levels we might see a slowdown in consumption, if not in the immediate future.

Besides this, one major issue for both ship-owners and suppliers is the tight credit scenario, and the higher cost of credit to everyone involved.

This can make things very difficult for companies unable to access to the extra financing needed. Therefore, financial muscle and credit risk management continues to be critical.

With the continued growth of economies in the East and with Shanghai now the busiest port, do you see the traditional trading flow (Russia/Rotterdam/ Singapore) changing? How is the market adapting to these changes?

AO: In the Far East shipping has probably grown faster than any other area. This additional shipping requires fuel and the Far East is a net importer of HSFO. Enormous quantities of HSFO are shipped from the Baltic and Black Seas to the Far East. Cargoes are also imported from the US Gulf and Latin America.

More refining capacity is being built in Asia, especially in the Middle East and India. However, most of the new refineries are designed with a coking plant, which maximizes distillate production and leaves very little residual fuel. Unless new sources of HS crude oil are discovered in the Far East, the region will continue to import from elsewhere. The major market in Asia will still be China, where a significant percentage of global HS fuel oil is still used for industrial and utility usage.

AD: We see the traditional flow of cargoes from Europe to Asia, regardless of whether it goes to Singapore or Shanghai.

What sort of impact do you think the upcoming Emission Control Area in the US will have? Will we see more ECAs come in to force?

IA: The ECA in the US and Canada is predicted to affect 93,000 ship port calls. It will therefore have a significant effect on the demand for low sulfur fuel.

AD: In answer to the first question, we will see demand for LSFO increase, but it should not greatly alter the global supply-demand situation. Regarding the second question, we will see new ECAs, although they might not be in areas of significant consumption, unless a Mediterranean ECA were to be eventually proposed.

How do you see the outlook for the bunker market in 2011?

IA: If I could answer this question I would not be in my current position!

AO: Prices will rise with crude but will increase at a slower rate due to its huge excess stocks. However, as the year progresses the buffer between crude and HSFO will narrow and discontinuity of supply will be more frequent.

There should be a small rise in suppliers able to deliver to the new ISO standard but this will remain for many years a source of friction. Work will continue to be done on ‘improving’ the standards in the supply of bunkers.

CH: Bunker prices worldwide will continue to follow crude markets.

Demand continues to increase in both OECD and non-OECD countries post-2009 as government stimulus injections and low interest rates boost consumption worldwide. 2010 oil demand growth was the second strongest in 30 years and demand forecasts have been altered continuously to reflect this surprise. It is forecast that global oil demand could reach as high as 90 million b/d by the end of 2011. The real driver of the demand growth has come from developing countries such as India and China whose demand far outstrips its own domestic supply forcing those countries to import more foreign product, in turn driving the price increase.

The upswing in non-OPEC supply is coming to an end as both the US and Russia decrease output. This is also the story in Europe as declines in North Sea Oil output are stepping up.

Overall this will have a bullish effect on bunker markets, and with increasing regulation and climate controls coming in to force, the refineries will have to increase their margins to cover increased production costs and all of this will no doubt be passed on to the consumer.

AD: In terms of volume, 2010 has been a better year than 2009, although in some ports we have seen recessions, which have affected demand. We expect 2011 to be a better year than 2010, but if prices continue upward, this amount of increase might be affected.

As for margins, I wonder how long very, very low margins can be maintained in some hubs.

Finally, quantity and quality guarantee will be critical with higher prices, and reputation therefore a very important factor when choosing a supplier.

This article was taken from The Barrel, a complimentary editorial lead magazine produced by Platts.

For further information about any of Platts products, or for your free edition of The Barrel, contact Mary_Yiannouzis@platts.com.

8th Annual

Bunker & Residual Fuel Oil Conference Bunker Quality, Availability, and New Specifications

June 22–23, 2011 • Westin Houston Memorial City • Houston, Texas

Register by May 13, 2011 and SAVE $200!

Platts annual Bunker & Residual Fuel Oil Conference gives you the latest information on the state of the industry and the key drivers for bunker and residual fuel oil, the “bottom of the barrel.” Hear in-depth information about new fuel specifications, fuel availability including low-sulfur fuel, logistical challenges, and international market dynamics.

This is the leading educational and networking conference for the bunker industry in the US. Attendees include petroleum refiners, traders, bunker producers, refined products transportation and storage, terminals and port owners, shipping owners and operators, and others in the industry.

Outstanding Speakers Include: • Ian Adams, Chief Executive, International Bunker Industry Association • Alan Gelder, Head of Downstream Consulting, Wood MacKenzie • Tim Gawne, Director of Trading, BrightOil Petroleum USA Inc. • Greg Binion, President, Kirby Corporation • John McDonald, Founder, Battleground Oil Specialty Terminal Company (BOSTCO) • Larry Taylor, Vice President, Trading and Supply, NuStar Energy LP • Maria del Rosario Escobar, President, Navipac S.A. • Kurt Barrow, Vice President, Purvin & Gertz, Inc. • Neil Earnest, Vice President, Muse Stancil • Randal Goodfellow, Senior Vice President, ENSYN Technologies • Esa Ramasamy, Editorial Director, Americas Oil Market Reporting, Platts • Thomas Sosnowski. Associate Editor, Platts • Robert Sharp, Associate Editor, Platts • Funda Saygin, Senior Editor, Platts ...And more — see web site for a full agenda

For a complete agenda or to register, please visit us online at www.bunkerfuel.platts.com or call us at 866-355-2930 (toll-free in the US) or 781-430-2100 (direct).

For more information and speaking opportunities, contact:

For sponsorship opportunities, contact:

Ron Berg Tel: 781-430-2118 ron_berg@platts.com

Joshua Vernon Tel: 781-430-2113 joshua_vernon@platts.com

For media inquiries, contact: Christine Benners Tel: 781-430-2104 christine_benners@platts.com Registration Code: PC122WB

oil majors

Avoiding risk

Last year’s Deepwater Horizon tragedy has left everyone reviewing their safety systems to make these even more risk averse. As demand for energy continues to increase, Sandra Speares looks at some of the latest developments.

A

s ExxonMobil points out in its Outlook for Energy report, few people outside the industry gave much consideration to the growth in deepwater drilling, but Deepwater Horizon put the increasing importance of deepwater drilling in meeting energy demand for the future into the spotlight.

ExxonMobil already has an operations integrity management system in place which is comprised of 11 separate elements, including standards that third parties doing work on the company’s behalf will need to meet.

The company is also working with other energy companies to develop a Marine Well Containment System, which will enable the industry to respond more effectively to a deepwater incident in the Gulf of Mexico, Exxon says. The new system will enable up to 100,000 barrels of oil a day to be contained in depths of up to 10,000 feet, which can be mobilised within 24 hours of an incident.

As Eddy Van Bouwel of ExxonMobil told the International Parcel Tankers Association conference for chemical and product tankers in March, ExxonMobil estimates that energy demand per capita in OECD countries will be flat in the period to 2030, even though gross Deepwater incident in the Gulf of Mexico makes oil majors more risk averse

World Bunkering Summer 2011

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Let’S keeP thingS SiMPLe Volatile prices, uncertain delivery, and unreliable quality can quickly complicate your fuelling requirements. Across the world, our professionals are guided by a simple promise: to deliver quality fuels on time and in full – every time. For that additional assurance, our global team of customer service professionals and risk management experts are always at your disposal. At Shell, we work to keep bunkering simple for you. As it should be.

Shell Marine Products

domestic product is expected to rise more than 60%, while energy demand in non OECD countries will be 75% higher than OECD demand. Such statistics mean changes in the types of fuels used in the industry, not least with the introduction of emission control areas round the globe.

If global energy demand is predicted by Exxon to rise by about 35% by 2030 demand for natural gas will rise by 60% between 2005 and 2030. Other energy sources are set to increase including the use of nuclear and biofuels, wind and solar power.

Given the arrival of the low-sulphur emission control areas, one of the debatable points is what the supply of low-sulphur fuels going forward will be. Many, including the International Chamber of Shipping, have argued that there is a need to look at availability of distillate fuel supplies ahead of the 2018 review stipulated in IMO guidelines.

Aside from looking at alternative sources of fuel, efficiency is the name of the game. “Without energy efficiency measures, energy demand would skyrocket,” Mr Van Bouwel said. Sulphur content in residual fuel of less than 1% is a “rarity” at present. Taking HFO through the desulphurisation process is an expensive business.

There have been some highly publicised sales among the major oil companies recently, which point to the fact that oil majors are offloading certain parts of their portfolio of assets.

Trafigura subsidiary Puma Energy has bought ExxonMobil’s downstream businesses in six Central American markets, including marine fuel supply businesses in Guatamala and Panama.

Commenting on the deal, Puma Energy’s chairman Pierre Eladari stressed the importance of the company’s growth in Central America. “It positions us as one of the leading fuel supply companies in the region. Together with our acquisition of the CAPECO terminal and network of service stations in Puerto Rico, we believe this creates one of the strongest and most dynamic players in this market.”

Other recent deals include Chevron reaching an agreement to sell Chevron Limited, including the 220,000 barrel per day Pembroke refinery, to Valero Energy for $730m plus another $1bn for Chevron’s inventory and “other items”. The deal is expected to be completed in the second half of the year, provided it receives the necessary green light from the regulators.

According to Mike Wirth, executive vice president of Chevron Downstream & Chemicals, the sale is “consistent with our global strategy to focus our business on markets where we are well positioned to deliver strong returns for our shareholders”.

According to the company, downstream activity is now focused on North America and the Asia-Pacific region which are, Mr Wirth says, “markets where we enjoy our greatest competitive strength and opportunities for growth”.

Shell, meanwhile, signed a $1.3 billion sale and purchase agreement with Essar Oil (UK) Limited at the end of March for its 270,000 barrels per day Stanlow refinery. The deal includes marine fuels businesses associated with the refinery, although not non-local marine business or lubes.

ADDAX BUNKERING SERVICES ALBA PETROLEUM LIMITED ASMIRA PETROL LTD AUSTRALIA BUNKERING PTY LTD BALTIC FUEL COMPANY BUNKERBRIDGE PTE LTD C.I INTERNATIONAL FUELS LTDA CYE PETROL TIC LTD STI ENERGY PETROL SHIPPING TRADE INDUSTRY INC

GAZPROMNEFT MARINE BUNKER LTD LUKOIL BENELUX B.V. LUKOIL BUNKER ITALY S.R.L. LUKOIL BUNKER LTD MAMIDOIL-JETOIL SA

For more information on these companies and to view this publication online using the innovative Page-Turning technology, visit: World Bunkering Summer 2011 www.worldbunkering.com

43

fuel management

Managing fuel, saving cash

As oil prices continue on an upward trend, fuel management has become increasingly important for shipowners and operators, Sandra Speares reports.

M

onitoring the use of fuel and optimising its use is becoming an increasingly high tech business. With companies like Houston-based FuelTrax using a combination of shipboard electronics and satellite communications and the internet to ensure fleets make the best use of fuel.

The patented FuelTrax product, which includes an internet-based product FuelNet, covers a wide range of applications from fuel monitoring to reduce consumption, optimisation of fuel use by recommending the most effective throttle settings, advice on fuel inventories and fuel locations, best practice for crew members, with comparison of their performance, and engine and vessel analysis.

The firm lists ExxonMobil Production, Holland America Line and Rio Tinto among its customers.

DNV Petroleum Services offers a Total Fuel Management service that aims, to improve operational efficiency, ensure clients get the most out of their bunkers and also that they meet increasingly stringent regulatory requirements.

According to the company, managing fuel has become more and more complex with “present day decisions having significant consequences in the future”. Shipping companies have to look beyond quantity and quality verification when looking at the bunker issue, and take a more holistic approach by looking at “different but inter-connected practices and issues in ship operations”.

The need for better fuel management has led to many innovations in the field of engine design. Man Diesel and Turbo, for exam-

44

ple, has recently successfully completed a type approval test for its fourth super-long-stroke S80ME-C9 engine, which uses extra energy in exhaust gas to produce fuel oil savings of the order of 10-15%, according to the company. Maersk is installing 22 of the engines on its new 4,500 teu container ships.

Maersk has also been developing its own tools to improve fuel management across the fleet. One such is ECO-Voyage, which analyses currents, depth, waves and wind along a planned route to establish the optimum power and speed during a voyage. The information is shared with other ships in the fleet so that they can all benefit.

“The programme enables the captain to run several alternative routes and see how much difference in fuel consumption there will be. Also our large vessels can plan a dual speed voyage to optimise the use of the waste heat recovery system. It should improve their confidence in choosing an alternative route,” explains Kim Henriksen of Maersk Maritime Technology.

According to MMT, potential fuel savings by using the tool are between 0.5% and 1% per year. Maersk’s new 18,000 teu container ships, the Triple Es – which are under construction at DSME in Korea, are expected to use 35% less fuel consumed by container than 13,100 teu vessels being delivered to other container shipping lines in the next few years, Maersk claims.

Rolls-Royce, meanwhile, has signed a £20m ($32m) contract to supply Norwegian operator Torghatten Nord with engines and propulsion equipment for four gas-fuelled ferries that will feature the

World Bunkering Summer 2011

company’s hybrid shaft generator, which is designed to reduce fuel consumption, and cut emissions.

Stolt Tankers launched its energy management project in 2006 and says the company has already made substantial fuel savings through the measures it has introduced. These have included making more efficient use of onboard heating and operational systems, smoothing hulls and propellers to reduce resistance through the water, reducing sailing speeds and optimising voyage planning.

Ensuring crews are up to speed with best practices and maximise efficiency is also important. The project has also been targeting the reduction of SOx, NOx, and CO2 emissions. With demand for fuel demand set to continue to rise in the decades to come, increasing attention is being paid to alternative fuel sources.

Stolt-Nielsen acquired an interest in Seaweed Energy Solutions in March 2011 – an energy start-up looking at using seaweed to produce bioethanol and biogas. Chief executive Niels Stolt-Nielsen said at the time: “The propulsion of our entire fleet is based on petroleum. The raw material for many of our cargoes is petroleum. I feel it is our duty, as well as being in our interest, to help develop alternative sources of energy and raw materials. Through our experience as shipowners and fish farmers, we know a lot about the sea and wish to put that knowledge to work helping to make seaweed such a source.”

Detailed work has been done at the International Maritime Organization to improve the energy efficiency of ships to reduce their fuel consumption and cut emissions.

As the ICS explains on its Shipping and CO2 website: “the Ship Energy Efficiency Management Plan (SEEMP) incorporates best practices for the fuel efficient operation of ships, such as better speed management throughout a ship’s voyage, for example. Such efficiency measures will significantly reduce fuel consumption and, consequently, CO2 emissions.

“The SEEMP was developed through detailed discussions between member states, and with the advice and assistance of the international shipping industry, through a specialised working group on greenhouse gas emissions convened by the International Maritime

World Bunkering Summer 2011

Organization’s Marine Environment Protection Committee. The working group also discussed measures such as an Energy Efficiency Design Index, which will help to ensure that new ships are built as energy efficient as possible.”

International Transport Intermediaries Club (ITIC), the Thomas Miller-managed specialist liability insurer, has provided a salutary lesson for ship managers which, among other things, illustrates what a costly business it can be when you get your bunker calculations wrong.

In its latest Claims Review, ITIC cites the case of a commercial manager which had, for several months, been operating a ship on a regular route that involved a call at Singapore, where it was usually bunkered.

The commercial manager was advised by the shipowners that the vessel had been sold for scrap and that, on its next call at Singapore, instead of taking on full bunkers, it only needed to lift sufficient bunkers to reach its scrapping location. Unfortunately, the commercial manager’s operations team failed to take note of the owner’s instructions and bunkered the ship with the usual amount.

When the ship was scrapped, the additional bunkers were an unexpected gift to the scrap yard. The owners brought a claim on the commercial manager for $95,000, which was the difference in value of bunkers purchased.

According to Tim Wilson, product manager at Fobas, another aspect of fuel management that needs to be considered is how bunkers are physically managed when they are pumped on board the ship. ISO13739 specifies procedures and requirements when transferring bunkers to vessels and also pre-delivery, delivery and post-delivery checks and documentation.

“From our perspective it is about managing the fuel from the point of ordering the fuel and the quality you are looking for. That means understanding what the ship can or cannot handle with regards to storage, treatment and use on board,” he explains.

At issue is whether various grades of fuels can be handled and what degree of tolerance the engines can take with regard to quality.

45

“Once you have got that, you know what to order and then there is the question of whether you get what you ordered and handle that correctly on board,” Mr Wilson says.

When the fuel comes on board it is obviously not ready for use and needs to be treated and prepared for use. Fuel needs to be managed properly and if it is, “you limit the risk of causing operational issues or even pollution with respect to the use of that fuel”, he explains. He believes that a lot of the difficulties that ships experience are due to crews not being competent in applying good management and best practice. It is easy to blame the supplier, he says “but often it is people on board who are poorly managed that is the problem”.

Even if the fuel is off specification, that does not mean it cannot be used, he says. “It just means there needs to be more focus in managing that fuel correctly for commercial use.” The specification is there mainly to provide the supplier with guidance on the fuel the ship can handle.

“If it goes over that, invariably the ship will be able to handle it.

It depends on which specification has been exceeded but generally speaking there needs to be greater understanding of the impact of variances in fuel quality on board ship and more training and more scope in understanding the risk if it isn’t done properly.”

Barges are doing bunker operations every day, he says, and one danger may be complacency. For example supervisors of a bunker operation might inaccurately calculate the speed of loading bunkers with a resulting spillage on deck.

Fuel management is an area where ships make a lot of mistakes, Mr Wilson says. One problem may be a lack of knowledge by the crew as to what is happening to the fuel once it is on board. “They think they are heating it with the purifiers; they don’t know if the purifiers are working properly and they don’t know if their temperature sensors are working correctly so they assume everything is working well.” Risks can be mitigated by good practice, he says. Good practices need to be instilled in the mindset of the crew; education and experience is essential.

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“When we are talking about good bunker fuel management, we most often think about how the fuel is handled on board; however, it is even more important how the purchasing is handled in the owner’s office,” Ivar Tonnesen of Pacific Basin says.

“In these volatile times, bunker prices are the hot topic and I sense there is a certain pressure on the person responsible for buying to keep the prices low and get the best deal for his/her employer.

But there is more to good bunker management than just getting ‘cheap’ oil. I don’t believe for a minute that a seller is giving low prices just to be nice. More often than not he will try to claw it back somewhere else, and what is more easy than through playing the numbers game when converting volume to weight?

“On a 1,000 cu m delivery and by just overstating the density on the BDR, they have taken back the ‘discount’ or more – add wrong temperature into the equation, and the 1,000 cu m that was meant to be 975mt delivered, now becomes maybe 950mt received, at best.

At $615/mt bought it becomes 631.18/mt paid. Was anybody talking about saving money by prudent purchasing?”

Then , he says, there is the case of the vessel loading grain in the Mississippi River for Japan. “The person in charge of buying knows that he needs to bunker in either New Orleans or Panama in order to make Japan. A quick look at the local broker’s price list tells him that over the past few weeks, Nola has been fairly consistent with prices around 10 dollars higher than Panama, so he scraps taking bunkers inbound, knowing well that the vessel needs to wait at least 24 hrs before loading.”

By the time the vessel gets to Panama, Mr Tonnesen says, the buyer is in for a surprise. “Despite being told beforehand that she must wait for transit, the ship is cleared to proceed through the canal on arrival at Cristobal, and Balboa is severely congested. This means at least two days waiting for the barge. Yes, the buyer had forgotten that Panama is working on a first come, first served principle. A planned ‘sweet deal’ suddenly turns sour. Again, was anybody talking about prudent purchasing?”

Finally, Mr Tonnesen says, there is the case of the vessel that has to discharge sludge. “This must be done through a special sludge line; however, when the sludge were pumped into the receiving barge, a quick change of manifold connection allowed the chief engineer to also pump about 50mt of ‘sleeve oil’ for which he was paid in cash.

Here we have a case of a dishonest crew member who not only overstated his consumption in order to build up his ‘reserve’ but also sold it for personal gain, which in the end, became the owner’s loss.”

There are numerous other examples to show how an owner can lose money, despite the fact that the bunkers were initially bought below the market price. “This is where proper fuel management comes into play – being able to control the whole chain, from picking up the telephone and ordering the fuel, through the delivery, and verification that what the owner is paying for was actually delivered.

Being able to provide proper bunker guidelines to the crew, have the necessary control routines in place to ensure that what is ordered is also delivered. Needless to say, this also applies to onboard handling, as unnecessary wastage happens there as well.”

Mr Tonnesen says that “the few dollars one saved when buying the fuel, may easily have cost 5-10 times more when the invoice is signed off for payment. However, by having a proper fuel management plan in place for both onshore and offshore staff is, without a doubt, beneficial for all. With bunker costs pushing 60% or even 70% of a vessel’s daily running cost, it becomes even more important. Too often do we focus on the price issue and forget that the real money disappears in the supply chain or on board, and do not bother do anything to stop it. I think it is safe to say, we have no one to blame but ourselves if we allow this to happen”.

World Bunkering Summer 2011

surveyors

Going with the flow?

The widespread use of flow meters does not seem to have dented the demand for bunker surveyors’ services, writes Sandra Speares.

A

lthough the likelihood of continuing high bunker prices is bad news for some, it has nonetheless meant a high demand for bunker surveyors’ services and may indeed make these services even more valuable to owners and operators.

According to Captain Rahul Choudhuri, regional manager for Asia Pacific at DNV Petroleum Services, “in general, we have seen a much larger demand for our bunker quantity survey work over the last few years. This covers the key bunker ports of Singapore, Fujairah and Rotterdam. Other upcoming bunker ports are showing demand too”.

In common with other sectors of the shipping industry, he sees one of the key issues as being supply of good quality surveyors going forward. “We take considerable time in choosing and training our surveyors and meeting demand is not easy. But we will not compromise on quality and integrity. So, we have had to turn away some jobs.”

“The work of the bunker surveyor will evolve with flow metering technology,” Captain Choudhuri says, “but these are just technologies at the end of the day, and until and unless we have a ship that does not need human beings anymore to sail across the seas, we will need these surveyors because bunker fuel is just too expensive and important in shipping operations today. Flow meters come with their own limitations as well.”

“This need for surveyors is linked to the quality of ships’ crews today, especially with the application of bunkering rules. In fact we see a deteriorating trend in this respect.”

“The shift to low-sulphur distillates will also mean more careful quantity assessment – just like crude oil cargoes we now have higher value and so higher risk.”

High bunker values also raise concerns for surveyors on disputes on quality issues and these are likely to continue for the moment as the debate over flow meters versus traditional measuring methods continues.

Educating crews on the correct management of bunkers on board is also stressed by Tim Wilson, product manager for Fobas.

“Education, experience, all that is important and it is not easy to

World Bunkering Summer 2011

get that across to crews.” Fobas uses Intertek to carry out bunker surveying on its behalf on a worldwide basis.

Bunker surveyors have an important role to play in educating crews about bunkers, so it is essential that they themselves remain up to date with the latest developments in technology. IBIA runs courses to this effect.

The total volume of bunkers sold in the Port of Singapore grew 12.3% to reach a record 40.9 million tonnes, last year compared to 36.4 million tonnes in 2009. This is the first time that bunker sales crossed the 40 million tonnes mark, the Maritime and Port Authority of Singapore estimated in January. The record figures, at a time of economic downturn and ships going into lay-up are impressive and high prices for bunkers mean quality assurance programmes are important and surveyors have a role in keeping their clients losses to a minimum.

With rising bunker costs, and the potential for disputes over quality, the surveyor’s services continue to be in demand, even with the widespread use of flow meters. Surveyors can also play a role in ensuring that the flow meter system is working well and mitigate the chance of disputes over whether the flow meter approach is more effective than more traditional measurement methods.

Bunker quantity testing is also proving to be an important area of operations as owners and operators seek to ensure that they are actually getting what they paid for.

The importance of the level of bunkers passing through the port has encouraged the development of bunker survey services in the Singapore region. One of them, DNVPS, has just celebrated the 30th anniversary of the launch of its residual fuel testing service; it received its first two samples for testing on 5 January 1981 from the Mosbrook. DNVPS managing director Tore Morten Wetterhus commented at the time of the anniversary that although fuel management was increasingly sophisticated “operators should still observe the basic precept of testing bunker quality delivered to their vessels.”

Global Marine Inspections Ltd is one company that is expanding its coverage in the Far East. Its new office in Singapore became operational at the end of March and it has also opened offices in the

47

South African port of Durban and in Algeciras. The company has also expanded its services in Korea.

According to N. Shankar, managing director of Universal Marine Surveying and Consultancy (S) Pte Ltd (UMSCPL): “With the industry accreditation and other regulations, survey practices are well regulated, with the respective companies maintaining the standards, and any non-conformance can result in drastic penalties”.

With the increased prices and upward pressure from the recent Japanese disaster, he said he believed the surveyor’s role to ensure quality and quantity was a “worthwhile expense for owners, operators and charterers to consider”.

As far as trends in either demand for surveyors’ services or in the number of off-spec bunkers are concerned, he says there has been a slight increase in 2011 in terms of the number of bunker surveys Universal Marine Surveying & Consultancy has conducted.

“Our company was not involved in any de-bunkering operations in the past year and quality issues are well regulated and enforced

by MPA,” he says. The company had heard of de-bunkering of contaminated fuel incidents which were probably either the fault of the vessel or due to quality issues. Singapore bunkering standards and accreditation represent an effective implementation of sound professional ethics, he believes.

The Singapore Accreditation Council regularly publishes lists of those who have received formal accreditation, and those who have been struck off the list.

What of the professional situation between surveyors? “We notice price wars,” he says. “We, for our part, have a different service attitude and culture strategy and we pride ourselves in our inimitable approach.”

In Mr Shankar’s view IBIA should handle issues pertaining to bunker quality with greater emphasis on environmental protection and to engage Asian participation in many policy matters.

Commenting on the state of the market, an industry source said: “There is still a demand for bunker surveyors, particularly with the introduction of low-sulphur fuels and changes to specifications. Most of the larger inspection companies are engaged in bunker surveys either working directly with the vessels’ owners and charterers or through classification societies. The market is fairly competitive, with the owners trying to keep their costs to a minimum to reflect the

48

current price of bunker fuel oil without jeopardising the workings of their fleet.”

DNVPS consultant Dr Rudy Kassinger was quoted in March as saying that the price premium for low-sulphur distillate fuel could be as much as $850 per tonne, depending on the price of oil. This means that using abatement technology such as scrubbers is becoming a more and more attractive option.

Commenting on the availability of low-sulphur fuels, the industry source said that: “The low-sulphur market is mainly confined to the ECA region and the analysis of these fuels is tightly controlled. The oil companies appear to be meeting the demands of low-sulphur fuel however, I am sure that the owners pay a premium for this fuel and only use it when they are forced to.”

Imports of low-sulphur fuel oil into the US are expected to rise when the ECA comes into force in 2012, although the 0.1% sulphur cap will not be in force before 2015.

World Bunkering Summer 2011

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GEoGraphical focus: SOUTH EAST ASIA

Going for gas?

A new study forecasts that container feeder vessels might be the first ship segment to adopt LNG for propulsion within SE Asia, but David Hughes finds considerable scepticism about LNG as a marine fuel.

A

ccording to the Joint Industry Project (JIP), which was initiated by DNV during Singapore Maritime Week in 2010, about 20% of the regional container feeders are up for renewal by 2020. Local and regional ferries are also well suited to use LNG for propulsion in the longer

term.

The classification society says that the managing director of DNV’s Clean Technology Centre in Singapore, Bjørn Tore Markussen, mobilised a consortium of 16 participants from all parts of the LNG ‘value chain’. The JIP members included Gazprom, Rolls-Royce, Wartsila, Hanjin Shipping, I.M. Skaugen, Keppel, The Linde Group, Trans LNG, DNV, BW group, BBG, the Maritime and Port Authority of Singapore, and the two Singapore universities, NUS and NTU. The JIP is also supported by Innovation Norway and the Norwegian Embassy in Singapore.

The study examined two areas of future use of LNG in South East Asia. These were LNG for small-scale power production in off-grid island regions and LNG as fuel for ship propulsion.

“Substantial market opportunities will evolve throughout the small-scale LNG value-chain in South East Asia in the next decade,” says Mr Markussen of DNV’s Clean Technology Centre in Singapore.

He has been in charge of the Joint Industry Project and is in no doubt.

“The companies who seize the opportunities early in these evolving markets will be well positioned for interesting growth if entry risks are managed properly.”

The study identified a number of island regions in South East Asia outside any pipeline grid where total demand for electrical power exceeds 500 MW. Based on a number of underlying parameters and assumptions, various financially feasible scenarios were modelled. For example, Eastern Indonesia might have a demand for up to 70 small-

50

scale 50 MW power plants by 2020. Equally, Southern Philippines could require up to 45 plants, while the estimated demand for Northern Vietnam might be seven small power plants.

The distribution of LNG to these power plants would require close to 60 small-scale LNG carriers by 2020 if this number of plants is built. As the price of crude oil is rising faster than the price of natural gas, the financial incentives for using LNG for power generation are equally increasing, with considerable environmental benefits to be gained from such a fuel switch.

The study identified Singapore as the regionally preferred site for future LNG bunkering, due to large shipping volumes, calm seas for bunkering operations and the fact that infrastructure for LNG bunkering is already under construction.

DNV says: “With stricter requirements for environmental performance, and an increasingly competitive expected price for LNG as fuel for ships, a shift to LNG propulsion may have an exciting impact on Singapore as a bunkering hub.”

Mr Markussen adds: “The consortium is eager to use the findings from the LNG study to build business for the participants and to inform regional stakeholders about the opportunities that lie ahead.

DNV as a company has already decided to invest into a next phase of the JIP. We are now inviting old and new members to join the consortium and one or more of the many project streams that will be kicked off in April and May.” The Maritime and Port Authority of Singapore (MPA) is looking favourably on the idea. Its chief executive Lam Yi Young says: “With the push towards cleaner fuel for ships, the results of this Joint Industry Project are timely in evaluating the potential for LNG bunkering services in Singapore. LNG’s lower carbon dioxide emissions, minimal sulphur and nitrogen content, as well as the

World Bunkering Summer 2011

abundant availability, allows it to be a viable alternative fuel source for ships, which is also in line with MPA’s commitment to promoting environmentally-friendly shipping.”

An MPA spokesperson said that the Joint Industry Project serves as a good start in evaluating the potential for LNG bunkering services in Singapore. She added: “Moving forward, MPA, together with other agencies and our industry partners, will be exploring how best to approach this in terms of regulatory policy, technical challenges and economic viability.”

Singapore’s bunkering community is, however, sceptical about the idea of LNG taking over from residual fuel oil.

N Shankar, managing director of Universal Marine Surveying and Consultancy, says: “I don’t see any facilities for developing LNG as a fuel. I think this is still in its early stages and the industry is still doing the feasibility studies. Even on land, the LNG logistics for motor transport are sparse and are not fully available. Politically, Singapore needs to adopt LNG as a major fuel and start planning the accompanying infrastructure before the local bunker industry takes a greater interest.” He concedes, however, that LNG definitely is “a cleaner alternative”.

Simon Neo, regional manager Asia for Integra Fuels comments: “LNG has been a hotly debated topic recently due to its cost and extra low carbon or no carbon at all. The Singapore government is looking at it as a way forward and thus the construction of a LNG tanks farm at the Jurong Island.”

He adds that he believes LNG will have no impact on the bunker market in the short term but will have in the longer run. He does not see LNG as becoming a significant marine fuel soon. He says: “Vessels will continue to use fuel oil as bunkers, unless new vessels are constructed in such a way that they can store and burn LNG. The one thing that we are most likely to see is that more vessels will start to burn heavier fuel instead of 380 cSt as we go along.”

“Local suppliers in Singapore,” Mr Neo concludes, “are not ready for any switch to LNG at this moment and I think it will be a long time until they are. Even after the LNG terminal is built, vessels may only be able to load the LNG from the terminal as there are no barges that can deliver at the anchorage. Local suppliers are not trained to handle LNG vessels. This infrastructure will take time and lots of investment will have to be pumped into it. So within the next two to five years, I do not see it taking off in a big way; maybe in a very small way.”

Details of the Port of Singapore’s 2010 performance are below: Year

Vessel Arrivals (billion gross tons)

Container Throughput (million TEU)

Cargo Throughput (million tonnes)

Bunker Sale Volume (million tonnes)

Singapore Registry of Ships (million gross tons)

2006

1.31

24.8

448.5

28.4

34.8

2007

1.46

27.9

483.6

31.5

39.6

2008

1.62

29.9

515.4

34.9

43.7

2009

1.78

25.9

472.3

36.4

45.6

2010*

1.92

28.4

502.5

40.9

48.8

*Preliminary estimates

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World Bunkering Summer 2011

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GEoGraphical focus: SOUTH EAST ASIA

Still expanding

Singapore’s bunker industry looks set for continued growth, though the Japanese disasters may have an impact

Y

et again the Port of Singapore was able to report record bunker figures, with Maritime and Port Authority of Singapore statistics showing a 12.3% increase in deliveries to reach a record 40.9 million tonnes.

Bunker volumes reflected a continued increase in vessel arrivals in tonnage terms with a total of 1.92 billion gross tonnage in 2010, an increase of 7.5%. Containerships and tankers were the top contributors, accounting for 32.0% and 29.7% of the total vessel arrival tonnage respectively.

IBIA Asia branch executive committee chairman Simon Neo says: “With continued strong container volumes in the Singapore port and the great increase in the world fleet over the past two to three years, bunker volumes are set to rise. MPA statistics for the first two months of this year indicate 6.9 million tonnes of bunkers supplied in our port. Many vessels are seen stopping in Singapore for bunkering purposes and stores due to its excellent geographical position between long haul trades from Brazil, Richards Bay to the Far East.”

“In addition,” he notes, “Singapore’s economic environment encourages the industry and, combined with growing world trade, is the reason for the growth in volumes. Initiatives and support from the government of Singapore focusing on lowering business costs, which include port dues concessions and the formation of the Maritime Cluster fund to support Singapore Maritime companies’ new business developments, add to the factors enhancing growth in the industry.”

N Shankar, managing director of Universal Marine Surveying & Consultancy is also upbeat about the future. He says: “Singapore sits right in the middle of Asia’s two biggest trading partners, China and India. Towards the South we have Indonesia and Australia and up north again China and Japan. Asia has been the biggest and fastest growing continent in the world today. With China and India importing the bulk of the coal, iron ore and many other commodities. This has in turn fuelled growth in the shipping sector in Asia, and more ships pass through the Singapore Strait to reach China, Japan or

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India. As the cheapest bunkering port with the largest pool of bunker players and barges you can find, it is natural that ships stop over in Singapore for their bunker needs. Singapore has built a strong and efficient infrastructure for ships taking bunkers in Singapore. Besides bunkers, ships call Singapore for other things like crew change (due to easy connectivity), ship chandlers (taking of provision and stores, and equipments). That means in Singapore we have everything that the vessels require for any voyage. For bunkering it is the only country whereby the barge operators and suppliers are regulated. MPA’s support also comes in handy as most vessels that call Singapore for bunkers or other ship services do not pay or pay very little port dues.

Asked whether there have been any apparent knock-on effects of the disasters in Japan, Mr Neo says: “On the whole, risks to the future health of Singapore’s shipping sector are evenly balanced. The main risk in this sense is that world trade could experience a steeper than expected slowdown in 2011, perhaps propelled by further financial difficulties in Europe or elsewhere – indeed, the sudden tsunami and earthquake in Japan will have repercussions in their energy needs.”

Mr Neo points out that Japan will rely on imports of oil at least until the end of the year. This may alter the regional balances of some grades of oil and crude. Additionally, Japan imposes a 0.5% limit of sulphur in its fuel used for power generation. In the past, Indonesia was the main supplier for low-sulphur fuel to Japan when a natural disaster, the Kobe earthquake, last hit. “Now Indonesia imports crude and halting exports. Japan may then import HSFO containing 3.5% sulphur, which is far above the anti pollution environmental limits.

Prices of LSFO has already risen as exporters try to meet Japanese requirements. In my opinion, Japanese demand will add pressure to the already high bunker prices.”

While volumes may be increasing, Singapore’s suppliers do have concerns. Asked what he sees as the main challenges, Mr Neo says: “The phasing out of single-hull tankers will mean greater operating costs for suppliers and a greater need for bank or institutional financing for the acquisition or charter of these vessels. Operating expenses

World Bunkering Summer 2011

are high due to crew wages and maintenance repair. Insurances are also high, aggravating the costs factor. Cost cutting measures are hard to put in place and profits are very lean.”

Mr Shankar has a similar view, pointing to costs pressures ranging from high operating overheads to compliance with IMO regulations etc.

He mentions another problem: “Crew supply problems are a critical issue faced by all operators and suppliers,” he says.

Mr Neo, asked whether the manning situation, and especially a shortage of senior officers , in the local bunkering fleet had improved or worsened, replies: “I think the Singapore Shipping Association and MPA are discussing these issues, which are gradually worsening.

Many bunker suppliers are facing the problems of recruiting qualified officers, due to a supply shortage.”

He adds: “There is also an over-reliance on one nationality for officers in the local bunkering fleet. More incentives should be in place to attract officers from different countries around the region. Applying for work permits for them is time consuming and unproductive.”

In a move designed to meet these concerns, the MPA has

World Bunkering Summer 2011

launched its new Certificate of Competency (CoC) (Special Limits) programme for Singaporeans and permanent residents (PRs) in collaboration with the National Trades Union Congress’ (NTUC) Employment and Employability Institute (e2i) and the Singapore Workforce Development Agency (WDA).

The scheme will train officers for all types of locally operating craft but the bunker industry has taken a particular interest in the programme which will see 60 trainees pass through over the next two years.

“The new CoC (Special Limits) allows seafarers to enjoy the flexibility of serving shorter voyages while addressing the industry needs for more Singaporeans and PRs to join the harbour craft industry, says Mr Lam Yi Young, chief executive of MPA. Trainees from this programme will start off as deck cadets on board Port Limit Vessels which operate within the Specials Limits.

Upon obtaining the CoC (Special Limits) certificate, the cadets can work on board bunker tankers as Chief Mate (Special Limits).

After serving 24 to 36 months of sea time and with continued good performance, a Chief Mate may attend further upgrading and take examinations to qualify as Master (Special Limits).

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GEoGraphical focus: australia

Strong demand

Oil majors have been investing heavily in Australia as exports look promising as a result of offshore activity and ports are seeing increased activity, Sandra Speares reports.

S

hell Australia has been a hive of activity in recent months despite the terrible floods and extreme weather conditions in Queensland at the start of the year.

Work has already started on the redevelopment of the King Bay Supply base after Shell reached agreement with Woodside, to whom Shell supplies bulk fuels.

Northern Western Australia is experiencing something of an export hike and according to Shell marketing general manager Craig James, “because of this, demand for marine fuel is booming”.

Work begun includes reinstating an import pipeline at King Bay, additional tankage and a road gantry. The investment is part of wider plans by Shell for aggressive growth in its fuel business, according to Mr James.

Shell also announced a memorandum of understanding with Marstel Holdings for a greenfield diesel import development at Newcastle and is also investing at Kalgoorlie in Western Australia and Mackay in Queensland.

BP has also recently announced the start of commercial operations at its new state-of-the-art fuel storage terminal with a dedicated barge loading wharf.

The terminal on the Brisbane River has been built at a cost of some $30 million. BP Marine has the capability to store and deliver three different marine fuels – RMG380, RME180 and DMA. Tanks at the new facility can store over 30,000 tonnes of product.

At the time of the opening, BP said: “This new facility will allow BP Marine to meet customer needs in Brisbane with a highly flexible and reliable offer.” A new double-hull barge which can carry both fuel oil and gas oil, has just entered service at the facility.

According to Lena Johnston of Australia Bunkering Pty Ltd “For many years there have been a number of investors looking to set up bunkering facilities in Australia, in particular in Western Australia,

56

I guess on the assumption that there is so much traffic due to the resources being shipped, therefore bunker demand is great.

“However, although it is assumed it should be possible to set up heavy fuel oil infrastructure and provide for the many vessels calling there, the drawbacks are many, with the possibility that although very promising it is very unrewarding for a huge investment where returns might not be seen for many years.”

Supplies were tight at many Queensland ports during the floods and bad weather conditions, with additional fuel supplies being brought in from Singapore by operators like International Bunker Supplies, who operate the bunker services at the Port of Gladstone.

As a bunker-only port, Gladstone has the deepest draught for bunkering in the whole of Australia, with inner and outer anchorages.

The protected inner anchorage has a draught restriction of 14 metres and there is no draught restriction on the outer harbour.

The Port of Freemantle registered an increase in refined petroleum exports including bunkers in 2010. The port’s principal bulk cargo, petroleum products, increased from 8.2 million tonnes in 2008/09 to 8.4 million tonnes in 2009/10. Crude petroleum imports increased by 0.4 million tonnes or 6.9% compared with last year.

Refined petroleum imports decreased by 26.5 per cent and refined petroleum exports (including bunkers) increased by 0.7%.

That said, total imports of fuel are increasing steadily year on year, according to Ms Johnston.

Meanwhile many will be watching with interest the outcome of legal action being taken against the master of the Pacific Adventurer, Swire Shipping, Swire Navigation, Bluewind Shipping and China Navigation, who are being prosecuted in the Queensland courts for pollution of coastal waters after a bunker spill in 2009. All have pleaded not guilty to the pollution charge.

World Bunkering Summer 2011

The final report into the incident, which has been billed as Australia’s worst ever bunker spill, has been issued by the Australian Transport Safety Bureau who found that some of the ship’s loose and secure container lashing, and an inspection regime and replacement regime for the equipment, had not been effectively implemented.

The inspection also found that the 31 containers lost overboard were not packed in accordance with dangerous goods shipping requirements and a dangerous goods audit had not picked up the fact.

Caltex Australia continues to invest heavily in fuel infrastructure in Australia, including assets dedicated to the delivery of fuel for the marine market. There is an ever-increasing requirement for imported fuel to meet demand for Australia’s growing mining and offshore oil and gas exploration activity.

Caltex have seen rapid growth, particularly in the oil and gas exploration sector and this is driving significant activity in the marine service and support sectors.

The speed of this growth has meant that marine fuel availability in some Ports in Western Australia is particularly tight.

Caltex will be opening a new Port Hedland Fuel Terminal in Q4 of this year, which will have 40 million litres of storage capicity. This is an important step in providing a foundation to support the future growth plans for the Western Australian region.

World Bunkering Summer 2011

Caltex is also investing in additional infrastructure in Brisbane to support the growing demand for marine fuel in this port.

In early 2012 Caltex will be taking delivery of a new double-hull barge for operation in Botany Bay. The barge has been purpose built for the Caltex facility but more importantly to meet the needs’ of customers in Botany Bay and will cater for the increased container trade that is forecast for the port in the coming years.

Uneasy neighbours, tanker enters Sydney harbour

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GEoGraphical focus: TURKEY

Looking after a large family

Capt Mustafa Azman

Istanbul’s harbour master Capt Mustafa Azman describes what it is like being responsible for one of the world’s busiest waterways.

I

may not own the vessels but as Istanbul’s harbour master I have a very large fleet to look after – the 50,000 plus vessels that pass through Istanbul Strait annually and the local vessels that make 2,500 trips around one the world’s busiest waterways every day.

In many ways this is like looking after a large family.

Safety is my and my colleagues’ top priority. We monitor vessels and enforce international regulations but also try to make Istanbul the best and most comfortable port of call. We are proud to welcome international shipping to Istanbul. Our port is the ideal place for crew changes and for taking on bunkers, spare parts, lube oil, provisions and fresh water.

Up to 500 cruise ships a year call at Istanbul and a large cruise terminal is being planned which could triple current capacity. I want every passenger calling at Istanbul to enjoy the best, most professionally managed port facilities possible so that they can really appreciate this magnificent city, Istanbul. ©Anadolu

World Bunkering Summer 2011

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GEoGraphical focus: TURKEY

Maritime Nation, Maritime Community Metin Kalkavan

The chairman of the board of the Turkish Chamber of Shipping, Metin Kalkavan, tells World Bunkering that the Chamber of Shipping believes in the importance of the bunker industry.

T

he Chamber’s overall mission is to promote the maritime sector in the national interest in order to meet national transportation and maritime policies.

With our 7,500 members, the Turkish Chamber of Shipping is working for the shipping community in Turkey, which believes in the bunker industry. There are 50,000 ships passing through Turkish straits and so we believe there is obvious potential for Turkish bunkering and related sectors; passing ships can stop in Istanbul for bunker supplies and use other services. This brings additional opportunities for our country and we, the Chamber, give our support to all sectors serving the shipping community worldwide.

The Chamber has been supporting the Turkish bunker industry and its well-organised event, the Istanbul Bunker Conference, from the beginning, and we welcome delegates to our maritime nation.

World Bunkering Summer 2011

The Turkish Chamber of Shipping is investing in Turkey’s future with a new project; the Piri Reis University will the be first and only fully ‘green’ university in the world. Over US$75m is being invested in this project, which will also serve our bunker industry by developing our human resources and our research capabilities.”

Turkey is a young country with a bright future. The aim is to be the 10th biggest economy in the world by the time of the 100th anniversary of the Turkish Republic in 2023. We, Turkey’s maritime community, believe our maritime and related industries have a bright future and the Chamber supports them by working to achieve a good environment for business and also stable, sustainable markets.

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GEoGraphical focus: TURKEY

© Energy petrol

Tough times

‘Price heaven’ for owners, perhaps, but Istanbul’s suppliers must survive in a fiercely competitive market.

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fficial figures for the Turkish bunker industry are difficult to find and similarly market share statistics are not readily available.

However, about 50,000 ships pass through the Bosphorus and Dardanelles every year, carrying some 400 million tonnes of cargo. Istanbul’s strategic location on the only route between the Black and Mediterranean Seas makes it the number one contender to the region’s bunker and ship supply hub.

It is estimated that about 18,000 ships take bunkers and luboil at Istanbul and that annual bunker volume runs at about 1.6 million tonnes.

There are five or six major suppliers all competing for market share while demand is more or less static and new players are emerging. There are also a number of MGO supply specialists.

Anadolu claims to have the largest market share and has the advantage of a floating storage facility located at the port of Ambarli close to Istanbul anchorage. Its marketing manager Cem Ozoral says the company runs a fleet of 11 owned barges.

Another long-established strong player is Petrol Ofisi (PO), which has a terminal in the same area. Other established suppliers include CYE Petrol, Energy Petrol and TBS. Lukoil and Oiltrade supply gas oil while Shell, Mobil and BP supply luboil only, and shipowner-backed Arkas Bunker, a relative newcomer to the market, has grown rapidly.

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Turkish-based Lukoil-Bunker Istanbul has moved from just supplying MGO and now offers IFO in Istanbul roads and Izmit Bay using a fleet of three bunker barges, while four other barges supply MGO only.

Adding to the competitive pressure the Russian oil major Rosneft is setting up a bunkering joint venture with Turkey’s Calik Holding.

The president of Rosneft, Eduard Khudainatov, was quoted as saying: “I am talking about offshore bunkering, and not only in the Turkish waters, but throughout the Black Sea and near the Bosporus and the Dardanelles.”

Mr Ozoral says that 270,000 tonnes of bunkers are estimated to have been delivered in the first two months of this year, about the same as in the same period in 2010.

The trouble is that last year was not a good one for suppliers.

He says: “2010 was not a profitable year for anybody. Strong competition affected profit margins. Also, as everywhere in the world, Turkish bunker suppliers are affected by the global economy and the downturn in trade. I expect this crisis will continue in 2011.

Tough competition will continue. Smaller buyers will have the biggest problems.

“Istanbul is heaven,” says Mustafa Muhtaroglu founder of major physical supplier Energy Petrol. He adds quickly, however: “These are not my words. It was said by a shipowner about bunkering in

World Bunkering Summer 2011

Istanbul. Facing many problems in other ports he described Istanbul in such a flattering way because of the high quality bunkering service provided there.”

“He is right,” says Mr Muhtaroglu, “Istanbul is one of the best supply centres in the area. It is a very well regulated and controlled supply port. Consequently we have a reliable bunker market here, which means trouble-free bunkering. Istanbul is known for having no quality or quantity claims and so is favoured by many buyers.

We notice an increase in blue chip shipping companies bunkering in Turkey. Istanbul also supplies several large container lines as well as cruise ships. At Istanbul we enjoy safe seas, generally calm weather and have a good location for bunkering”.

Stressing the flexibility and service standards of the Istanbul suppliers he says: “One Saturday a European buyer called asking for bunkers on the Sunday after a supplier in one of the Black Sea ports failed to deliver. We arranged the stem in five minutes. Service and flexibility are the magic ingredient behind Istanbul’s success”.

Another important point in Istanbul’s favour, according to Mr Muhtaroglu, is the competitive prices. He says the suppliers have lowered their margins to keep business. Illustrating his point he says that recently, the Istanbul price for 380 cSt was US$638 level while Fujairah and Singapore were charging over $640, and that Gibraltar’s was almost the same as Istanbul’s.

Efe Vural of trader Global Bunkers says that the Turkish bunker market has changed since 2008. He says that the new player, Arkas, has had a marked effect on the physical market. He adds: “Of course, some traders tried to cut out the suppliers and go directly to shipowners.” He says that in some cases unreliable traders did not pay the physical suppliers who had to collect their money directly from shipowners.

“The market may move up a little bit after July,” Mr Vural suggests. He concludes: “If Russia starts to export grain again and if the Arab countries can contain their political problems, the recovery could be quick.”

©Anadolu

World Bunkering Summer 2011

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russian Update

Russian news and views

Olga Bogacheva

A round-up of developments in the bunkering scene by Olga Bogacheva

Busy ports

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he good news for Russia’s bunker industry last year was that the country’s ports were busier than in 2009, shrugging off the global downturn. According to an Association of Seaports spokesperson, port turnover increased by 5.9% compared to 2009, reaching 525.85 million tonnes.

Cargo throughput at most ports increased, although it fell 4.7% at Novorossiysk port to 117.08 million tonnes in 2010.

In line with the general upturn in trade, St Petersburg’s 30 bunkering and 13 barging companies supplied about 1.8m tonnes, up 9% on 2009. Taking into account all of the Leningrad Oblast ports – Ust-Luga, Primorsk, and Vysotsk – the total was 2.15m tonnes, of which heavy fuel accounted for about 90% of the total volume.

As usual there were seasonal fluctuations during the year, with about 200,000 tonnes delivered in July and about half that in January.

As in 2009, LUKOIL-Bunker handled the largest volume, 400,000 tonnes against 370,000 tonnes in 2009. Gaspromneft Marine Bunker delivered 336,500 tonnes while Baltiiskaya Fuel Company supplied 194,000 tonnes.

Ust-Luga takes on oil port role

The first tanker carrying oil products left Ust-Luga oil terminal on January 31 as the Russian Baltic port develops into a significant oil port. The newspaper Rossiiskaya Gazeta quoted deputy minister Victor Olersky as saying: “Handling the first tanker in Ust-Luga, even though as a trial, means a new route for Russian oil products export has emerged. I’m sure it will take a part of freight traffic volume from Baltic ports, particularly from Estonian terminals.”

Ust-Luga is expected to become the second bulk oil port in the Finnish Gulf after Primorsk when construction of the new terminal

World Bunkering Summer 2011

will be completed. Projected annual capacity is about 30 million tonnes. Rosneftbunker is putting some Rb26bn (US$917m) into developing the port’s oil terminal. Some analysts expect that, once Ust-Luga is up and running at full capacity, throughput at Tallinn’s terminal may drop by 10 million tonnes. Currently about 14m tonnes are handled there but Ust-Luga will be able to handle 18 million tonnes. Rossiiskaya Gazeta noted that vice-president Sergey Ivanov said in mid-2009: “Up to now Russia had not a single port [in the region] capable of handling mazut (heavy fuel oil). Once tankers start using Ust-Luga we will reduce our railway oil deliveries to Estonia and will cancel mazut deliveries to Estonian ports completely.”

Gaspromneft expands bunkering facilities at St Petersburg

Gaspromneft is to expand the capacity of the bunkering facility it leases from diverse engineering company Kirovsky Zavod at St Petersburg by 500,000 tonnes a year , taking the total annual capacity to 1.2m tonnes of oil products. The company is not saying how much the project is costing but analysts expect the total investment to be as much as Rb1.2bn ($33m).

Originally, the facility was built jointly by Kirovsky Zavod and Transbunker but the former bought out Transbunker in 2008 and subsequently leased the terminal to Gaspromneft .

Pavel Scheglov, the editor of Argus Rossiisky Mazut, noted that Gaspromneft handled about 600,000 tonnes of oil products at the Kirovsky Zavod site in 2010; 150,000-160,000 tonnes were exported, and the rest was sold through bunkering operations. “The company’s share in the Petersburg market is approximately 20%; further expansion of bunkering capacity is not feasible because the market is stable and there is no demand for additional bunkers. It seems that the second facility will be used for export purposes,” he said.

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russian Update

Rosneft boosts global presence

Russian bunker company Rosneft is about to set up a subsidiary in the world’s largest bunkering centre, Singapore, according to reports.

The company intends expanding its international presence and to use the new Singapore company to enter the Asia-Pacific region.

Rosneft, which started bunkering operations at the end of 2007, owns 14 bunkering terminals. The largest are at Archangelsk, Murmansk and Nahodka. The company supplies bunkers along the Lena and Amur rivers and delivers fuel to Sakhalin-1 and Sakhalin-2 offshore project contractors. In the middle of 2010, Rosneft and Calik (Turkey) announced the formation of a joint bunkering company to provide services in the Mediterranean and Black seas.

The company sold more than 1.8m tonnes of bunkers in 2010, 50% up on the previous year and 250% above its 2008 total.

Rosneft’s bunker revenue rose from $426m in 2009 to $739m last year, according to its website.

Traffic up on inland waterways

During last year’s navigation season some 115m tonnes of cargo was transported on Russia’s 100,000 km of in and waterways. This was

World Bunkering Summer 2011

achieved despite extremely unfavourable weather. A long dry and hot summer started in early July, the earliest onset of the drought since records began 130 years ago. Water levels were way below normal.

A wide range of commodities were carried: crude oil and oil products, gas, timber, construction materials, machines, equipment, food. By region, 17.5 million tonnes of goods, up 8.7% year on year, were delivered to the Northern Territories along the Siberian rivers.

Cargo traffic increased in Volga, Volga-Baltic and Moscow basins by 27%, 17% and 15%, respectively. Meanwhile passenger traffic grew in Moscow, Ob-Irtysh, Pechora and Ob basins.

Heavy fuel output up

Heavy fuel oil output grew significantly at Russian refineries last year.

Production of ‘mazut’, with a 1% sulphur content, increased by 65% compared to the previous year, to 6.4m tonnes. A significant part of this product, over 2.3m tonnes, went to the St Petersburg and Leningrad Oblast bunkering market where, according to the analyst Kortes, there was 16% year-on-year growth. The main suppliers to the Petersburg market in 2010 were the Omsky, Antipinsky, Uhtinsky, Mariisky and Volgogradsky refineries.

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132, Verhne-Morskaya str., Nakhodka 692917 Primorskiy, Krai, Russia Tel/Fax: +7 4236 629626 Tel/Fax: +7 4236 697060 Tel/Fax: +7 4236 645852 E-mail: tsetan@yandex.ru

Bunkering in the southern ports of Primorskiy Krai: • Vostochny • Vladivostok • Nakhodka • • Slavyanka • Zarubino •

russian Update

LUKOIL-Bunker continues fleet modernisation

LUKOIL-Bunker has been upgrading its bunker barge fleet. Its Murmansk branch has put a refurbished tanker into service recently.

The Desna was bought by LUKOIL-Bunker and converted into double-hull configuration to meet MARPOL requirements.

The Kanonersky ship repair carried out the conversion at St Petersburg. The Desna is equipped with two heavy oil tanks, with a total capacity of 2,490 cu m, and a 410 cu m diesel tank, two 170 cu m/hour heavy oil and one 80 cu m/hour diesel pump.

The Desna will soon be joined at Murmansk by another refurbished tanker, the Aginskoye, following conversion to a double-hull tanker at Kaliningrad’s Pregol dockyard. Refurbishment should be complete later this year.

A third vessel, the highly-manoeuvrable tanker CT Wexford, has been bareboat chartered by the company for three years, with options for extending the charter or buying the vessel.

Meanwhile a purpose-built, MARPOL compliant double-hull vessel, the RN Taurus, started bunkering operations for LUKOIL-Bunker in Tuapse in March following a refit. It was built in Turkey in 2007 and is twin engined with two adjustable pitch propellers. It also has a 300 kW bow thruster.

World Bunkering Summer 2011

The company also plans to build two support vessels by 2013 for operation at Nahodka in the Russian Far East. The vessels, one for boom-laying and the other an oil waste disposal tanker, have been designed by the St Petersburg-based Rikoshet design bureau and are being built at Zvezda shipyard at Bolshoy Kamen, Primorsky Kray.

Transit-DV’s 11,868 dwt bunker tanker

Transit-DV has brought in a large tanker for its bunkering operation at Nahodka, which started in early February. The company claimed that conversion of the 11,868 dwt Elara-DV to provide port bunkering services was part of a new approach to logistics in the bunkering sector. Transit-DV says a tanker of this size allows the company to deliver large batches of oil products to several vessels according to a previously agreed schedule. The Elara-DV carries up to 7,500 tonnes of fuel and has a pump rate of 1,000 cu m/hour.

Meanwhile, Transit-DV subsidiary, North-East Marine Shipping Company, has been busy supplying bunkers at sea at Ohotomorskaya fishing grounds. The tanker Kropotkin refuelled eight trawlers managed by Primorje-based TURNIF. North-East Marine has delivered more than 20,000 tonnes of fuel at Ohotomorskaya and Beringovomorskaya grounds since August last year.

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PENINSULA PETROLEUM LTD PETROLEOS DE PORTUGAL PLATTS PORT AUTHORITY OF ALGECIRAS BAY ROSNEFT MARINE LTD SEARIGHTS MARITIME SERVICES PRIVATE LTD.

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www.worldbunkering.com

russian Update

Bunkering barges under construction for Kontur

The keel-laying of the first of four non-propelled, 6,300 dwt oil barges for bunkering company Kontur was held at the Baltiisky shipyard in February. The barges have been designed by Marine Engineering Bureau and are being built very quickly, with the first vessel scheduled for launching in the middle of July.

The barges are intended to carry oil products with a flash point over 60°C, including products which need heating, in 12 tanks.

Kontur will use the double-hull barges on inland waterways and coastal areas where the ice is no more than 20 cm thick.

Baltiisky shipyard, part of United Industrial Company ZAO, is one of the largest Russian shipbuilding companies and is well known for construction of ice-breakers and ice-class vessels.

Severe winter weather

There were severe weather conditions during the winter of 2010/11 in the Finnish Gulf, with very low temperatures and unfavourable winds which promoted ice formation, shearing, compression and hummocking. Ice was up to 1.5 metres thick in places. Similar conditions were experienced in the winters of 1992/93 and 2002/03.

World Bunkering Summer 2011

The weather meant frequent stoppages to navigation. At one point the queue for ice escorts reached 150 vessels. During the peak period 15 ice-breakers were working in the port, including the nuclear powered ice-breaker Vaigach, which arrived from Murmansk.

Despite these measures the number of calls reduced significantly during this period. Even the cruise ferry Princess Maria, which shuttles between St Petersburg and Helsinki, was delayed for hours at a time.

There were other problems due to the weather conditions. On 11 March Transneft had to stop pumping through the Baltic pipeline in Primorsk. Operations were resumed a day later. The bulk carrier Aquila Companion ran into major problems at Archangelsk. According to PortNews the vessel arrived to the port with summer fuel when the temperature was minus 30°C. Its main generator and then its boiler stopped. The ship’s owner ordered winter diesel fuel from an Archangelsk bunker supplier. The crew were then able to start the emergency generator to heat the accommodation and the ship continued unloading.

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russian Update

A selfregulating system

Yury Telelyuev, Commercial Director TransOilBunker

Yury Telelyuev, Commercial Director of prominent Vladivostok-based supplier TransOilBunker, describes recent changes in the Russian Far East bunker market.

World Bunkering: Prior to the Japanese catastrophe, how would you describe the Russian Far East bunker market?

Yury Telelyuev: After suffering the effects of the global economic crisis, the Russian Far East market had stabilised, in my opinion, by the middle of 2010. However, the crisis itself, along with certain decisions made by the Russian government, has brought some changes to the Far East bunkering market.

Since the beginning of 2009, the government has imposed customs duties on car imports. For the Russian Far East ports this was a noticeable loss, with fewer ships coming to the ports for bunkers.

Before the duty was introduced, Vladivostok received a huge flow of car shipments from Japan. There were usually four to five vessels with cars in the port on a daily basis. Considering the fact that the turnaround time of such vessels is no more the one week, you can see how big a segment of the bunkering market was lost.

Consequently, the shipowners involved in transportation of this cargo have suffered. Most of them had specialised roll-on-roll-off vessels, which they could not use for any other type of transportation. As a result, they were frantically selling the vessels at the cost of scrap metal. Some of those companies somehow managed to reorientate their fleet to work with other cargos, others just left the market.

As a result, this has changed the structure of the ports’ cargo flow, and, correspondingly, the presence of some shipowners on

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the market. It has also had a negative effect on the bunkering market. Some smaller companies that lost their clients were forced to close. Only the strong ones, active and adaptable to changes, remained afloat. As for our company, we did have some difficulties but overcame them without losses.

WB: How has the steady rise in prices affected the Russian FE market? Has the pressure on margins eased?

YT: The market is the market. It is a self-regulating system, and the sooner it reacts to changes, the sooner it will come back to balance. Yes, at the end of the day, we are all dependent here on the major fuel suppliers. If they put their prices up, we correct ours. If there is demand then the prices are fixed at a new level.

Should the demand fall, there will be an overstocking situation and the system rolls back, which means if the demand has to be revived the main suppliers need to react accordingly. Apart from that, there is competition between the main suppliers themselves, which helps the market to avoid sudden jumps and falls. The local market is dependent on the availability of ample supply in case of a sudden deficit of a particular oil product.

Whoever has this supply marks the price up. Situations like this, however infrequently, do occur. In reality, there is no pressure from the centre on the margins, but there is a market which reacts to different conditions.

World Bunkering Summer 2011

WB: What effect has the Japanese earthquake and the damage to that country’s bunkering infrastructure had on the Russian FE bunker market? Have volumes increased?

YT: It is difficult to speak for the Russian Far East market in general.

For this, analytical investigation needs to be done. It would be correct for us to speak only about how our company is affected. I can say with a high degree of certainty that the Japanese tragedy had no effect on our business. Our clients continue to work on Japanese routes as they did before the earthquake. Those Japanese areas which were not affected by the disaster seem to be working normally.

All the parties, ours and the Japanese, are fully aware of the high risk of radioactive contamination of vessels and cargoes, as well as the responsibilities for the consequences of that.

As a result, a tough radiation control has been introduced, both at the points of the vessels’ departure at the Japanese ports, and points of entry on the Russian territory where the cargo is unloaded. The numbers of vessels coming to our ports has not decreased, nor has the number of bunkers we supply. The consequences of the Japanese catastrophe have largely affected the fuel and energy complex of Japan. The destruction of one of the biggest nuclear power stations, breakdowns and damages at the oil refineries, has made the country redirect pressure to energy generating plants and has changed the structure of energy consumption.

It is obvious that Japan will increase the volumes of import of oil products, but this will have a greater effect on exporting companies rather than bunker suppliers.

products, or, indeed, dollar to rouble exchange rates when trading with our foreign clients, but they do not affect TransOilBunker and our strategic planning. Also, since the beginning of the year we have shown a steady growth on bunker fuel sales and strengthened our position in the market. In our plans for the near future is the purchase of a 3,000-dwt bunker tanker. We have already concluded a contract and made the first instalments, with the new vessel coming out from the shipyard in May or June this year. We are also in the process of developing new directions for expansion. This includes bunkering in Russia’s western ports and bunker trading in the ports of the Baltic States.

WB: Do you think the Japanese earthquake will have a long-term effect on the region’s bunker market?

YT: The tragedy that happened in Japan – the aftermath of the earthquake, killer tsunami, breakdown at the power station, radioactive contamination – are all tough challenges for the Japanese people. We, as the closest neighbours, have taken it with pain in our hearts as we have a lot of friends and business partners there.

However, we understand from our contacts with our Japanese partners that life goes on for them, and things start taking their course. All our partners working on the Japanese routes continue to do so. In my opinion, there will be no considerable effect on the regional bunkering market.

WB: Have recent events affected TransOilBunker’s plans?

YT: As I mentioned previously, neither recent Japanese nor Libyan developments have affected our bunkering business in any way. These events do, certainly, affect the global prices on oil and oil

World Bunkering Summer 2011

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legal news

California Rules

A US appeal court has upheld a controversial state law exercising jurisdiction beyond three miles from the coast.

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he US Ninth Circuit Court of Appeals has rejected a legal challenge by the Pacific Merchant Shipping Association (PMSA) against California’s controversial emission rules.

The court ruled that arguments in favour of uniformity were outweighed by other factors, including the health concerns that prompted the US state’s legislation.

California Air Resources Board (CARB) regulations have, since July 2009, required ocean-going vessels to burn either marine gas oil, with a maximum 1.50% sulphur content, or marine diesel oil, with 0.50% sulphur, when operating less than 24 miles off the state’s coast.

Prominent shipping lawyer Denis Bryant commented in his web blog: “The precedent established by this decision is troubling as it provides states with broad authority to regulate maritime activity on the high seas. The previous bright line limiting state jurisdiction at three nautical miles has been significantly eroded.”

PMSA claimed that the state regulation violated federal law.

It pursued the case even though the North American Emissions Control Area will supersede the state law in 2015, bringing similar controls around the continent’s coasts.

Immediately after the ruling, PMSA president, John McLaurin, said: “While we are disappointed with today’s ruling, the maritime industry will continue its numerous, successful efforts to reduce emissions from vessels that travel not only in California’s waters but in oceans around the world.

“The worldwide container fleet will continue to be in compliance with all state, federal and international laws and we look forward to the full implementation of the off-shore emissions control area by the United States and Canada, which has been sanctioned by the International Maritime Organization,” Mr McLaurin added.

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He said: “The maritime industry is working in earnest to reduce environmental impacts to the maximum extent feasible at the earliest possible date. We continue to believe that this is an issue that requires global and national solutions rather than a patchwork approach that could vary state-by-state. The state’s requirements on how vessels must be operated 24 nautical miles offshore, when the state’s jurisdiction ends only three miles beyond the coastline, remains a unique attempt to expand its authority.”

Mr McLaurin commented: “The ruling handed down today by the Ninth Circuit panel is without precedent and only reaffirms that this is a novel application of state authority. Even after this ruling, it is only through the application of consistent and harmonised federal and international standards that meaningful and sustainable emission reductions from ships engaged in international trade on the high seas will be obtained.”

The shipping body had won a legal challenge in 2008 against CARB’s initial legislation, forcing a rewriting of the state’s regulations. In this latest case, however, the court concluded: “In the end, we acknowledge the unusual characteristics and circumstances of the Vessel Fuel Rules. We are clearly dealing with an expansive and even possibly unprecedented state regulatory scheme. However, the severe environmental problems confronting California (especially Southern California) are themselves unusual and even unprecedented. Under the circumstances, we do not believe that the [federal law] Commerce Clause or general maritime law should be used to bar a state from exercising its own police powers in order to combat these severe problems.”

World Bunkering Summer 2011

equipment and services

Mixing it

New system blends high and low-sulphur fuel

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wedish-based JOWA Technology says that its new Fuel Management System significantly reduces fuel costs. It is based on the company’s Diesel Switch DSMK II, the first fully-automated switch over and blending system with an approval Certificate from Germanischer Lloyd.

According to the company, the system mixes HFO and lowsulphur MDO/MGO to the precisely correct sulphur content for traffic in Emission Control Areas (ECA). The result is significantly lower fuel costs and increased operational reliability.

The system has been developed in response to the introduction of the IMO-authorised Emission Control Areas where only lowsulphur fuels are permitted to be used.

The Diesel Switch uses sensors and intelligent computer control to ensure the fuel burnt complies with the restrictions in force in a particular area. JOWA says the advanced system is able to both switch fuel during the voyage without any interruption to operations as well as mixing HFO and low-sulphur fuel in the correct ratios. It adds: “This allows the sulphur content of the fuel to be precisely in accordance with the requirements for the respective ECAs.”

World Bunkering Summer 2011

JOWA’s Fuel Management System can incorporate the company’s Homogenizer and Cooler in order to get a complete interacting system.

The company notes: “In all ECAs there are also strict requirements in regard to documentation of fuels and their use. This information is routinely checked in port. JOWA Diesel Switch DSMK II thus also has an integral documentation system, which logs all information about operation, fuel and times in accordance with official requirements.

The information can be presented and delivered as a printout or on data media, and may also be viewed on screen.”

The JOWA Diesel Switch DSMK II is available in five different sizes, covering all fuel systems. The system can be retrofitted in an existing fuel system with a minimum of additional pipework. JOWA says: “The installation process is very easy and simple, regardless of whether it involves the construction of a new vessel or is installed later.”

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equipment and services

Meeting Tier III

Man Diesel & Turbo latest large two-stroke marine engine complies with IMO Tier III requirements

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MO’s Tier-III legislation on NOx is due to come into force in 2016; how to achieve compliance is likely to become a prominent issue of the coming two years.

Machinery manufacturer MAN Diesel & Turbo says that its MAN B&W 6S46MC-C8 type fitted with Selective Catalytic Reduction (SCR) meets the Tier-III regulations.

The first SCR-fitted unit, with an output of almost 7 MW, was constructed in the autumn last year by Hitachi Zosen Corporation at its Ariake works in southern Japan. The engine is to be fitted in a general cargo ship, to be built at the Nakai shipyard and scheduled to enter service later this year for operation by Nissho Shipping.

The first engine-start took place in January and MAN Diesel & Turbo sent a team to Japan to commission the engine-control system – the first in a series of planned visits. The team also optimised the integration of the SCR system The SCR system features: more than 80% NOx reduction based on the load cycle; more than 70% NOx reduction on each load point in the load cycle; and easy switching between on/off modes for optimal emission performance on high seas and coastal waters.

MAN Diesel & Turbo says that, when bringing two-stroke engine performance up to Tier-III standard, it had considered both SCR and EGR (Exhaust Gas Recirculation) techniques but, based on a general evaluation of two-stroke MAN B&W engines, a high-pressure, ureabased SCR configuration was chosen as the optimal solution.

Vice President Research & Development, Marine Low-Speed MAN Diesel & Turbo, Søren Jensen, said: “We haven’t just provided an engine and added an SCR system to it. On the contrary, we have delivered a bespoke system. As engine designer, builder and catalyst designer, MAN Diesel & Turbo and Hitachi Zosen comprise a group of specialists that have delivered an optimised propulsion/emissions package of engine, engine-control system and SCR system.”

Mr Jensen added: “In the future, MAN Diesel & Turbo wants not only to develop engines but also to design engines with complete

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emission-reduction systems. To that end, we envisage collaborating with many other partners in times to come in the same successful fashion as we have seen in Japan.”

World Bunkering Summer 2011

Company News

New Vector

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he Baltic Fuel Company (BFC), based in St Petersburg, is becoming the largest bunkering holding company of Russia’s north-west, thanks to its fleet expansion to 30 vessels.

In line with the company’s newbuild program, BFC has already put into service the double-hull, 2,570 dwt tanker Captain Shiryaev, and the double-hull, 5,000 dwt tanker Captain Ponikarovsky.

The tanker will be engaged in the transportation of exported oil products from the port of St Petersburg to European ports, as well as in bunker supplies to vessels at the ports of St Petersburg, Primorsk, and Ust-Luga, and to fishing vessels outside of Russia.

This year the company, which is currently focused on bunker fuel supply, oil products export and providing integrated services for environmental safety and Oil Spill Readiness and Response operations, is going launch a new business direction – the transportation of oil products on the country’s inland waterways.

BFC ceo Stanislav Korneev says: “Transportation of oil products, including exports, is one of the key activities of our company.

We plan to develop this business by expanding our own logistics capacities; from June this year we start shipping oil products from refineries in central Russia, using our own oil barges, via the country’s inland waterways. That will allow us to reach the guaranteed delivery volumes. With the commissioning of Captain Ponikarovsky we plan to expand the geographic reach of services provided outside the Russian Federation.”

The company, which is currently focused on bunker fuel supply, oil products exports and providing integrated services for environ-

World Bunkering Summer 2011

mental safety and Oil Spill Readiness and Response operations, is going launch this year a new business direction – transportation of oil products on the country’s inland waterways.

He goes on to say: “This will help the company to become independent and mobile in the supply of oil products. The new bunker barges are under construction at Russia’s largest shipbuilder – Baltiysky Shipyard.”

To date, Baltic Fuel Company ranks among the top bunkering companies in the north-west region of Russia, operating in partnership with Russian major oil companies. Among BFC’s regular customers are some of the world’s largest container shipping companies, Russian and foreign shipowners, as well as icebreakers and port fleet.

Baltic Fuel Company LLC 13, Dubrovskaya Street Saint-Petersburg, Russia Tel: +7 (812) 438 12 80 Fax: +7 (812) 490 58 15 E-mail: info@balticfuel.ru, sales@balticfuel.ru Website: www.balticfuel.ru

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Company News

Rosneft Marine has established an international trading office in the United Kingdom

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osneft Marine has established an international trading office in the United Kingdom Rosneft Marine UK has been tasked with expanding Rosneft’s marine fuel business in line with Rosneft’s commitment to providing access and support to its customers throughout the world.

Rosneft Marine UK will focus on international trading, sales and marketing. It will also be looking to engage in more direct marketing, develop its risk management services, and explore opportunities to form strategic alliances with global partners.

The establishment of Rosneft Marine UK is part of Rosneft’s long-term growth plan to expand its marine fuel business in Russia.

Rosneft has laid out its strategy for growth over the next 10 years and is well on their way towards meeting its targets, aiming to increase volumes and meet sales targets for 2011.

The UK office will bring the company closer to its global customers and put them in a better position to understand their needs and facilitate transactions. It will also enable Rosneft to capitalise on opportunities for strategic alliances with other players in the market.

Rosneft began developing its bunkering business in 2008 and has since become a leading player in the Russian domestic market. Since its formation, it has experienced steady growth in sales volumes and it plans to sell in excess of 2 million mt in 2011. Rosneft Marine currently has a presence as a physical bunker supplier in the Baltic, Black Sea, Russian Far North and Russian Far East. The sharp increase in sales were achieved due to high quality management standards in addition to the implementation of cost savings and the optimisation of logistical costs, which allow the company to offer fuel at competitive prices in any region that it supplies.

Rosneft Marine intends to set new quality standards in the Russian marine fuel market. The company offers almost all types of fuel of exceptional quality and that exceed international standards,

Oil facility “Belokamenka” (Murmansk)

including MARPOL, in all regions where it has a physical presence. Rosneft Marine also intends to raise procedural standards in bunker fuel delivery, by implementing its strategy of controlling the movement of oil products at all stages of bunker delivery, from its refineries to delivery vessels.

Rosneft Marine has the expertise and experience required to expand the marine fuel market in Russia and is looking to create a modern, dynamic, flexible and efficient company of international standing, which will focus on establishing long-term beneficial relations with its customers.

Rosneft Marine is also keen to play a key role in the development of Russia’s maritime sector and has recently placed orders for several bunker tankers from Russian shipyards, a testament of its confidence in the market’s potential for growth. By focusing on providing reliable service and high quality fuel that meets international standards at competitive prices, Rosneft hopes to establish the reputation of Russian ports for bunkering services.

The launch of their office in the UK underscores Rosneft’s commitment to its customers and will be the cornerstone of its plans to expand its bunkering division. It is also the first step towards the establishment of Rosneft Marine as a major global bunker supplier.

Oil terminal “Nakhodkanefteproduct” (Russian Far East)

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World Bunkering Summer 2011

Company News

How LUKOIL Benelux B.V. is ready to face challenges in 2011

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UKOIL Benelux B.V. is a prominent and reliable physical supplier of bunker fuels in the ARA region (Amsterdam-Rotterdam-Antwerp). We are supported by the logistic and financial strengths of our parent company LITASCO SA in Geneva, Switzerland. LUKOIL Benelux B.V. is part of the Russian oil major LUKOIL, which also has wide scale operations outside Russia.

Our clientele varies from the well-known large and medium shipping lines to other physical suppliers and trading companies. In the last couple of years our company has had a market share of 10-15% in its home market of Rotterdam and Amsterdam ports. In June 2010 the Credit Risk Management Committee of LITASCO SA approved a strategy of further strengthening the company’s presence in ARA, increased credit lines for a significant number of our customers and allowed more flexibility in dealing with new customers. This step clearly shows that LITASCO SA and LUKOIL Benelux B.V. have adapted themselves very well to the post-crisis situation in the bunker industry in ARA and feel comfortable to explore new market opportunities. However, we continue to closely monitor the situation in the market and are ready to adjust in order to be able to successfully face any new challenges, and to sustain the growth of our business.

In July 2010 LUKOIL Benelux B.V. made a decision to close its Amsterdam office and centralise handling of all the bunker enquiries through one contact point, Bunker Desk in Rotterdam (Capelle aan den Ijssel). The formal closing of our Amsterdam office took place at the end of July 2010. This step has proved to be very successful and has helped our company to optimise its bunker trade operations.

Since then, LUKOIL Benelux B.V. has been serving its clientele more quickly and efficiently.

Since September 2009 LUKOIL Benelux B.V. has supplied bunker fuels to the Belgian port of Antwerp from the refinery TRN (Total Raffinaderij Nederland) in Flushing, where the LUKOIL Group purchased a 45% stake, and other locations in ARA. We are also finalising receipt of a license for fully-fledged bunker operations in Antwerp. In addition to the ARA region, we are also active in the Baltic Sea, Black Sea and Mediterranean Sea. Our company is planning to get on firm footing with its bunker supplies in a number of the European ports.

In the last two years LUKOIL Benelux B.V. has also been successfully targeting the Russian northern ports of St Petersburg, Kaliningrad, Vysotsk, Primorsk and Murmansk, supplying bunker fuels to a variety of shipping companies.

Since 2005 LUKOIL Benelux B.V. and our Dutch partner Burando Holding have been jointly operating Service Terminal Rotterdam, which enables LUKOIL Benelux B.V. to store fuel oils and blend them to necessary specifications. Currently, new storage tanks are being constructed at STR, which will significantly increase the total storage capacity of the terminal. The new tanks are expected to become operational in Q1 2012. Having our own terminal and purchasing almost all of our bunker fuels from our parent company LITASCO SA gives us a competitive advantage in the saturated market, in which

World Bunkering Summer 2011

demand has been steadily picking up since the world’s recent economic crisis. Due to this competitive advantage, LUKOIL Benelux B.V. is in a position to design and implement flexible delivery strategies.

As a supplier of a wide range of grades, we receive bunker enquiries and provide quotations for the products IFO 700, 600, 500, 380, 240, 180, 120, 80, 60, 40, 30, 20 cSt and bunker gas oil. We can also make other products available upon request. In order to ensure quick and timely deliveries of our products to seagoing vessels or to other physical suppliers, we currently have a fleet of six time- chartered barges with deadweight ranging from about 1,700 MT to 6,310 MT. Provided by FTS Hofftrans, the barge operating company of our partner Burando Holding, they are all double-hulled barges, including several very new ones with greater bunkering capabilities. Should we require a greater capacity, we have the option of hiring other barges for spot deliveries in the range from about 1,700 MT up to 9,200 MT with both FTS Hofftrans and alternative reliable transport companies in the ports of Rotterdam, Amsterdam and Antwerp.

Our team of bunker traders and operators has all it takes to become and remain your reliable partner: experience, expertise and thorough knowledge of the bunker markets. They are friendly and available for your enquiries 24 hours a day. LUKOIL Benelux B.V. will gladly look into your enquiries for the regions where we have been actively operating, as well as for any other regions in the world.

We look forward to your bunker enquiries and hope to do business with you soon.

New office address: Wilhelminakade 85, Building “De Maastoren”, 36th floor, 3072 AP Rotterdam, the Netherlands New post address: PO Box 24065, 3007 DB Rotterdam, the Netherlands – as from May 30, 2011 Tel: +31 10 264 27 00 E-mail: Bunkers@lukoil.nl

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Company News

LUKOIL-BUNKER is active in exploring new markets

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UKOIL-BUNKER is a branch of the largest Russian oil company, LUKOIL. The company, now considered as one of the largest suppliers in Russian ports, specialises in bunkering fuel to vessels at sea and river ports, as well as the wholesale supply of bunker fuels.

LUKOIL-BUNKER’s services in Russia are used by icebreakers, navy and research vessels, and by private companies, and the company can guarantee the supply of high quality fuel and associated services.

In particular, the company offers 1% sulphur fuels, to meet MARPOL 73/78 Convention regulations, relating to the Sulphur Emission Control Area (Baltic Sea and North Sea) from 1 July 2010, which was previously set at 1.5%.

Bunkering activities are closely connected with environmental risks of fuel spillages in port waters. That’s why LUKOIL-BUNKER pays particular attention to safety conditions when handling cargo and undertaking bunkering or other operations, company take very seriously environment protection issues and the prevention of emergency situations and accident oil spillages. The company’s industrial, labour and environment safety management system complies with requirements of international standards ISO 14001:2004 and OHSAS 18001:2007.

LUKOIL-BUNKER takes active part in improving the Russian legal safety standards and reducing environmental pollution risk. The company is running a vessel reconstruction programme in Russia to comply with MARPOL 73/78 requirements, which is scheduled to be completed by the middle of this year.

At the same time, LUKOIL-BUNKER does not only focus on Russian markets but continues to actively advance its services in the ports of Bulgaria and Romania (including the Danube river ports), as well as in Turkey and Italy.

In Bulgaria, a branch company, LUKOIL-Bulgaria Bunker, has been in operation since 2008. The company operates three of its own bunker barges (Navi, Bellona and Neftianik-1) and has access to one other. Bunkering operations in Bulgaria take place the ports of Burgas, the oil area Rosenets, Varna, Ruse, Svishtov, Vidin and Lom,

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and since August 2010 also in the Danube river mouth. Furthermore, in autumn 2010, LUKOIL-Bulgaria Bunker started bunkering at the Romanian port of Constanta, where IFO-380, IFO-180 and MGO 0.1 fuels are offered. Since August 2010, the company has also been offering bunkering operations along the Danube, and at the regions of the river mouth.

LUKOIL-Bulgaria Bunker’s sales grew by 45.8% in 2010 compared to the previous year, and amounted to 217,200 tonnes. The supplies increased at the expense of light fuel grades sold, which amounted to 174,200 tonnes, whilst 43,000 tonnes of dark oil products were supplied. Furthermore, at the Romanian port of Constanta 5,800 tonnes of light and dark fuels were bunkered; the first bunkering operations started in the middle of November 2010.

One of the promising markets is Turkey where, since March 2010, another branch of LUKOIL-BUNKER, LUKOIL-Bunker Istanbul Ihrakiye Tic. Ltd. Sti, has been operating. LUKOIL-Bunker Istanbul’s fleet currently consists of seven bunker barges. In Turkey, bunkering operations at Istanbul are made by road, but it is planned to expand the company’s activity to other Turkish ports in future.

In the summer of 2010, bunker fuels started to be sold at the Sicilian port of Augusta in Italy (as well as on the port road), through the LUKOIL-Bunker Italy branch. Currently in Italy, MGO 0.1 and IFO 380 fuels are bunkered via the fleet. Bunkering activity is based at the ISAB refinery, which processes 14-18 million tonnes per year (LUKOIL holds 49% shares in the enterprise); oil and oil products are delivered by sea. The company has plans to operate bunkering services in other Italian ports in the future.

Additionally, the company is currently negotiating the possibility of fuel storage in Malta, and is also considering bunkering around the Canary Islands, starting in March 2011; this will also be based from the ISAB refinery.

In conclusion, LUKOIL-BUNKER has an active expansion programme underway and is looking for opportunities to enter other new markets.

World Bunkering Summer 2011

Company News

GROUP TRANZIT DV Co ltd

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or the last few weeks the Russian bunkering market has been affected by the coming into effect of Russian Federal Customs Order No 1665 dated 29 December 2007, which regulates procedure for bunker supply operation and bunker customs clearance.

The list of documents required to undergo customs clearance as well as to be granted bunker supply approval is still unclear and appears to vary from one customs clearance office to another depending on location. This situation forces shipowners, shipbrokers and bunker suppliers to make time and effort-consuming investigations in their search for the information from a row of customs officials of different ranks, who, in their turn, seem unwilling or uncertain to give straightforward explanations and references to the particular articles of the Customs Regulation Code.

Despite the first attempts having been made on 1 September, the actual application of the new regulation was made only two days later, thus launching a new order of the bunker supply operation.

This new procedure is extremely inconvenient for shipowners for it considerably extends the time for official formalities and jeopardises the vessel resulting in voyage schedule deviation and demurrage.

Not only shipowners but other parties engaged in the bunker supply industry also suffered greatly from the regulation changes, ie oil handling terminal at Bolshoy Kamen along with many other bunker suppliers had to suspend their activity, some of them are even close to shutting down.

Taking into consideration the current situation in the market and being conscious of its possible effect upon its clients and partners, one of the leading traders and bunker suppliers in the Russian Far East, Group Tarnzit DV, had protested against the implementation of unjust regulations and sent a formal request to the Russian Federal Customs Service and Russian Ministry of Transport on 18 September.

Notwithstanding the changes in procedures and regulations the company continues to duely observe all its obligations and applies all efforts to ease its clients and facilitate normal operation of the vessels in such an uneasy environment.

Previously Holding Tranzit DV was the well-known owner of marine oil-handling terminal JSC Vostokbunker located in the port of Slavyanka, Primorsky Region. This year the oil storage and handling facilities of the Holding have almost doubled since the managing company Group Tranzit DV and JSC “Commercial Port of Vladivostok” signed a the contract of operation over the oil-handling terminal Vladportbunker Co. Ltd. In accordance with the contract starting from 1 June this year and for four years in advance Group Tranzit DV effects operation of the oil-handling terminal Vladportbunker Co, Ltd. located in the commercial port of Vladivostok, with its oil tank farm capacity reaching 26, 000 m3 and pier being 35.6 m long and 7.8 m deep.

These new production facilities allow the speed-up of delivery of the fuel oil to the final consumer and consequently improve the quality of oil handling and bunker supply services. It is because of its high-quality products and supreme services that Group Tranzit DV holds its 50% share of oil handling market and affects over 30% of bunker supply in the Great Peter Bay. For the period of summer navigation the Tranzit DV oil handling facilities have already delivered as much as 25,000 mt of bunker fuel per a months.

World Bunkering Summer 2011

In addition to abovementioned, in 2006 the Holding had successfully introduced to the market VB marine fuel oil of its own production, which quality has been proved by the certificates of the independent laboratories and highly attested by clients and partners.

VB marine fuels fully comply with the international standards ISO 8217 (IFO 30, IFO 40, IFO 180, IFO 380) International standards are generally applied and maintained at every stage of fuel oil manufacturing, handling, storage and delivery chain due to the permanent quality control and up-to -date equipment. These allow the company to supply its clients with premium quality fuel with maximum water content less than 0.5% even in winter.

One more far-reaching project of Group Tranzit DV – the licensed anchorage bunker delivery spot for bunker-call-only needs in the vicinity of Slavyanka – is close to completion. This new service opportunity will allow shipowners and shipoperators to save on port charges which sometimes constitute up to 50% of all expenses in such cases.

Own and operated oil terminals and fleet, chain of representative offices in the Far East and Moscow, agenting companies in the APR ports – all these are the keys to successful activity of the Holding Tranzit DV which offers its clients overall service and support in monitoring of cargo and oil products through the whole delivery chain.

At present Group Tranzit DV unites 10 enterprises all over the Far Eastern region and is actively expanding its presence in the international market. One of the company’s priorities is the development of foreign trade. Main direction of Hong Kong-based Marine Logistics Co., Ltd activity is to promote the services and fuels of the Group Tranzit DV in the Asia-Pacific market. For almost a year and a half Marine Logistics Co., Ltd has been an official agent of Tranzit DV Trade House Co., Ltd and JSC “Vostokbunker” and successfully keeps the online contact with the head office in Vladivostok, being fully available and substantially minimising the time for the procedures.

7th Floor, Bldg 5A, Uborevicha Street.

690091, Vladivostok, RUSSIA Tel: +7 (4232) 650 555 Fax: +7 (4232) 650 310 E-mail: bunker@tranzitdv.ru Website: www.tranzitdv.ru

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Company News

CYE Petrol now supplying bunkers in the Danube River61 mile

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YE Petrol Tic Ltd Sti, a physical bunker supplier based in Istanbul, has recently started to offer physical bunker supplies in the Danube River-61 mile.

Established in 1988, CYE Petrol has been a physical bunker supplier of MGO and IFO grades in Turket since 1992. CYE Petrol Bunker Terminal is located in the Gulf of Izmit at Poliport, convenient for bunker supplies by road.

In 2010, the company was the first to start supplying low-sulpher fuel oil in Turkey and, as of April 2011, is still the only physical bunkers company supplying LSFO in Turkish ports.

CYE Petrol is one of the most qualified bunker suppliers, with more than 20 years’ experience and over 40,000 bunkers supplied in Istanbul. All grades of high quality marine products are prepared using computerised line blending facilities, and the company guarantees ISO 8217:2010 specifications for all grades of bunker products.

Bunker deliveries are managed professionally by the company’s own fleet of bunker barges. In the bunker terminal at Poliport, all bunker barge loadings are managed by reputable international independent surveyors. In 2011, bunker barge loadings are being handled by Caleb Brett, and on board the receiving vessel bunker barge supplies are handled by English and Russian speaking surveyors.

In 2011, taking into consideration demand from shipowners in different ports for high quality marine fuel products, CYE Petrol decided to supply physical bunkers in the Danube River-61 mile. At the moment only 0.1% gas oil supplies are planned, but the supply procedure practised in Istanbul Port will be same.

The company bunkers in all Istanbul ports, in the Sea of Marmara (Bandirma, Mudanya, Gemlik, Tekirdağ), in The Black Sea coasts of Turkey (Karadeniz Ereğli, Bartin, Zonguldak) and naturally in the Gulf of Izmit (Derince, Yarimca, Hereke, Gebze, etc), and now in the Danube River-61 mile.

CYE Petrol Tic Ltd Sti holds the physical bunker supplier license of EPDK (Energy Market Regulatory Authority) no: IHR/482-4/11098, which lasts for 15 years from 04/05/2005. Additionally, the company acts as a trader in other Turkish ports and around the world for supplying bunker fuel and luboils.

Deniz Eraydin, General Manager CYE Petrol / Istanbul T: +90 216 345 47 00 F: +90 216 330 50 68 cye@cyepetrol.com.tr www.cyepetrol.com.tr

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LUKOIL-BUNKER develops new markets

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new bunker service is scheduled to start off the coast of West Africa. Timwell Bunkering Ltd, in cooperation with LUKOIL-BUNKER ITALY SRL, is beginning the physical supply of bunkers from April 2011.

The company’s main area of activity will be offshore from the Mauritanian ports of Nouadhibou and Nouakchott, which enables easy access and reliable delivery. The products to be traded are sourced from the ISAB refinery in Italy and from the ARA area (Amsterdam-Rotterdam-Antwerp).

The fuel will be supplied from the 12,500 (dwt) bunker tanker Vasi, built in 2008. The company will sell all grades of heavy fuel oil (HFO) as well as marine gas oil (MGO DMA) with sulphur content 0.1 % max.

LUKOIL-BUNKER ITALY SRL was established in 2009, and has been successfully operating bunker services for the Italian market.

ISAB, the largest regional refinery, enables LUKOIL to gain coverage of the bunker markets within western Europe.

ISAB refinery has its own production capacity in two ports: ISAB Nord-Augusta, and ISAB-South-Santa Panagia. The port of Augusta ranks as the third top port in Italy by bunker sales volume, which reaches 370,000-400,000 mt per year. Augusta is the most important Italian port for bunkering, vessel refitting and maintenance, thanks to its central position in the Mediterranean Sea. Santa Panagia Bay is located at about 25km south of Augusta.

ISAB-South Terminal operates in this region through the use of its own pier, which has five docking bays, is about 1,600 metres long and can accommodate ships up to 400,000 dwt.

The port of Augusta has very good weather conditions, and provides a viable alternative to Malta, which suffers from hard winds, especially in during the winter period.

All these factors combined, illustrate the existing potential of this region for bunker supply.

LUKOIL-BUNKER is a major bunker supplier in Russia. The following list includes most of the major Russian ports where the company operates: St.Petersburg, Vysotsk, Kronshtadt, Primorsk, Kaliningrad, Svetly, Baltiysk, Murmansk, Vitino, Arkhangelsk, Astrakhan, Volgograd, Kazan, Kostroma, N.Novgorod, Olya, Perm, Rostov, Rybinsk, Saratov, Cherepovets, Yaroslavl, Naberezhnie Chelni, Kama and the mouth of Azov, Eysk and Tuapse.

Additionally, LUKOIL-BUNKER OOO operates through its subsidiaries (business units) in Bulgaria, Turkey and Romania.

LUKOIL-BUNKER ITALY SRL Tel: +39 0931 207620 Fax: +39 0931 207621 E-mail: office@lukoil-bunker.it www.lukoil-bunker.com LUKOIL-BUNKER OOO Tel: + 7 812 346 81 30/31 Fax: + 7 812 346 81 32 E-mail: bunker@lukoil-bunker.com

World Bunkering Summer 2011

Company News

Gazpromneft Marine Bunker

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stablished in 2007, Gazpromneft Marine Bunker, a bunker subsidiary of JSC Gazprom Neft, supplies oil products for vessels in the ports of Russia. The company is one of the leading suppliers in the Russian bunker market, with an expected turnover of almost 1,500,000 mt by the end of 2010.

The company provides a guaranteed, efficient, all year round supply, with high quality ISO8217-2005 compliant fuels, including marine fuels and distillates.

Gazpromneft Marine Bunker’s strategy focuses on operations in the Russian North-West region, the Far East, the Black Sea region and the Russian Rivers. In addition, Gazpromneft Marine Bunker is preparing to enter some marine ports in the North-West Europe and in the Black Sea. Gazprom Neft’s main oil refineries are situated in the Moscow, Yaroslavl and Omsk areas. This range of locations makes it possible to cover nearly all the ports in Russia. Currently, the company operates in the major Russian ports of St Petersburg, Kaliningrad, Ust-luga, Primorsk, Arkhangelsk, Murmansk, Vladivostok, Nakhodka, Vanino, Kavkaz, Novorossiysk, Tuapse, Yaroslavl, Kazan, Volgograd, Astrakhan, Rostov-on-Don, and Azov.

The company is now investing heavily in building a developed infrastructure, including terminals in the main Russian ports and a bunkering fleet in order to form an advanced diversified proprietary network of distribution and logistics. The highly integrated logistic network ‘from the refinery to the bunker tanks’ will lead to cost minimisation and a much faster service in general.

One of the unique selling proposals of the company is the permanent availability of low-sulphur products, which are received directly from the Omsk refinery. This factor is of crucial importance for the North West region, where the content of sulphur in the oil is highly restricted by MARPOL VI legislation. The Omsk refinery is one of the few production sites in Russia that can produce fuels with low-sulphur content.

The well-organised proprietary logistic network makes it possible to conclude and support long-term wide scale contracts directly with the shipowners and the main world broker companies, focusing on a flexible pricing system. Gazpromneft Marine Bunker has an excellent two-year experience of furnishing cruise vessel contracts with Royal Caribbean International and Carnival Cruise Lines and we are looking forward to increasing our selling volumes for cruise vessels in future navigation periods.

Gazpromneft Marine Bunker, a subsidiary of one of the biggest corporations in Russia, Gazprom Neft, is a state-owned company and is focused on improving its operating and economic performance, minimising costs and raising its capitalisation.

Our team of bunker traders and logistic operators are determined to become, and remain, your long-term reliable partner, thorough their knowledge of bunker markets, experience, competence and efficient, friendly service.

Oil Marketing & Trading International

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ince August 2010, Oil Marketing and Trading International have been marketing and supplying marine fuels at Cueta, Spain anchorage.

This is part of our company’s strategy to extend our services to our worldwide customers at alternative ports, and we believe Cueta is a good alternative to frequently congested Gibraltar and Algecira ports.

We have been supplying all grades of fuel oil (ranging from 10 cSt to 380 cSt) both high and low-sulphur as well as MGO conforming to international ISO standards.

A 2002 built double-hull bunker barge of 3,420dwt is already at the anchorage of Cueta and ready to assist with your enquiries.

We wish to thank you in advance for your support and assure you that OMTI is committed to offering a first class bunkering service in Cueta, as in Fujairah, with a high emphasis on trouble-free deliveries, high fuel and MGO quality, and on time deliveries at the most competitive prices.

Greek Office: Mr Tassos Lathouras Sales Manager Mobile: +30 6956 303 131 Tel: +30 210 96 09 860 Fax: +30 210 96 09 861 E-mail: bunkers@oil-marketing.com Dubai Office: Mrs Anastasia Fafoutaki Bunker Trader Office 2001, Saba Tower 1, Jumeirah Lakes Towers, Dubai, United Arab Emirates Mobile: +971 50 4842269 Tel: +971 44350500 Fax: +971 44350505 E-mail: bunkers@oil-marketing.com

Vasilyevskiy Island, 3rd line, 62A, St Petersburg, Russia, 199178 Tel: +7 (812) 449 49 70 Fax: +7 (812) 449 49 71 E-mail: bunkers@spb.gazprom-neft.ru World Bunkering Summer 2011

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Company News

Portugal fuel stop

Tsetan Company Limited

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ased in Lisbon, Petrogal SA, part of the Galp Energia Group, offers fuel supply services to all ships visiting this warm and pleasant country.

Petrogal, with a professional bunkers team, provides its customers with high-quality fuels and services, and adheres to the highest safety standards in all its bunkers activity.

The company’s bunkering products fulfil the ISO 8217: 2010 specification in all grades. To help achieve customers’ targets on the environment, the company can supply low-sulphur fuels at several ports; Lisbon is the main port for low-sulphur fuel.

Petrogal optimises its logistical resources and storage to provide high-quality services and products, and can also supply a large variety of marine distillates.

As the main bunker supplier in Portugal, Petrogal provides a bunker service using two barges with capacities of 5,800 tonnes and 3,000 tonnes. The 5,800 dwt double-hull barge, Bahia Tres, began operations in 2010 to support the company’s business in Sines and Setúbal ports. Being fully aware of the importance of safety and protecting the environment, our barges are equipped with anti-pollution measures as well as being covered by European Maritime Safety Agency regulations in the Atlantic Ocean and Mediterranean Sea. Always aware that the customer’s main concern is cost, Petrogal offers competitive prices without compromising product or service quality. Visiting Portugal and being supplied by Petrogal Bunkering will always be a good decision for regular customers, used to working with a professional team.

As the only refiner in Portugal Petrogal operates two refineries at Sines and Oporto, and has an extensive product range that includes gasoline, diesel fuel, jet fuel, fuel oil, LPG, bitumen and several aromatic products. Our refining business is responsible for the supply of oil products to our retail, wholesale and LPG marketing divisions, competitors and foreign customers, as well as for the operation of our refining and logistics assets.

We have a leading position in the Portuguese market, as we own the four largest Portuguese tank farms and are responsible for 80% of national crude oil product storage.

Our two refineries together represent 100% and 20% of Portuguese and Iberian refining capacity, respectively, and collectively account for 88% of Portugal’s annual domestic petroleum product requirements. We have invested approximately €240 million in the last five years to upgrade and improve the efficiency of our refineries (€158 million for Sines and €82 million for Oporto).

For further information contact: Galp Energia SA Tel: +3512 1724 0637/654 Fax: +3512 1724 2957 E-mail: bunkers@galpenergia.com www.galpenergia.com

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setan Company Limited provides customers with services in bunkering, transportation and trade of oil products. A young and dynamically growing company, Tsetan entered the bunkering market in 2003. At the early stage of its activity Tsetan operated one bunkering barge in the port of Nakhodka. At present the company owns three bunkering tankers, the first of which was purchased in 2003 and the other two in 2005 and 2008 respectively.

Recently the a newly purchased Japanese made double-hull bunkering vessel Tsetan has been put into service, which will increase transportation and bunkering services in the ports of South Primorye. The total deadweight of Tsetan’s fleet is 5,000 tonnes, and the company’s annual cargo turnover is 50,000 tonnes. The scope of the bunkering services provided by the company covers all the ports of Southern Primorye, namely Nakhodka, Vostochny, Vladivostok, Slavyanka, Zarubino.

For the past couple of years Tsetan has strengtnened its’ position on the market and has gained a reputation of reliable bunker supplier.

Even in the current economical climate, when the demand for fuel has decreased in the Primorsk Krai area, the company has managed to increase the volumes of bunker supply which at the end of year 2010 constitued 70 000 tons. In addition to this Tsetan has expanded the range of clients.

The main supplier of the oil products for the company is Khabarovsk Oil Refinery (Khabarovskiy NPZ). The oil products are transported in cisterns by rail and then transhipped via the oil transhipments terminals of Nakhodka, Vostochny and Vladivostok.

The company aims to maintain the high profile, international image of a professional supplier of quality bunker fuel to its clients.

We value our clients and take a good care of their bunkering needs.

We always welcome new clients and are permanently ready to offer our services.

Tsetan Company Limited.

132, Verhne-Morskaya str.

Nakhodka 692917 Primorskiy Krai Russia Tel/Fax: +7 4236 629626 Tel/Fax: +7 4236 697060 Tel/Fax: +7 4236 645852 E-mail: tsetan@yandex.ru

World Bunkering Summer 2011

Company News

Neftehim Bunker Jsc

Unicom Bunkering SA

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eftehim Bunker Jsc is an affiliate of the well-known and reputable oil product trader and bunker supplier, Neftehim Ltd, which has been operating since the year 2000.

We maintain a reputation for reliably supplying the highest standards of services and excellent quality of products. Because of our outstanding business relations with the major Russian oil companies, as well asthe independent oil producers, we are able to be very flexible in the market, and always offer the best prices to our clients.

Thanks to these extensive and stable relations, we always have the full range of residual products available. Furthermore, our marine gas oil is in full compliance with the latest international industry standards.

Our company has access to a fleet of five different barging companies, giving us flexibility and efficiency in our bunker delivery operations.

With our company’s growth in mind, we now we have our own bunker-barge, Velta, which has nine separate cargo tanks with a total capacity of 1,600 tonnes (including MGO 230 tonnes), that enables us to supply different types of fuel. Moreover, Velta has blending equipment on board to provide a variety of fuel products.

Quality control is a matter of great importance to us, so before a bunker delivery to the vessel we regularly engage a surveyor to test our fuel.

In choosing Neftehim Bunker Jsc for your bunker supplies, you will always find outstanding levels of service, quality and efficiency.

Neftehim Bunker Jsc. Office 602 Bolshoy avenue V.o. 80 St Petersburg 199900 Russia Tel: +7(812) 332 2363/+7 (812) 942-3140 Tel/Fax: +7(812) 332 2364 E-mail: main@nh-bunkering.ru Website: www.nh-bunkering.ru

nicom Bunkering SA, becomes Unicom Holding SA’s bunkering division in Romania Unicom Holding entered the Romanian bunkering market in 1999, by setting up a distinct department to handle this business.

Since then, we have developed rapidly and gained the knowledge and experience to become the undisputed leading bunker supplier in Romania.

From 2005 to December 2010, we acted as an independent company, Unicom Bunkering, as part of Unicom Group. Following a merger by absorption, we are now re-established as the bunkering department of the acquiring company, Unicom Holding.

We continually strive to become more effective and competitive within the market, which is paramount in these uncertain times so that we can provide our customers with the best bunkering services.

We bunker at the Romanian Black Sea ports of Constanta, Agigea, Midia, and Mangalia, and also at the Romanian Danube River ports of Galati, Tulcea,Braila, and Drobeta Turnu Severin.

At the maritime ports we deliver a full range of high-sulphur fuel oil products, from IFO-30 to IFO-380, as well as low and high-sulphur distillates. The fuel oil can be delivered to ships by barge, while the gas oil can be supplied either by barge or by trucks. The barge deliveries are made mostly by our M/T Unicom 3. We also own the oil barge Deltaoil, but it is used mainly as a storage unit, which gives us an increased flexibility when dealing with various bunker orders in a short time.

At the Danube River ports, we supply only low-sulphur gas oil, ex-pipe, using our barge Unicom 1 or by trucks.

All the oil products we deliver are compliant with the ISO 8217:2005 specifications and are of high quality as we only purchase from the refineries that have consistently proved the quality of their product. All the bunker deliveries are managed professionally by an experienced staff, in full accordance with the relevant legal provisions in force.

Our bunker traders are available 24-hours a day and ready to put their experience, expertise and knowledge at your service, gladly helping you with any bunker or lubricant oil enquiry you may have at the above ports.

The first-class service we provide, coupled with the competitive prices we offer, make us one of the most reliable choices for you to consider whenever you need to supply bunkers to your vessels sailing in any area under our coverage.

Tel: +40 21 233 27 70/Fax: +40 21 233 27 69 General e-mail: office.bunkering@unicom-group.ro Website: unicom-group/bunkering Mr. Bogdan BURGUI – Bunker Sales Manager Mob: +40 741 383 412 E-mail: bogdan.burgui@unicom-group.ro Mr. Marc BOBEICO – Bunker Sales Manager Mob: +40 741 362 023 E-mail: marc.bobeico@unicom-group.ro

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Company News

TransOilBunker Co Ltd

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he bunkering company, TransOilBunker Co Ltd, was established in 1995 by the merging of several companies operating in the Russian Far East bunker market. The company provides bunkering services to vessels in the ports of Vladivostok, Nakhodka, Vostochniy, Slavyanka, Zarubino, and Posyet, amongst others.

Since our appearance in the Far East bunker market we have gained and maintained a good reputation amongst our clients – both national and foreign – as a reliable business partner, and we are positioned in the top 10 bunkering companies in the region, with about 10% of the market share.

Our monthly average volume of bunker fuel trade is up to 10,000 tonnes of heavy fuel, and up to 3,000 tonnes of light fuel (MGO).

The company owns five bunkering barges with capacities ranging from 500 to 1,700 tonnes, one of which is equipped with blending facilities, permitting the production of lighter grades of fuels.

The largest of our tankers has unrestricted navigation, giving us the opportunity to deliver bunkers to fishing grounds at the limits of the Russian exclusive economic zone in the Okhotsk Sea, Bering Sea and Japan Sea. Additionally, we are planning to acquire another tanker with even greater capacity, in order to meet the demands of our clients who require quantities of up to 2,000 mt of fuel. The company also operates its own tank tracks for delivering fuel to shoreside customers.

It is our company policy to strictly maintain the quality of our service and fuel, to continually practice safe working procedures, and to protect the environment at every stage of the bunkering process.

Additionally, we value highly the professionalism and reliability of all personnel who work for our company.

Looking to the future, our company is focused on further development to expand its activities and attract new clients through means of cooperation with the best known bunker trading houses in Singapore, Hong Kong, South Korea, Japan, China and Europe.

Bunkering company TransOilBunker Co., Ltd 53 of., st. Aleutskaya 11 Vladivostok, 690001, Russia Tel: 007 (4232) 642-448/007 (4232) 642-449 Mobile: 007 914 704 2856 E-mail: bktob2006@yandex.ru Website: www.transoilbunker.org

BunkerBridge Pte Ltd 億航網油供有限公司

Fueling the Future

O

ver the past 17 years, our Bilsea Group, from its humble beginning in 1994, has displayed its vibrancy in building a marine platform engaging in a diversified range of shipping activities, including chartering, shipagency, shipmanagement, shipoperation, international trading of asphalt and clean petroleum products, hedging, and ship bunkering.

Over the past seven years, the ship bunkering business – operated by one of its subsidiary companies, Seabridge Bunkering Pte Ltd – has forged ahead by handling an annual turnover of around US$235 million in 2010. We leverage our solid relations with reliable bunker suppliers worldwide to provide our value-based and customer-focused service.

During the global economic turbulence which lasts for three years, Bilsea Group, rooted in the belief of integrity, humility and community and guided by the corporate strategy, faced up to the tests, becoming more resilient and stronger. It is against this background that our BunkerBridge Pte Ltd, an online bunkering platform, was launched, constituting the new vision of our Bilsea Group.

BunkerBridge online trading portal is designed to provide our clients and suppliers with a brand new bunker trading experience by incorporating a fixed price trading system with cutting-edge communication technologies. Ninety per cent of the trading time in the traditional model is spent on negotiating and bargaining, which can be saved by our online trading system. In this online portal, the more players we have, the more valuable this bunkering ecosystem will be. Thus all participants will benefit more by creating and sharing the assets physically, financially and intellectually. By adopting this benign bunker trading system, we are able to pass on savings to our customers by offering them the most competitive market price based on the alliance built between suppliers and BunkerBridge, with the strong support of our experienced bunkering hedging team.

Through this online platform we offer: • Real-time fixed bunker price system: non-negotiable price for negotiable customers • Historical dealing price system: actual price for each deal • Bunker operation and payment status monitor system: watch your deal closely • BunkerBridge View: real time market insights.

We hope that the initiative in launching this BunkerBridge online trading platform will become the new milestone of our group, establishing ourselves as an enduring symbol of a multibusiness enterprise, an icon of vibrant ideals in a changing world, with the capacity to build and realise dreams.

Tel: (65) 65364012 Fax: (65) 65364482 Email: email@Bunkerbridge.com Web: www.BunkerBridge.com Add: 3 Church Street

#16-06 Samsung Hub

Singapore 049483

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Port of Algeciras Bay

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he Port of Algeciras Bay – Spain’s number one port – is located in an exceptional geo-strategic point. At the crossroads of the world’s main cargo shipping lanes, our Port is made up of a ‘hub’ platform for container transhipment in the West Mediterranean.

Our traffic evolution over the last few years has allowed us to become one of the main Mediterranean ports both in total throughput and container handling. In 2010, the Port of Algeciras Bay handled 70.65 -million tons total throughput, as well as 2.81 million TEUs. In order to be able to guarantee the necessary port infrastructure to meet traffic growth, the Port of Algeciras Bay Authority, which manages the ports of Algeciras, La Línea de la Concepción and Tarifa, continues to be strongly committed to developing our facilities. The new infrastructure on Isla Verde Exterior and Campamento – currently in full swing – will provide more than 200 hectares of new port surface area. Following a strict model of sustainable growth, the above infrastructure reflects the intermodal and logistics structure at the heart of the main port at the Strait of Gibraltar, complemented by improvements to road and rail communications.

Ro-ro cargo is another of the Port of Algeciras Bay’s strengths.

The proximity of Africa has given a leading role to the Bay of Algeciras, enabling it to serve as a sea-bridge between Africa and Europe. In 2010, 4.73 million passengers crossed this bridge.

The Port of Tarifa has likewise contributed to a wider range of services on offer; through the commercial developments witnessed over the last few years, more than one million passengers were able to use its facilities to cross the Strait of Gibraltar.

Supplies are another of the most notable traffic types of the Port of Algeciras Bay’s. In 2010, more than 2.96 million tonnes of goods were supplied – 2.1 million of which were petroleum products. This service makes up part of a range of global services: fuel supply to vessels at berth and anchor, repairs afloat at dry dock, waste oil collection and treatment, lubricant supply, etc.

One of the main challenges facing the Port of Algeciras Bay is the construction and commissioning of the main development taken on board in our history: Isla Verde Exterior. Having completed the first two phases’ work in record time, the third phase is scheduled for completion by mid 2011.

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The oil terminal, soon to be commissioned by Vopak Terminal Algeciras, consists of a six-hectare plot of land with a total capacity of 403,000 cubic metres. Vopak, the world’s largest oil product storage company, will be the third bunker operator, together with Cepsa and Repsol. There are currently five bunker barges operating within the port waters.

The Port of Algeciras Bay Authority (APBA) launched an international tender to build and run a new container terminal on Isla Verde Exterior. As a result, Hanjin Shipping Co. Ltd. – the South Korean corporation – was awarded a license to run Phase A of the above-mentioned terminal, where its subsidiary company – Total Terminal International Algeciras (TTI-A) – started operations in May 2010. The Asian shipping company has also won right of first refusal on the license for the new Phase B. Both phases together provide a 1,900-metre berth line, with draughts from 18.5 to 17.5 metres depth, and a levelled area totaling 72 hectares.

The ro-ro terminal, which will begin operations in 2011, is another important project set to convert the Isla Verde Exterior region into almost a whole new port for the Bay of Algeciras.

The mission of our Port, along with those mentioned above, is to strengthen our commercial ties with the international port community, hand-in-hand with COMPORT, the association of port service companies, which work for the promotion of the Port of Algeciras Bay through activities drawn out in its Commercial Plan of Action.

2010 main traffic figures:

Total throughput (tonnes)

70,649,440

TEUs

2,810,242

Passengers

4,730,042

Vehicles

1,371,238

Number of vessels

29,368

Liquid bulks (tons)

23,700,620

Solid bulks (tons)

1,475,910

Supply (tons)

2,954,261

Oil products

2,094,011

For more information, visit the Port of Algeciras website: www.apba.es

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REview: FUJCON

Steady as she goes There was a message of reassurance for delegates at this year’s Fujcon

T

he 7th International Fujairah Bunkering & Fuel Oil Forum (FUJCON) coincided with unrest in the Middle East and fears that the fragile global economic recovery could be at risk.

There were, however, words of reassurance from Mohammed Saeed Al Kindi, the emirate’s former Minister of Environment and Water, in his welcoming address. Dr Al Kindi has been a driving force behind Fujcon since its inception in 2000, is well known in IBIA circles and was formerly a Council member.

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He acknowledged the problems afflicting the world economy but told delegates: “Nevertheless, despite the ongoing global economic crisis, I can assure you that the United Arab Emirates, as a well established leading commercial centre in the Middle East, will continue to play an important role as a major financial link between the East and the West. Our structural policies are put into place for maintaining the stability of the real economy.”

Dr Al Kindi reflected on how much things had changed in Fujairah since the first Fujcon. He said: “Looking back to our first Fujcon in

World Bunkering Summer 2011

2000, it is, to me at least, almost a shock to recall that we were then operating with only 1,500 metres of main quay. Today, the port has just under 4,820 metres of quay of which 2,340 metres are dedicated oil berths. The port has built and invested in anticipation of demand and this will continue to be both governmental and port policy.”

Nowadays, nothing stands still for long in Fujairah and contracts will shortly be awarded for a minimum of 1,000 metres of additional oil berths. A master plan has been drawn up for an additional 11 berths to be implemented in stages as required. Investment in corresponding marine resources, tugs, vessels staff and facilities is continuing to increase. The Fujairah Free Zone has also developed and expanded rapidly to accommodate the new industrial petrochemical area.

Dr Al Kindi also drew attention to Fujairah’s “abundance of mountains and, in some important locations, an almost corresponding lack of coastal plain for future development”. He told the conference: “This has been tackled imaginatively with some 53 million metric tons being blasted, transported and compacted to gain some 225 hectares of land for future projects, from the sea. We have come a long way from our first Fujairah Bunkering Conference.”

World Bunkering Summer 2011

Finding out about the latest developments at Fujairah is one of the reasons for attending Fujcon, but by no means the only, not even, perhaps, the most important. This latest Fujcon, as with its predecessors, provided a wide-ranging insight into issues affecting both the Middle Eastern and wider global bunker industry.

Chemoil’s CEO, Tom Reilly, gave a keynote speech which emphasised the uncertainties now facing a global bunker market that will remain in a state of flux. He predicted that there would an increasing number of joint ventures and that consolidation will increase. On the other hand, however, diversification of bunker players is set to continue.

The rest of the programme comprised a balanced assessment of the main issues of concern, with IBIA’s chief executive Ian Adams providing an update on Marpol Annex VI issues and developments at IMO. As ever, Fujcon’s organiser, Singapore-based Conference Connection, made sure the social and networking side of the event went smoothly. Informal gatherings both at the venue, Fujairah’s five star Al Diar Siji hotel, and also at the Conference Dinner in the grounds of the Hilton Hotel contributed to the event’s success.

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review: IBC

Choices, choices

IBC spelt out the uncertainties facing the bunker and shipping industries

C

laimed to be the longest running conference of its type, the 32nd International Bunker Conference (IBC) took place in Copenhagen’s Hotel Scandic from 6-8 April 2011.

The 2010 event took place in Oslo and had ‘The roadmap to 2020’ as its theme.

The event’s organiser, BI Norwegian Business School, said: “After last year’s success in Oslo ‘The roadmap to 2020’ we raised a series of questions: Is it a mission impossible? Or mission possible? Have the regulations had any effect so far, can the industry cope with the regulations and last, but not least, is the development of new technology keeping us on track?”

Summing up those questions, IBC 32’s theme was ‘Fuelling 2021 and beyond – are we halfway there?’ From the presentations the answer was: “Probably not.”

The 2021 dateline is of course significant as the 0.50% global sulphur limit is due to come into effect in 2020, subject to the 2018 fuel availability review.

This year’s chairman, Tore Morten Wetterhus, DNV Petroleum Services’ managing director, began by outlining the shipowner’s dilemma. The owner has to adapt to changing times and plan for switching bunker fuels, or taking other measures, by 2020. At the same time he has to be aware of pressure on fuel quality.

Bo Cerup-Simonsen, chairman of the Technical Committee, Danish Shipowners Association and vice president, head of Maersk Maritime Technology, AP Moller Maersk, also talked of the problems facing the owner. He said that the shipowner’s dilemma related to energy and emis-

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sions through a decade of change and uncertainty.

It was difficult to know what fuel newbuildings being ordered now should burn. Should SOx scrubbers or biofuel be used on certain trades as a supplement or alternative? Alternatively, newbuildings could be designed to use LNG as a fuel.

Colin Crooks, general manager Shell Marine Products Europe/ Africa noted: “The path to the future is not straightforward. There are no easy answers and there is no silver bullet.”

Gunnar Kjeldsen, regional manager, DNV Petroleum Services asked whether better quality is a real problem. He accepted that cost is an issue but argued that business can be good, even with high prices.

Given that he was speaking against the background of the ongoing crisis at Japan’s Fukushima nuclear power station, Vince Jenkins,

World Bunkering Summer 2011

Global Marine Risk Advisor for Lloyd Register, had a rather unenviable task in speaking on the topic “Nuclear power – its potential contribution to the marine industry”.

Actually, he put effectively the LR view that nuclear power needs looking at in the mix of future fuel options.

Less controversial, though by no means universally accepted, is the idea of powering the merchant with LNG. Martin von Sydow, Wallenius Marine’s vice president Design LNG gave a presentations on the commercial and the technical challenges moving forward.

Not, of course, that the conference proceedings. There was also, as ever, a lot of networking going on during the breaks and in the evenings, helped along by IBC’s social programme, which included a Live Mass Flow Meter Demonstration on the evening before the conference followed by a welcome reception. On the Thursday there was dinner at the magnificent Tycho Brahe Planetarium.

This was preceded by a environmental video with the result that the bunker industry is now much better informed on the detrimental effects of logging on coral reefs.

So, once again, IBC’s organisers put together a well-balanced and informative event. No doubt work is already underway on IBC 33, which will be back in Oslo next year.

Among the challenges Mr von Sydow noted were tank arrangements, availability of bunkers, and large investment. On the plus side he mentioned lower fuel costs, no need for heating and/or treating of fuel, and the prospect of a clean engine room.

So how should we tackle shipping’s environmental challenges?

Jacob Sterling, head of climate and environment, AP Møller–Maersk, said: “We believe it is easier to deal with change proactively, rather than reactively. As an industry, we should plan for a patchwork of regulations and work for high global, uniform standards. We should proactively develop alternatives to bunker fuels before regulation and supply issues demand it of us”.

At the end of the conference James Corbett, professor, College of Earth, Ocean and Environment, University of Delaware, reflected on how far the process of preparing for 2020 had gone. He talked the optimist’s half-full glass and the pessimist’s half empty one. But whichever way you view it, IBC turned out to be a useful, timely and informative event.

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preview: Istanbul Bunker Conference

©Anadolu

Istanbul Bunker Conference 10 years, five conferences

T

he Turkish Bunker Association (TBA) was established a decade ago and is now set to run its fifth International Istanbul Bunker Conference, from 1-3 June. The venue will be the impressive Four Seasons Hotel at the Bosphorus.

TBA chairperson Yeşim Muhtaroglu recalls: “It has been 10 years since we established the TBA. It feels like only yesterday when we, all the suppliers in Turkish bunker industry, sat around a table putting together our constitution. It was not very easy to bring all the players together when, of course, they were in competition with each other every day in the bunker market.”

She continues: “We managed it though, and achieved some notable successes. We have improved the standards of Turkey’s bunker industry, which now offers one of the most reliable markets in the area. We come together regularly, to share our experiences, help each other and make our market one of best supply centres in the region with trouble-free deliveries and almost no disputes.

Ms Muhtaroglu says that the TBA has become the key point of reference for the bunker industry in Turkey. Over 15,000 bunker deliveries a year take place in Istanbul. The main players are well established and the relevant authorities support the national bunker industry.

She notes: “During the 10 years since the TBA was set up there have been significant changes in the Turkish market. A new petroleum law was introduced which licensed all players in the bunker market. We have been consulting with regulatory bodies to ensure a healthy, reliable and sustainable bunker market in our country. This has resulted in the establishment of best practice and we now enjoy a trouble-free, reliable and high quality market in Turkey.”

These positive developments have been enhanced, Ms Muhtaroglu says, by the regular Istanbul Bunker Conference which is now

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©Anadolu

World Bunkering Summer 2011

widely recognised as one of leading bunkering events, attracting large numbers from around the world. She says: “This year we again have friends from South America, Europe, Far East, and the Middle East, making this an interesting and enjoyable event in this magnificent city of Istanbul. We have certainly become a popular bunker industry gathering for this region, running a well organised, informative conference and excellent associated social events.”

Ms Muhtaroglu acknowledges the support of the highly influential Turkish Chamber of Shipping, which has backed the conference from the start 10 years ago. She added that the conference and the TBA enjoy the assistance of the Maritime Under Secretary and Istanbul Harbour Master, and also of the Customs and EMRA authorities.

“As an indication of the event’s popularity,” she says, “sponsorships have sold like hot cakes.

This 5th conference again includes some very important speakers and subjects.” CYE Petrol sponsors the conference hall; Triton Marine Fuels, the coffee breaks; Dto Petrol, the lunch; KPI Bridge Oil, Thursday evening’s Dinner; Energy Petrol, Friday evening’s reception and the gala dinner. To round everything off in style there will be a “till morning party” sponsored

by TBS Denizcilik.

“As usual we are able to offer some well organised social events to complement the conference and enable delegates to make the most of this networking opportunity,” says Ms Muhtaroglu.

One of the highlights of the social programme is a boat tour, sponsored by Anadolu, on the Bosphorus, one of the world’s busiest waterways with 50,000 ships passing through annually. ©Anadolu

© Energy petrol

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IBIA Annual Convention 2011 Barcelona, Spain Hotel Rey Rey Juan Juan Carlos Carlos II Hotel 2-4 November November 2-4 www.hrjuancarlos.com www.hrjuancarlos.com

PREMIER SPONSOR SPONSOR PREMIER

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ALSO ALSOEXHIBITORS SPONSORED SPONSORED BY BY

• Chance Chance for for you you to to vote vote on on future future • IBIA policies policies IBIA • Excellent Excellent social social programme programme • and networking networking opportunities opportunities and allowing you you the the time time to to make make new new allowing contacts. contacts.

Delegate Delegate Prices Prices *Early Bird Bird Member Member Rate: Rate: £800.00 £800.00 €945.00 €945.00 *Early Member £900.00 Member Rate: Rate: £900.00 €1,060.00 €1,060.00 Non-Member Non-Member Rate: £1450.00 Non-member Rate: £1450.00 €1,710.00 €1,710.00 Early bird bird rate rate ends ends on on July July 4th 4th 2011 2011 ** Early

To register register for for the the IBIA IBIA Annual Annual To Convention visit: visit: www.ibia.net www.ibia.net Convention or alternatively alternatively contact: contact: or Charlotte Egan, Egan, Event Event Manager Manager Charlotte (t) +44 +44 2380 2380 226555 226555 (t) (e) charlotte.egan@ibia.net charlotte.egan@ibia.net (e)

World Bunkering AUTUMN 2011 issue Independents While thin margins have impacted on some independents the story has been generally one of expansion. Is there enough room in the market, or will there be consolidation?

Fuel Quality Quality is always a hot topic but even more so now as port states look closely at the sulphur content of fuels within ECAs. We also look at how widely ISO8217 2010 is being adopted by the bunkering industry.

Lubricants The requirement to switch from high to low low sulphur fuels as vessels move in and out of ECAs together with the trend towards slow steaming pose difficult challenges for lubricant manufacturers. We look at the new products on the market.

Scrubbers The impending enforcement of a 0.1% sulphur cap in the ECAs and the likely premiums that will be demanded for low sulphur distillate have focused attention on abatement technology, or scrubbers. Will it be possible for much of the world fleet to be fitted with scrubbers by the 2015 deadline or will many owners have to pay handsomely for compliant fuel.

Geographical Focus: Middle East Turbulent times but the bunker industry carries on. Our annual survey looks at the main players and market and asks what is new.

ARA Volumes may have been lacklustre recently but there is widespread optimism for the long term prospects for bunkering in the key ARA region. Players continue to invest in new barges and facilties.

Black Sea With some 25,000 ships sailing in to the Black Sea a year and a thriving regional trade the Black Sea ports complete for a significant market.

Event Preview IBIA Annual Convention – Barcelona,

Conference Review Istanbul Bunker Conference – Istanbul

Regular Features Interview, Industry News, Environment, Testing, Risk Management, Russian Update, Legal News, Equipment and Services.

DiARY

Looking ahead 23-27 May

21-22 September

Maritime Week Americas 2011 Cartagena, Colombia www.petrospot.com

9th Intermodal Africa 2011 Casablanca, Morocco www.transportevents.com

27-29 May

3-6 October 2011

Nor-Shipping Oslo, Norway www.congrex.no

36th Annual Interferry Conference Barcelona, Spain www.interferry.com

1-3 June

26-27 October

Turkish Bunker Conference Istanbul, Turkey www.istanbulbunkerconference.com

7th Trans Middle East 2011 Abu Dhabi, United Arab Emirates www.transportevents.com

22-23 June

2-4 November

Platts 8th Annual Bunker and Residual Fuel Oil Conference Houston, Texas, USA www.platts.com

IBIA Annual Conventional Barcelona, Spain www.ibia.net

22-23 June 9th ASEAN Ports and Shipping 2011 Ho Chi Minh City, Vietnam www.transportevents.com

23-24 June Bunker Fuel Blending Technology & Economics Singapore www.cconnection.org

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24-25 November 6th Thai Ports and Shipping 2011 Bangkok, Thailand www.transportevents.com

1-2 December Bunker Fuel Blending Technology & Economics Singapore www.cconnection.org

World Bunkering Summer 2011

ENErGY of GROWTH • High quality ISO 8217-2010 bunker fuel • Quality control from oil refinery plant to end user • Flexible prices • Main sea ports of service: St. Petersburg, Arkhangelsk, Ust-Luga, Kaliningrad, Murmansk, Vladivostok, Nakhodka, Novorossiysk, Tuapse, Port Kavkaz • Main river ports of service: St. Petersburg, Yaroslavl, Nizhni-Novgorod, Kazan, Samara, Volgogard, Astrahan, Rostov-on-Don, Azov

GAZPROMNEFT MARINE BUNKER Ltd Saint Petersburg Office: Vasiliyevskiy Island, 3rd line, 62A, Saint-Petersburg, Russia, 199178 Tel: +7 (812) 449 4970 Fax: +7 (812) 449 4971 E-mail: bunkers@spb.gazprom-neft.ru

Main Office: 14, Krzhyzhanovskogo street, Building 3, Moscow, Russia, 117218, Tel: +7 (495) 213 04 36 Fax: +7 (495) 213 04 37 E-mail: marinebunker@gazprom-neft.ru