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WINTER 2014

World BUNKERING

IBIA

moves forward Hamburg Convention report

Inside this issue: OW collapse shocks the industry LNG developments Sulphur - 0.1% rule just weeks away

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Editor's letter

A night to remember

he 2014 IBIA convention was certainly memorable for two reasons – one good, the other not so good. To take the good reason first, the Hamburg event was well up with the best conventions that IBIA has run over the years. Arguably, it was the best so far. Partly that is because it was very well run, had excellent presentations, and was in Hamburg – the quintessential port city. Unlike most so-called port cities now, this German metropolis still feels connected with shipping and the sea. Long may that last. It was also one of the best conventions because it gave the strong impression that IBIA as an association is on the move, doing more, adapting to change and listening to its members. This issue includes a three-page convention report, which shows the wide range of topics covered in a meeting that broke new ground in the use of electronic voting. But, moving onto the not-so-good reason why the convention will stick in our memories, the event was when we first heard OW Bunker was in dire straits. It is true that somebody attending from Singapore had had a word in my ear on the Tuesday evening. The message was that OW was on its way out. Frankly, I thought the person in question was overstating the problem. Not so, it turned out. Of course, the whole bunkering industry was aware that a bad-news announcement from the company was imminent, against a background of falling oil prices. Nevertheless, few realised how serious the situation was. Just as the convention was winding up on Wednesday evening, with most delegates celebrating in typical German

World Bunkering Winter 2014

style in a beer hall, the news that OW Bunker was in deep trouble started to filter through. Not surprisingly, mobile phones were ringing into the small hours as delegates from around the globe tried to find out what their company’s exposure to an OW collapse might be. There was just one topic for discussion over the breakfast tables at Hamburg’s Grand Elysée hotel on the Thursday morning as the enormity of what was happening started to sink in. By Friday evening, of course, it was all over and a bankruptcy notice appeared on OW’s website. The shockwaves generated by this corporate crash will be felt for a considerable time and, sadly, will probably result in copious copy for our Legal page in future issues. More immediately, the situation has put World Bunkering in something of a dilemma. Our reports on Central and South America were filed just before the company’s demise. OW had been expanding rapidly in the Americas and our reports reflect that. They don’t cover what might happen now. Again, that is more copy for future issues.

While OW may cast a shadow over the industry, there is much else going on, not the least the now imminent 0.10% sulphur limit in emission control areas, a subject that crops up throughout the pages of this issue. The same can be said for liquefied natural gas (LNG). We take a look at this rapidly developing sector in two special features, one on LNG newbuildings and the other a general overview. Looking ahead, the IBIA Dinner is looming. The spring issue will be ready in time for this important date in the IBIA calendar. The World Bunkering team will be there and we look forward to meeting you then. David Hughes, editor

WINTER 2014

Publisher: W H Robinson Editor: David Hughes editor@mar-media.com

World BUNKERING

IBIA

Deputy Editor: Sandra Speares sandra.speares@mar-media.com

moves forwArd Hamburg Convention report

Project Director: Dawn (Barley) Allison dawn.barley@mar-media.com

Project Consultant: Alex Corboude InsIde thIs Issue:

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OW collapse shocks the industry LNG developments Sulphur - 0.1% rule just weeks away

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WINTER 2014

Editor’s letter

Chairman’s introduction

Chief executive’s report

Asia report

Africa report

AGM noticeboard

New members

Events report

Noticeboard

IBIA Convention

IBIA reports

Special features

Industry news

Environment

Additives

Barge design

Risk management

LNG

Testing and surveying

Geographical focus

North America

Central America

Caribbean

South America

Russian update

Innovation

Legal news

Equipment and services

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amburg has a place in my heart, it is almost “home” and the IBIA convention is very much like that, an opportunity to catch up with old friends and make new ones. I hope for those of you that came you can empathise with this. We also tried something different this year with the “IBIA’s Oktoberfest” for the convention dinner. It is now behind us, however, I would like to say a few thank you’s on behalf of the IBIA board. First our sincere thanks to the Secretariat for their diligence and hard work in bringing the convention together, particularly Steve Hoare who only joined at the end of July yet picked up the baton and ran hard with it, not only delivering a superb convention but also some innovations. I have never seen a sea shanty like the one performed on the opening night, I can still see the faces of the “old sea dogs amongst the delegates!! I wonder if you can guess who they are? But such a juggernaut needs a driver and my thanks also go to the Convention Working Group under the chair of Eugenia Benavides and to Trevor Harrison who so professionally chaired the conference. Then there are those who make IBIA what it is, the volunteer members who identify sponsors, speak with nonmembers, use their contacts to unearth challenging and topical speakers, you know who you are and know also that you are greatly appreciated. Stand up and take a bow. Thanks too to the hotel staff for the food and arrangements, and last but not least our sponsors who are essential to all our activities. I am delighted from feedback that they have gained additional business and am thrilled that there was a tangible benefit from the exposure.

World Bunkering Winter 2014

So what will the New Year bring ……… The conference gave some indicators for the future: New Fuels, Compliance and Enforcement. I am delighted that as I write this the EU has announced that they will review their plans on compliance. We must have a level playing field upon which shipping can operate. Unfortunately the week of the convention was also the week of OW Bunker’s collapse. It came out the blue. Suddenly the company’s name was on everybody’s lips. Until then, when people spoke about OW, it was in connection with mass flow meters, new offices or new initiatives like its co-operation with Genoil. But this time it was news that hit the industry like a tsunami. The company was declared bankrupt on Friday evening, 7 November. Its was, and still is, a huge shock for the entire industry. It is not for me to judge exactly what happened but I can say that I feel for all those experienced employees who, in a matter of just minutes, suddenly found themselves unemployed. The same goes for all those suppliers who have delivered products or bunkers to OW and are now having to fight to survive. We at IBIA are trying to assist wherever we can. I can only cross my fingers and trust that the entire bunker industry will stand together and try to minimise the unexpected and unfair situation the OW bankruptcy have put the global bunker industry in. We must wait to see how the OW situation unravels but it could herald tighter credit lines and I suspect in some areas greater financial regulation for the supply chain. Time will tell the about the deeper impacts on the bunker markets. We have so much to be challenged by but so much

to look forward to as out of adversity springs innovation and opportunity. IBIA will continue to work with International, national and shipping associations to forge ahead with sustainable, efficient and environmentally friendly policies. We will try and give as much support to our members and potential members as we can. Board Elections

Chairman’s welcome

A great convention, followed by a big shock

Can I remind you that the elections to the board take place throughout January, we need your input to keep the issues relevant to the industry. I hope you have a prosperous New year. Finally I am honoured to have been asked to continue as chairman for another year. I look forward to another exciting and rewarding 12 months in post. Jens Maul Jørgensen, Chairman, IBIA

n my introduction in the convention programme I made reference to the words of scientist Charles Darwin: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change. In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment.” It is against this backdrop that the IBIA annual convention serves its purpose in bringing together thought leaders, to help inform you and support you with the strategic decision-making that is needed to navigate through these times of a changing environment. So this introduction identifies some of the changes that IBIA has made and is making to adapt to the changing environment. OW Bunkering

During the convention, the OW Bunker scenario unravelled before us, a poignant case that will affect many of you. The association responded and announced a series of measures to support companies and individuals affected by the collapse of OW Bunker. These have included the following. • Dialogue sessions with the Maritime and Port Authority of Singapore (MPA). • Support available in European ports.

• Career support for affected staff.

Abolish the role of immediate past chair

The dialogue sessions in Singapore aim to ensure continuing smooth bunker operations. IBIA stands ready to offer this service to other companies potentially affected in European ports. The association is also offering professional career support services to those individuals who have lost their jobs, free membership for 12 months and a jobs notice board.

The third area of proposed structural change to the governance was to abolish the office of immediate past chair. This was unanimously agreed. Consequently the byelaws will be amended and a copy made available on the website.

Changing the governance

The IBIA board meets every month by teleconference and face to face twice a year, taking advantage of the convention to hold one of the physical meetings. This was an opportunity to re-evaluate policy and where the association is, following the circulation of information concerning proposed governance changes to all the membership earlier this year. The board considered the following changes. Merger of the roles of treasurer and vice-chair

This proposal was rejected. The board considered the role of treasurer to be a significant one that should not be amalgamated. It recognised, however, that the vice-chair should be involved in the association’s finances and agreed to establish a financial team comprising the chair, vice-chair, treasurer and chief executive. It was agreed that Dilip Moody will be appointed treasurer from 1 April 2015 for 12 months. Permit chair and vice-chair to stand for re-election for a second year

The board recognised that, to support consistency and sustainability of policy, it would be advantageous for the chair and vice-chair to be able to stand for a second year. This does not extend the officers’ term to two years. Rather, each year, there will be a board election for chair and vice-chair. Jens Maul Jørgensen has been elected as chair for a second year commencing 1 April 2015. Robin Meech has been elected for a second term as vice-chair.

Strategic review

The three-year business plan is halfway through its ‘life’ and this was an opportune time to carry out a review. The key points of the current plan are as follows. • Focus on delivering value for money and increasing membership in order to deliver sustaining value. • Establish regional events, addressing topical issues in that location. • Deliver added value to members. • Provide stronger representation and active lobbying at industry regulatory organisations and forums. • Developing education and training ultimately culminating in accredited qualifications for IBIA members. • Last, but not least, improving communications throughout the association. A review will be carried out over the next two months and a report will be provided to the board along with an update for the membership.

Chief executive’s report

Convention 2014

Membership fee review

The board also agreed to review the membership fees, particularly the structure of how fees were calculated. Many associations had a graduated scale that was linked to the size of the company. During the next few months, I will be canvassing views on this, so please let me have your thoughts. I can be contacted by email at ibia@ibia. net. We will also be looking at student membership – a new category with a minimal subscription. That leaves us with a number of things to do, but a new year to achieve them in. I would hope you all have a great break, refreshed for the year ahead. Best regards Peter

Captain Peter Hall, chief executive, International Bunker Industry Association World Bunkering Winter 2014

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Presentations, courses, social events and a golf tournament have all taken place in the past few months, as Kwok Fook Sing, regional manager – Asia, reports

ouglas Raitt, chair of IBIA Asia’s executive committee, recently addressed industry stakeholders on the implementation of mass flow metering (MFM) for bunkering in Singapore. This will be a step change in efficiency, accuracy and transparency for the bunker industry. Currently the process of dipping tanks and measuring temperatures and volume to convert to mass calculations is prone to variances, leading to inaccurate determination of quantity, which results in potential disputes. The enforcement will ensure the customer receives the quantity they have purchased. Raitt said he was confident that the industry will see the long-term benefits of embracing new technology, such as mass flow metering. Ultimately, the use of mass flow meters will result in a smoother bunker transaction landscape with fewer commercial disputes, shorter delivery times and a simpler custody transfer process. The current greatest concern, he explained, was from bunker surveyors as they feared their work and business would be affected. He argued that there will be a significant role for bunker surveyors, including checking seal integrity and verifying calibration records. He added: “Surveyors who upgrade their skills and work effectively with new technology should not be affected by the introduction of mandatory mass flow metering in Singapore. It will be an excit-

World Bunkering Winter 2014

ing and busy future for the survey community working in harmony with mass flow meters on barges in Singapore.” IBIA, in support of industry stakeholders, developed and conducted the first MFM course on 18 September 2014. The inaugural course was well attended, with 13 participants from eight different organisations comprising bunker suppliers, bunker craft operators, bunker surveying bodies and port regulator the Maritime and Port Authority of Singapore (MPA). The course was conducted over a two-day period and covered the development of the use of mass flow metering in Singapore, the technical working principles and system integrity of the meter onboard and operational processes with the use of MFM. A fully working meter was used to demonstrate MFM operation, while manufacturers Emerson Process Management and Endress + Hauser were fully supportive and provided the expertise to explain the technical aspects of the meter, using scaled-down working modules to demonstrate the operating principles and procedures. A half-day session of case studies was included, which allowed delegates to actively participate in the simulated bunkering process and provided useful practice. Zulfiqur Husain, of MPA’s training standards department, congratulated IBIA on its “new initiative on MFM course introduction”. He particularly praised the mode of delivery and especially the use of

the working model and the presentations by industry experts. The annual IBIA Golf Challenge and Bursary Award was held on 17 October at the recently refurbished Jurong Country Club. Captain M Segar, MPA’s assistant chief executive (operations), led the teeoff at 1.30pm. Although the challenge was interrupted three times by showers, the weather failed to dampen spirits and the players took the chance to have a few beers while waiting for play to resume. The game ended with evening cocktails and dinner, presentation of the bursary awards and the prize-giving ceremony.

IBIA Asia branch report

Busy time for IBIA Asia

Captain Khong Shen Ping, dean of MPA Academy and one of the architects behind the establishment of IBIA in Singapore, thanked the participants who had generously supported the event. Fundraising for the bursary award was first mooted in 2007, and 2012 saw the first disbursements to two students: Daphne Kow Wei Ling, taking a maritime studies course at Nanyang Technological University; and Mitesh Swastikzz on a six-month deck cadet course at Wavelink Maritime Institute.

This was quickly followed by awards to six students in 2013 and two more this year. The IBIA Asia Bursary Committee, chaired by Captain Tey Yoh Huat, will continue to work with training institutions to identify needy students and, through the financial support of the bursary fund, provide them peace of mind to concentrate on their studies.

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As Tahra Sergeant reports, the IBIA’s Southern Africa branch continues to back an exciting project to train potential ship’s officers

BIA Southern Africa branch has been involved with Simon’s Town School’s Lawhill Maritime Centre for a few years. Lawhill Maritime Centre has helped to address youth unemployment and poverty by providing young South Africans with maritime knowledge and skills while they are still at school, thereby increasing their employment prospects. Most of the students begin the maritime studies course with little background in the maritime industry – some may not even have seen the sea or a ship at close quarters – and, after our three-year programme, they emerge with a range of knowledge and skills that makes them immediately employable in the shipping industry. Wholly funded by the maritime industry, the Lawhill Maritime Centre has won several awards since it was founded in 1997. Past awards include the Lloyd’s List ‘Salute to Youth and Training’ award (1999) and, more recently, the Seatrade ‘Investment in People’ Award (2012) and a platinum award from the Impumelelo Social Innovations Centre (2013). Our very own Patrick Holloway, longstanding member of IBIA Southern Africa and currently serving on the executive committee, gave the students of Lawhill an enthralling account of the perils of maritime law and what is required from the students in order

World Bunkering Winter 2014

to further their studies. Holloway is a partner in the insurance, shipping and transport practice at law firm Webber Wentzel and practises in Cape Town, South Africa. He has been named by The Legal 500 as an expert in shipping law for many years. He is a member of the International Bar Association, the Comité Maritime International and is a longstanding member on the National Executive Committee of the Maritime Law Association of South Africa, of which he is the president. He has for many years presented the legal section of the IBIA basic bunkering course.

IBIA Africa report

Lawhill support We are most grateful to him for his contribution to the industry and the Southern African branch.

Patrick Holloway

AGM Annual meeting

The 21st Annual General meeting of the Association

Will be held at:

The Cunliffe-Owen Room The Naval Club 38 Hill Street London At

15.00 On

Monday, 9th February 2015 EVERY MEMBER HAS THE RIGHT, UNDER THE COMPANIES ACT 2006, TO APPOINT A PROXY. SHOULD YOU WISH TO DO SO PLEASE CONTACT THE IBIA ADMINISTRATION TO OBTAIN A FORM By order of the Board Jens Maul Jorgenson Chairman

World Bunkering Winter 2014

New members

CORPORATE Agent Lima, Jose' LIMAGE - Shipping Agency of Cape Verde Jose' Figueiredo Street Cape Verde Islands 174 Cape Verde joseliam@limage.cv Bunker Supplier Felix, Tarik West Indies Petroleum Ltd 5 Paraiso Avenue Kingston 10 Jamaica sales@westindiespetroleum.com

PO S&D Torrado, Jose' Port Authority of Ceuta Muelle Espana' s/n Ceuta 51001 Spain victor@puertodeceuta.com

Bunker Supplier Koay, Eng Oon Sin Soon Hock SDN BHD (Asia) 2-7-23 Harbour Trade Centre Gat Lebuh Macallum Georgetown 10300 Malaysia kesoon@sinsoonhock.com.my

Bunker Trader Grunwaldt, Peter Soyuz Bunkering Group #3702-22, 37th Floor JBC 2, Jumeirah Lake Towers P.O. Box 113154 Dubai UAE pw@sb-group.biz

Service Camarta, Neil Field Upgrading Suite 201, 1100 - 1st Street SE Calgary AB T2G 1B1 Canada neil.camarta@westernhydrogen.com

Buyer Hossain, Mir NMC Global Corporation 236 Ernston Road Parlin NJ USA 08859 jahangir@nmcigroup.com

World Bunkering Winter 2014

New members

INDIVIDUAL Service Korusaw, Gary Port Enterprise Ltd No. 1 - 28, 2 Chome, Chikko Osaka 552-0021 Japan x27e53a7b@yahoo.com Bunker Trader Koekkoek, Victor Albemarle Advisors Limited Foch Street Marfa'a 127 Beirut Central District 20126607 Lebanon vk@albemarleadvisors.com Service Takolia, Ebrahim South African Oil & Gas 4 Loop Street Studio 604 Cape Town 8001 South Africa etakolia@saoga.org.za

Bunker Supplier Christine De Silva, Mary Prosperbiz Petroleum (S) Pte Ltd 21 Bukit Batok Crescent 29 - 75 WCEGA Tower 658065 Singapore mary@prosbiz.com Legal Cawley, William Loudouns 15 Old Bailey London EC4M 7EF UK wlc@louoduns.com

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World Bunkering Winter 2014

As Steve Hoare reports, IBIA members have an ambitious programme of events to look forward to in the coming year

ell my first event with IBIA is now complete. The IBIA Annual Convention in Hamburg in November was a great success. The feedback has been very positive, with everyone saying that they enjoyed the convention. IBIA's version of Oktoberfest also went very well, with people rating it as the best convention dinner they had attended! I would like to say thank you to all of our speakers for giving very interesting and thought-provoking presentations and for subjecting themselves to our Question Time themed format after their presentations. A big thank you also goes to our sponsors and exhibitors. The focus now shifts to our two big events in February, first the IBIA Annual Dinner in London on 9 February. As we have mentioned before, through force of circumstance we are changing venues. Therefore, this year we are at the Park Plaza Hotel, Westminster Bridge. The Park Plaza is a great venue within easy reach of Westminster and Waterloo stations and close to other International Petroleum (IP) Week events. With a new dining facility, it also offers more space to network. It promises to be a fantastic new base that will allow us to update the dinner itself as well as adding new features. Look out for further news.

World Bunkering Winter 2014

Tickets are selling fast, so don’t delay! On 25-27 February, IBIA will stage a regional forum in Gibraltar. This looks at the area as a gateway between the Atlantic and Mediterranean, and covers the Mediterranean bunkering market and its potential as a transhipment hub. IBIA is working closely with all parties in the region and the Gibraltar Port Authority to bring something new to the forum. The event starts with an IBIA Basic Bunkering course, followed by an opening reception at the Mons Calpe Suite at the top of the Rock. There are not many places in the world where you get such a stunning venue that, on a good day, lets you see the Mediterranean meet the Atlantic and Africa almost touch Europe. You can track vessels in real-time, without AIS, and get a bird’s-eye view of bunkering and ship-to-ship transfers in Gibraltar Bay, Ceuta and Tanger-Med. Thursday 26th will see presentations taking place on

the Sunborn Gibraltar floating hotel. In the afternoon, you get the chance to come up close to bunker operations and marine service operators as they host an exhibition and presentations. You can even board a bunker barge and see how it all works firsthand. The forum will be topped off with a sumptuous dinner in the famous St Michael’s Cave. Combined with IBIA's Basic Bunkering course and time to chat to suppliers and service providers, this really will be an event that you will not want to miss. As this convention finishes and we wrap up all the loose ends, we are busy planning next year's convention in Cancun! Plans are afoot to make this a spectacular event for the whole industry, and I will be updating you in the coming months. Until then, I hope you all have a great festive season and I look forward to meeting you at one of our events in the New Year!

Events manager report

Exciting 2015 programme ahead

Bunkering in Gibraltar

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Benefits to members as of 1 November 2014

Membership Costs

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

These increases took effect on 1 July 2012. Additional The Board has also decided that the present practice of listing Corporate have changes some and needs s’ member meet fairly and Members does not properly ship to member of benefits the match ly accurate more will that ed therefore been introduc its cost; affected members will be contacted directly by the Secretariat. If you have any queries or comments about these changes, then please contact ibia@ibia.net or telephone: +44 (0) 20 3397 3850.

Noticeboard

IBIA noticeboard

IBIA Publications and Benefits IBIA World Bunkering Magazine – free copies for Members of IBIA

Please note non-members are requested to subscribe to the magazine at a cost of Pounds Sterling £45, £60 or £80 depending on location. Up to 20 additional free copies of the magazine are offered to buyer members of IBIA for forwarding to their vessels. IBIA World Bunkering Magazine – discounts on advertising

Discounted advertising rates are available for members with savings dependent on the advertisement size. Please contact the Advertising Sales Team at Maritime Media London on + 44 (0)20 7386 6100 IBIA List of Members

If your details are not correct, please log on to our new website and update them on your members page. The new website is designed so members can easily access and change their own information. This publication is only available to IBIA members. IBIA Guide to In-Line Blending

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

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

World Bunkering Winter 2014

Evaluate the Merits of a Bunker Claim

Interpretation of specifications for bunker fuels and a guide to the question of repeatability. For sale to non-members at £35. IBIA Glossary of Bunker and Lubricating Oil Terminology

A comprehensive guide to all those complicated terms that are in daily use in the bunkering industry. For sale to non-members at £45. IBIA Guide to Good Commercial Practice

On sale to non-members at £50 per copy. IBIA Safety Cards for vessels’ crews

IBIA buyer members receive copies of the IBIA Safety Cards for distribution to their ships, giving basic, plain English advice about safe handling of bunker fuels Please note that all of the above publications can also be downloaded by members by visiting www.ibia.net and logging into your account. Please then go to the download section of the website. IBIA LogO

Free bromide supplied for use by corporate members only.

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CONFERENCE HIGHLIGHTS

YOUR DISTINGUISHED PANEL OF SPEAKERS TO-DATE H.E. Dr Mohammed Saeed Al Kindi Chairman, FUJCON Steering Committee and MD, Fujairah Petroleum Products, UAE

Mr Mohammed Obaid Director-General of Dept. of Industry & Economy and Chairman of Fujairah Building Industries, UAE

KEYNOTE Dr Fereidun Fesharaki Chairman FGE

Dr Salem Khalil Technical Advisor Government of Fujairah, UAE

Mr Peter Hall CEO International Bunker Industry Association, UK

Mr Ara Barsamian President Refinery Automation Institute LLC, USA

Capt Tamer Masoud Harbour Master Port of Fujairah, UAE

William Tan Vice President Miyabi Industries Pte Ltd Singapore

Ms Jasamin Fichte Managing Partner Fichte & Co Dubai, UAE

Mr Martijn Notten Terminal Manager Port of Fujairah, UAE

Capt Rahul Choudhuri Chief Operating Officer Asia, ME & Africa, Veritas Petroleum Services Group Singapore This is only a partial list of speakers. The final programme will feature additional speakers.

REFER TO WEBSITE AT www.fujcon.com

Roundtable Discussions on: • Opportunities & Challenges for Shipowners • Bunker Market Outlook • Oil Storage Developments • Fujairah Terminal Operators’ & Bunker Operators’ Forums • Growth & Usage of LNG as a Marine Fuel • The Evolution Of Marine Fuel Quality • Environmental Regulations/Compliance • Fuel Efficiency & New Technologies

FUJAIRAH BUNKERING WEEK EVENTS 2015

Additional Speakers (Confirmed) • Mr Lars Moller, CEO, Dynamic Oil, Trading, Singapore • Mr Koos Blaazer, LNG Europe BV, Netherlands • Mr. Ton Floors, Commercial Director LNG, Vopak LNG Projects, The Netherlands • Senior Representative, Vitol Dubai, UAE

• Understanding Bunker Fuel Measurement for Traders, Brokers & Commercial Analysts 21 March 2015 • LNG Bunkering 22 – 23 March 2015 • Bunker Fuel Blending 22 – 23 March 2015

Confirmed Sponsors:

Supported by:

Media Sponsors:

FUJAIRAH PETROLEUM PRODUCTS LLC UAE Shipping Association

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(Fax to 65-63384090. For further inquiries, please call 65-63380064 or email: shaman@cconnection.org or herrine@cconnection.org or register online at www.fujcon.com) Name Tel

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IBIA convention

Informal and interactive at Hamburg This year’s IBIA Convention broke new ground, not least by its use of new voting technology, as David Hughes reports

tretching from Monday to Thursday, the 2014 IBIA Convention was a bumper combination of classroom training, industry update, presentations on the industry’s main concerns, a uniquely entertaining evening in a beer hall and a glimpse of Hamburg’s culture, history and modern-day port. Monday’s training forum, with nearly 30 attendees registered, demonstrated how IBIA is able to bring together some of the industry’s most experienced and knowledgeable practitioners. ‘Bunkering in 2015 and Beyond’ was taught by a team comprising Robin Meech, Michael Green, Chris Fisher, Naeem Javaid, Roland Van Assche, Jens Maul Jørgensen and Peter Hall. Together they shared an immense amount of knowledge in just eight hours. Just the course notes constitute one of best concise guides to the industry you are ever likely to find. Tuesday morning saw a very well attended update on mass flow metering by the Maritime and Port Authority of Singapore. Lasting three hours, the session comprised an MPA briefing followed by a panel discussion. The convention itself kicked off on Tuesday, after lunch. On entering the very large conference hall of the Grand Elysée, the first reaction was to wonder if it was the wrong room. Rather than

World Bunkering Winter 2014

normal conference-style rows of tables and chairs, round tables had been set out, almost as if for a meal. Initially, that seemed a bit odd, but actually the arrangement worked really well. As IBIA chief executive Captain Peter Hall remarked later on, the round tables gave a much more informal feel to the event. The feeling of informality and taking part was heightened by the use of technology. The Sli.do system allowed almost instant voting and feedback as issues were discussed. It depended on

delegates having smart phones and it turned out that about a third were able to avail themselves of the voting system. That was enough to provide some interesting instantaneous feedback as the discussion developed. Some formality was of course maintained, with the traditional keynote speech from IBIA’s chairman, Jens Maul Jørgensen. He covered a wide range of subjects very briefly and particularly focused on there being (at that point) only 50 days to the 0.1% sulphur in fuel rule within emission control areas (ECAs). © Nigel Draffin

Two men in a boat. Sea shanties rounded off the 2014 Convention

Round tables, a relaxed atmosphere but but serious discussion

even greater focus on efficiency. For example, a new, smaller bulbous bow and new propeller for a 13,000 teu containership would cost $2 million and provide fuel savings in the region of 10% to 15%. Payback time would be less than a year. Klein said that a three-tier market was emerging: very efficient modern ‘eco’ tonnage; ships modified to improve efficiency; and ‘old’ ships (six or seven years old but of ‘pre-eco’ designs). The latter would, Klein said, become very hard to charter. He was, however, optimistic that liquefied natural gas (LNG) would have a major role. While LNG is one major emerging fuel, possibly the session that attracted most interest was the second on Tuesday afternoon, which looked at the new fuels that refiners and others are developing in response to the need for low-sulphur fuels.

David Lifschultz explains how Genoil is launching a new fuel for shipping

World Bunkering Winter 2014

IBIA convention

Unsurprisingly, he also mentioned the subject that particularly concerns him, fuel quality or the lack of it. There was a lot of poor-quality fuel out there, he said, but decisions at the International Maritime Organization’s (IMO’s) recent Marine Environment Protection Committee meeting (MEPC 67) gave some grounds for optimism. Braemar’s Mark Williams set the scene with his Shipping Markets Overview. He noted that growth in global gross domestic product of 4.2% to 2017/18 was “OK but not great”. He said: “There is still a shipping cycle. We are at the bottom now, but the recovery will be very patchy and weak. That is not good for owners, but is good for charterers.” He also noted that the inflation-adjusted cost of newbuildings was lower than in 1985, but freight rates on the same basis were also lower.” In a third introductory presentation, Dr Herrmann Klein, chief executive of German shipowner ER Schiffahrt, spoke about ‘Challenging Markets’. He pointed to the reduction in daily fuel consumption of large container ships in recent years as a result of slow steaming. In 2008, an 8,500 teu vessel steamed at 23 knots and consumed 196 tonnes a day. By 2010, the comparable figures were 20 knots and 143 tonnes. Speeds had dropped another knot by 2012, with the figures coming in at 19 knots and 127 tonnes. Klein, who was previously the head of classification society Germanischer Lloyd, saw slow and super-slow steaming as being the future of container shipping. There would be, he predicted, an

Daniel Leuckx of oil industry body FuelsEurope presented ‘The Refiner’s View: Availability of Middle Distillate’. The impending 0.10% sulphur limit is not likely to cause a major problem as far as availability is concerned. However, supplying additional 0.50% sulphur marine fuel in 2020/2025, when that becomes the global limit outside ECAs will require increased volumes of components produced by conversion processes like coking and residue desulphurisation and hydrogen units. He said that, in a scenario where the required 30 million tonnes of additional residual marine fuel would be supplied by the EU refining industry, an estimated investment of €15 billion would be needed. John La Rese of ExxonMobil Marine Fuels & Lubricants explained how he thought ExxonMobil HDM 50 and other ultra-low-sulphur residual fuel oils that are about to come onto the market would be part of the answer to the fuelswitching problem for ships trading in and out of ECAs. However, like Dr Klein, he believed that the next big thing in bunkering would be LNG. He stressed: “There will not be just one answer, but there will an integrated solution, with owners finding the best solutions for their fleets. Dealing with new fuels will not be a quality issue but a fuel management one” Then there followed two presentations on radical technologies to produce low-sulphur residual fuel. David Lifschultz, chairman and chief executive of Genoil, described the Genoil Hydroconversion Upgrader (GHU), which, he said, was “a zero waste

Gibraltar: Gateway to the Mediterranean Your chance to hear more about the Gibraltar Straits as a bunkering Hub

24-27th February 2015

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

instead no alarm bells rang in delegates’ minds. He gave a workmanlike overview of what was likely to happen in the New Year. He predicted that there would be enough marine gas oil complying with the new sulphur limit to satisfy demand, with a temporary spike in prices. Ironically, he told delegates that they could be assured that OW Bunker would have plenty of the new ultra-low-sulphur fuel oil, which had just been developed by several oil companies. As it turned out, Leonard’s presentation was almost certainly OW’s last pronouncement on anything other than its own troubles, which led to bankruptcy just three days later. Oblivious to the drama unfolding in Denmark and Singapore, delegates continued to work their way through a packed programme covering topics including Enforcement and Compliance and Quantity and Integrity. The last two hours were devoted to discussing what IBIA is doing now and should be doing in the future. While numbers were down somewhat by this stage, there was a lively discussion, with good use being made of Sli.do. Then there was a surprise. As soon as Jens Jørgensen had thanked all involved and wrapped up proceedings as chairman, we heard the sound of German sea shanties and loud drumming. There followed 15 minutes of entertainment by a two-man band in a ‘boat’. While

some delegates seemed a bit baffled at first by this example of nautical folk music, pretty much everybody had joined in by the end. Then there came the chance to really let our hair down and enjoy an exuberant evening at a beer hall – the IBIA Oktoberfest. Traditional German music, huge glasses of beer, plates piled up with three sorts of roast meat and dancing in the aisles. Certainly an evening to remember. On Thursday, the programme concluded with an Eisbeinessen Reception at Hamburg’s historic town hall. For the uninitiated, ‘Eisbein’ is a salt-cured pig’s knuckle, which is simmered for several hours in broth and served with sauerkraut and puréed peas, while ‘essen’ means to eat. For the past 65 years, the German shipping community has gathered in Hamburg for their Eisbeinessen. This year it took place on the Friday of the IBIA Convention week. Several hardy IBIA delegates stayed on for this unique event. For everybody else, their stay in Hamburg ended with lunch on a boat tour around the city’s still thriving port. As this report was being written, IBIA’s events manager, Steve Hoare, was still waiting for feedback forms on his first event to come in, but it was already clear that Hamburg 2014 had gone down very well with delegates. Roll on Cancun!

IBIA convention

process that converts heavy crude oils and refinery bottoms into clean burning transportation fuels”. He claimed 99% sulphur removal and added: “Our reactor produces a more stable molecular bond, which yields more gasoline and diesel from a barrel of crude oil.” After that, Mike Doma of Canadian company Field Upgrading outlined its different technique, which is intended to produce fuel with a sulphur content of below 0.5%. He said the company was currently building an US$18 million, 10 barrels per day pilot plant, which should be working by next year and should be followed in 2018 by a full-scale production facility. He said the technique had already been demonstrated to desulphurise 6% sulphur residual to ISO specification bunkers with less than 0.5% sulphur content. It was expected to be able to desulphurise 2% sulphur residual to ISO specification bunkers with less than 0.1% sulphur. The next day saw a wide range of presentations, starting with a detailed look at the implications of the new fuels discussed the previous afternoon. Among these, OW Bunker’s vicepresident, physical distribution, Søren Christian Meyer, was due to present an overview of the price implications of new fuels entering the market. When the company’s global sales director, Steve Leonard, came forward New fuels gave the experts plenty to talk about

World Bunkering Winter 2014

Global news OW collapse rocks industry IBIA acts to support companies and individuals affected by the collapse of OW Bunker as the industry struggles with unpaid bills and complex legal issues

ays after OW Bunker filed for bankruptcy, the International Bunker Industry Association (IBIA) took part in dialogue sessions led by the Maritime and Port Authority of Singapore (MPA) to ensure continuing smooth bunker operations there. It also provided a similar service to companies affected in European ports. In addition, the association offered professional career support services to those individuals who have lost their jobs. IBIA chief executive Peter Hall said: “This is an unprecedented occurrence and our thoughts are with the very large number of competent, hard-working exemployees now urgently in need of support and industry contact. It is important that dialogue is maintained across the supply chain, and we are pleased to be able to support the Singapore bunkering community. We hope that our efforts will ensure an uninterrupted supply of bunkers. We are willing and able to act as local point of support in European ports as we are doing in Singapore.” He added: “We are offering all ex-OW Bunker employees affected by the situation free IBIA membership. This is a modest gesture, but will provide them with access to an independent forum where their details can be made rapidly available to others in the industry, including employers who

World Bunkering Winter 2014

are picking up the business previously conducted by OW.” The independent bunker logistic company, both a trader and physical supplier, had an estimated global market share of 7%. News that the company was in deep trouble came on Wednesday 5 November, when it disclosed a US$125 million “fraud loss” in a Singapore-based subsidiary, Dynamic Oil Trading, and also separate risk management losses of another $125 million. Initially, the company tried to reach a deal with its banks and go through a court restructuring procedure. That attempt failed and on Friday 7 November OW chairman Niels Henrik Jensen said in a statement: “Since the credit facility was closed down on Wednesday, the underlying business has eroded significantly. The banks hold mortgage over all receivables and consequently, without the provision of new, significant credit facilities in the immediate future, it is not possible to save the remaining business. It is now clear that such facilities will not be made available. Nor is a sale as a going concern a realistic option. We are therefore left with no option but to file for bankruptcy. On behalf of the entire board of directors and management, we deeply regret this outcome and the consequences affecting the

company, its employees, shareholders and business partners.” The MPA quickly issued a statement saying that, in its assessment, there would be minimal disruption to bunker supply in the Port of Singapore. It said: “There are currently more than 60 bunker suppliers in Singapore, and OW Bunker Far East (Singapore) Pte Ltd accounted for less than 3% of the 42.6 million tonnes supplied in Singapore in 2013.” While the OW collapse did not significantly affect physical availability in Singapore, the financial effects were soon being felt throughout the global bunkering industry. One major supplier known to World Bunkering was owed some US$5 million from OW. Although that company was able withstand the loss, its top manager predicted there would many others in the business that would find it hard to survive. Major mutual liability insurer UK P&I Club said shortly after the bankruptcy: “The rapid collapse of the company, seemingly overnight, has led to issues for some of our members and charterers, with [regards to] who to pay and threat of arrest.” The club issued its members with comprehensive advice, but it was soon clear that all sides of the industry were in a legal minefield. The Charterers P&I Club cautioned its members against direct payments to suppliers lest they found themselves liable to pay twice.

7 I N T E R N AT I O N A L ISTANBUL TH

THE

BUNKER

CONFERENCE May 20th - 22nd, 2015 Four Seasons Hotel-Istanbul at the Bosphorus

Turkish Bunker Association Phone: +90 216 391 55 60 Fax: +90 216 391 55 61 Email: info@gyid.org.tr Web: www.gyid.org.tr

www.istanbulbunkerconference.com

Shippers call for transparency on Emission Control Area costs

The Global Shippers’ Forum (GSF) is calling for more information on the impact of the implementation of the new 0.1% sulphur in emissions limits to be implemented in Emission Control Areas (ECAs) from 1 January. GSF secretary-general Chris Welsh said: “With one or two notable exceptions, few shipping lines have yet provided information to their customers on

their low-sulphur fuel strategies and the extra cost to be passed onto shippers via increased rates or bunker surcharges. With shippers under pressure to finalise freight budgets for 2015, this information is urgently required by customers.” GSF says that as the low sulphur requirements are limited to specific geographical areas, and as there are various options for managing the new sulphur requirements, shippers will require greater transparency from carriers in order to substantiate extra freight charges and bunker surcharges levied by shipping lines to recover additional costs. Welsh stressed: “It is extremely important that individual carriers

are open and transparent with their customers about the additional costs incurred resulting from the new sulphur limits, and that they fully justify the additional freight charges and surcharges being levied. “Broad industry surcharge guidelines set by some carrier groups are wholly inappropriate to recover additional lowsulphur fuel costs because of the significant differences in energy efficiency of vessels, management of fuel and the different options available to carriers in implementing the new low-sulphur limits. It’s clear, however, that information on additional costs is needed now rather later as shippers set their freight budgets for 2015.”

Global news

The UK P&I Club’s advice to its members was that they could not refuse to take bunkers on charterers’ orders, even if they feared the ship would eventually be arrested in a dispute.

IMO quality compromise deal welcomed

IBIA was among several shipping industry bodies be transparent along the entire supply chain. Our members that welcomed a compromise solution on the issue of and all shipowners should be able to have confidence, and ensuring bunker quality agreed at the 67th meeting of documented proof, that fuels they receive are at or above the International Maritime Organization’s (IMO’s) Marine the mandated standards.” Environment Protection Committee (MEPC 67) in October. However, IBIA still wants to see sanctions on “continuously under-performing suppliers”, according to its chief executive, Peter Hall. Submissions by IBIA addressing sulphur compliance issues and quality control had called for a series of practical measures, including a licensing scheme and for the bunker delivery note (BDN) to be a more useful document containing information on the specification of fuel ordered. Although these proposals were not implemented, MEPC 67 agreed to establish a correspondence group to develop draft guidance for assuring the quality of fuel oil delivered for use onboard ships, and to consider the adequacy of the current legal framework in MARPOL Annex VI for assuring the quality of bunkers. Hall said: “This has been a step forward by IMO. Previous MEPC meetings would not entertain a correspondence group, but, taken together with a commitment to improve MARPOL regulations, we believe that the measures will Caption improve the situation.” He added: “The ultimate safety risk to vessels using fuel ‘not fit for purpose’ is simply unacceptable in this modern day. Any improvements that can be made to the fuel supply chain are welcomed, and it is ultimately down to bunker suppliers to provide compliant fuels. However, buyers have a responsibility to specify the quality they require and to be willing to pay for it. We believe that the authorities must provide sanctions on continuously under-performing suppliers. Without this, the current disquiet in the industry will continue.” Katharina Stanzel, managing director of The International Association of Independent Tanker Owners (Intertanko), said: “We welcome this decision. However, this is only the Taking samples. IMO agrees to look at quality issues beginning, as we believe that control of compliance should

World Bunkering Winter 2014

Environment Shipping’s emissions continue to decline But IMO and industry say more has to be done to reduce shipping’s contribution to global warming

nternational Maritime Organization (IMO) estimates show that total greenhouse gas (GHG) emissions from global maritime transport were 20% lower in 2012 than in 2007. These figures were in a report prepared for the UN agency’s Marine Environment Protection Committee (MEPC) at its 67th session, held in London from 13 to 17 October. The Third IMO GHG Study 2014 estimates that international shipping emitted 796 million tonnes of carbon dioxide (CO2) in 2012, against 885 million tonnes in 2007. This represented 2.2% of the global emissions of CO2 in 2012, against 2.8% in 2007. However, an IMO statement cautioned, the “business as usual” scenarios continue to indicate that those emissions are likely to grow by between 50% and 250% in the period to 2050, depending on future economic and energy developments. In 2011, IMO adopted mandatory measures to address the energy efficiency of international shipping. These came into force on 1 January 2013 under Chapter 4 of MARPOL Annex VI. The regulations on energy efficiency for ships make mandatory the Energy Efficiency Design Index for new ships, and the Ship Energy Efficiency Management Plan for all ships. Ahead of the MEPC meeting, at the United Nations Climate Summit in New

York in September, Peter Hinchliffe, secretary-general of the International Chamber of Shipping, noted: “The latest IMO study, which uses satellite tracking, suggests there’s been a significant reduction in absolute CO2 emissions from ships due to the introduction of operational efficiency measures across the whole fleet. This includes operating at slower speeds, combined with more fuel efficient designs onboard the large number of newbuild vessels that have recently entered the market.” He added: “The reduction in CO2 per tonne of cargo carried per kilometre by ships is even more impressive than the headline IMO figure for absolute GHG reduction, because cargo moved by sea has continued to grow since 2009.” ICS reiterated that the shipping industry is committed to delivering further CO2 emissions reductions, in partnership with its global regulator, IMO. Shipping is already the only industrial sector to have mandatory global regulations in place to reduce its CO2 emissions. These entered into force worldwide in 2013. Nevertheless, according to Hinchliffe: “The shipping industry fully recognises that governments expect even greater CO2 efficiency improvements in the future. Given the very high cost of fuel, which is soon set to increase by around 50% due to separate new rules on sulphur, the

industry already has every incentive to deliver this.” Earlier in September, ICS had asked IMO member states to give careful consideration to shipowners’ concerns about the implementation of “an avalanche of new environmental regulations”. These included concerns about rules on sulphur in emissions and

Peter Hinchliffe, International Chamber of Shipping secretary-general

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Morooka said: “No two voyages are the same, owing to factors such as weather and ocean conditions, and many of our members think there is a danger that the development of such an operational indexing system would lead to serious market distortion.” MEPC 67 continued its work on further developing guidelines to support uniform implementation of the regulations on energy efficiency for ships. During the session, the MEPC adopted the 2014 guidelines on survey and certification of the Energy Efficiency Design Index (EEDI), updating the previous version to include, for example, identification of the primary fuel for the calculation of the attained EEDI for ships fitted with dual-fuel engines using liquefied natural gas (LNG) and liquid fuel oil. The MEPC also adopted amendments to the 2013 interim guidelines for determining minimum propulsion power to maintain the manoeuvrability of ships in adverse conditions. The guidelines will be applicable to phase 1 (starting 1 January 2015) of the EEDI requirements. A correspondence group was established to review the status of technological developments relevant to implementing phase 2 of the EEDI regulatory framework. Regulation 21.6 of MARPOL Annex VI requires IMO, at the beginning of phase 1, to “review the status of technological developments and, if proven necessary, amend the time periods, the EEDI reference line parameters for relevant ship types and reduction rates set out in this regulation”. MEPC agreed, in principle, to develop a data collection system for ships. Having established a general description of the data collection system for fuel consumption of ships, it agreed to reinstate an inter-sessional correspondence group to develop full language for the data collection system for fuel consumption that can be readily used for voluntary or mandatory application of the system. The core elements of the system include: data collection by ships, flag state functions in relation to data collection and establishment of a central IMO database. MEPC reviewed a progress report from the correspondence group. It

had been instructed to develop a draft framework for a methodology to examine whether sufficient fuel meeting the requirements set out in regulation 14 (Sulphur Oxides (SOx) and Particulate Matter) of MARPOL Annex VI is likely to be available by the effective date of those requirements. This had to take into account the global market supply and demand for fuel oil, trends in fuel oil markets and any other relevant issues. The sulphur content of fuel oil used onboard ships is required to be a maximum of 3.50% outside ECAs, falling to 0.50% on and after 1 January 2020. Depending on the outcome of the review, to be completed by 2018, as to the availability of compliant fuel oil, this requirement could be deferred to 1 January 2025. Despite industry requests to bring the review forward, MEPC kept the date for the decision on this potential deferment and for the completion of the review into the availability of compliant fuel oil as 2018.

Environment

on water ballast management, which were set to affect ship operations at more or less the same time. ICS chairman Masamichi Morooka said: “The shipping industry is not in any way questioning the need for these important new IMO rules and is fully committed to implementation. But governments need to address some very important issues if they wish to avoid confusion and market distortion.” The ICS board agreed that ICS should continue to encourage the Paris Memorandum of Understanding (MOU) on Port State Control to ensure that there is a harmonised approach to implementation and thus avoid market distortion. In particular, ICS is encouraging the acceptance of bunker delivery notes, rather than fuel sampling, as prima facie evidence of compliance, unless there are clear grounds for suspecting otherwise; and a sensible approach towards minor technical violations as opposed to the deliberate use of the wrong grade of fuel. Morooka remarked: “With regards to the issue of fuel availability and the impact on price, there is perhaps even greater concern about the 0.5% global cap in 2020. The increased demand for diesel grade fuel from shipping may have an impact on land-based industry too.” ICS says that it is disappointed that IMO now looks unlikely to bring forward the IMO fuel availability study from 2018 (as required by MARPOL). By this time, it will be far too late to encourage any action needed from governments to help ensure that refiners produce sufficient quantities of fuel, so that ship operators are able to comply. The ICS board also noted pressure from some governments for the industry to do even more to reduce CO2 emissions, “despite the fact that shipping is already by far the most carbon efficient form of transport”. ICS reiterated its support for the development by IMO of a global system of mandatory CO2 data collection from ships, provided that the system is simple to administer and is primarily based on fuel consumption. However, it stressed that the global shipping industry has not agreed to the development of any kind of mandatory operational efficiency indexing system that might be used to penalise ships that are deemed less efficient.

Masamichi Morooka ICS chairman

The Clock is Ticking Towards 2015 Are You Prepared?

Innospec Can Help. Begin using Innospecâ&#x20AC;&#x2122;s OctamarTM BT 25 to drastically reduce the time and cost of tank cleaning as tanks are converted from Heavy Fuel to MDO/MGO. OctamarTM BT 25 is the industryâ&#x20AC;&#x2122;s most effective Fuel Stabilizer and Dispersant and will reduce sludge in your tanks, meaning less total costs and time in the tank cleaning process as well as protection against clogged filters after the changeover.

Additives

Additives ready for dispatch

Adding value? David Hughes asks the marine business development manager for manufacturer Innospec, Ian Crutchley, why ship operators should consider using additives

David Hughes: Some ship operators are very wary of using additives and they have not always had a good press. Why do you think this is?

Ian Crutchley: There can be a number of reasons for this, and the credibility of additive application can often be questioned in marine applications. The use and benefits of fuel additives is embraced in other industries in fact. In terms of shipping, this negative feeling can often be associated with a bad experience. There are very few companies supplying fuel additives into marine applications that have both the technical understanding of fuel and the facility and resource to produce a chemical that can make good on its claims. For example, there are additive suppliers making claims of 15% fuel savings, which must immediately be treated with scepticism. Understandably, to a shipping company, such a claim may warrant further investigation in the form of a trial, and certainly on paper it would appear more attractive than another company making a more realistic claim of 2% to 3%. In the end, they are left empty-handed, and the damage to the industry can be difficult to dispel.

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Any additive company should have a robust data set to reinforce their claims. In recent years, Innospec has worked with external companies such as Lloyd’s Register to demonstrate additive performance in marine gas oil and verify our claims. As a result, we can carry the Lloyd’s verification logo on product literature. Innospec is the only supplier that does this. Shipowners can also believe that one fuel is the same as the next, or that marine engines do not see the difference. This is a misconception, and improvements can be made in any fuel’s performance. In simple terms, fuel is not a mystery. We know which components are good, and which are bad. Generally, fuel additives are merely enhancing the effect of the good, or suppressing the effect of the bad.

DH: What would you say is the take-up of additives among shipowners? Is it true to say the majority of operators do not use additives? Are you finding more interest in your products?

DH: What are the main advantages of using additives?

IC: There is a perception in the marine industry that distillate is a trouble-free ‘clean’ fuel. However, there are many quality issues that can be corrected with additives, such as lubricity, stability and cold flow properties. To no lesser extent than residual fuels, such quality-related problems can cripple a ship. So, in terms of protecting the integrity of the fleet, additives for distillate fuels are essential.

IC: Improving efficiency of the fuel is the main reason why operators use fuel additives, and this can bring a number of benefits, such as reducing sludge or reducing consumption. Other benefits are to mitigate risks, improve safety and reliability, or to reduce maintenance.

IC: Currently we estimate take-up of fuel additives by shipowners to be around 30% globally, and this includes many of the world’s largest shipping companies. However, that only covers owners who use additives continuously, and many more operators use them occasionally if they have a specific problem fuel. Therefore, in combination, I would estimate around 60%. There is no doubt the market is increasing, both in continuous and occasional users. DH: Is it worth using additives with distillate fuels?

Additives

DH: What are the implications of fuel switching for the use of additives?

IC: Fuel switching is a complex process, as it takes time and requires great care and attention. There are several reasons for this, but one clear area of concern is compatibility. When paraffinic distillate is mixed with aromatic residual fuel over a prolonged period of switchover, this can cause the residual fuel to immediately stratify, cause rapid choking of the filters, and ultimately loss of propulsion (LOP). One only needs to consider the number of LOPs in California in recent years caused by fuel switching to appreciate the implications in emission control areas (ECAs) from 2015, where the majority of vessels will switch-over to distillate fuel. Innospecâ&#x20AC;&#x2122;s products have been demonstrated, both in laboratory simulations and in practice, to mitigate the risk of compatibility issues during switch-over. DH: Do you have some examples of the benefits of using additives?

IC: Again, any credible fuel additive supplier should have countless examples, and this is where Innospec is particularly strong. Additionally, we have the benefit of vast expertise within other sectors,

such as automotive, light heating and aviation fuels. In some cases this knowledge can be directly transferred. Typically, we see fuel savings of up to 3%, which represents a huge financial benefit to a shipping company. Also, reducing fuel sludge is another area, where up to 60% is achievable. This can translate to an additional fuel saving of around 1.5%. In slow steaming applications, many operators use fuel additives continuously to prevent engine fouling, and particularly in the exhaust system where deposition from fuel can have a huge influence on maintenance and performance. DH: How much do additives cost?

IC: Firstly, additives should be viewed not as a cost but as a saving. Cost does vary depending on additive type and supplier, and it is always best to consider the treat cost, rather than the cost for a drum, for example. Typically, Innospecâ&#x20AC;&#x2122;s fuel treatments have a treat cost of between $1 per treated tonne of fuel, and up to around $3 depending on product. So, it is inexpensive when you consider the benefits. If you consider a residual fuel price of $500, an easily achievable and demonstrable 1% efficiency gain represents a $5 saving, so it more than pays for itself.

DH: As we speak, the 0.1% sulphur rule in ECAs is only weeks away. What are implications as far as additives are concerned?

IC: 1 January 2015 represents some huge changes in the maritime industry, and many of these are directly associated with the fuels that will be burned. Innospec has engaged closely with its clients in the run-up to this date, and offered a number of solutions outside the traditional application. For example, most ships will need to reallocate a residual fuel tank to the use of distillate. To do this, the tank and associated fuel system must be cleaned beforehand, or else the first batch of distillate fuel will cause rapid clean-up of the fuel tank. This could result in severe filter blocking, could bring about a sulphur non-compliance, and could even render the fuel unusable. Innospec has developed a method of cleaning the tanks during operation in the run-up to the reallocation of the tank, using a dispersant stabiliser additive applied at an increasing dosage. We have many years of experience of similar applications, and the cost savings when compared to the costs and downtime associated with traditional cleaning are considerable. Innospecâ&#x20AC;&#x2122;s Ellesmere Port facility

World Bunkering Winter 2014

Barge design

LNG designs take shape German, US and Japanese companies are among those pioneering the design and building of LNG bunker barges, as Sandra Speares reports

s interest in the use of liquefied natural gas (LNG) as a fuel continues to grow, so too does the development of bunker barges, which could go some way to resolving the shortage of onshore facilities at present. One recently announced design comes from Hamburg-based shipyard Theodor Buschmann. Managing director Stephen Aumann is spearheading the development of the TB-X bunker barge series in collaboration with Marine Service, which is a turnkey partner for the LNG system. The barge has been under development for about a year, and the design incorporates vacuum-insulated C type tanks with an LNG capacity of between 100m3 and 900m3. The design, particularly around the manifold, is compatible with other concept studies under way, such as for an LNG terminal at Hamburg. The initial design is for a push barge, but it can be equipped with a selfpropelled propulsion system, or delivered as a stationary fuel pontoon or in a jack-up version. According to Marine Service, the barge will be designed with two tank slots, and firstly fitted with one tank to which a further tank can be added. The motorised version of the barge would require a twoman crew. The company says it is easy to

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maintain and economically priced, with short construction times. While the bunker barges are understood to be aimed at the German market, with interest being shown by port operators and authorities, they could be an export item. They offer the possibility of tackling the current shortage of LNG bunkering infrastructure shoreside as well as the difficulties of retrofitting existing vessels for LNG. The yard says customising the barge to individual requirements would be easy to do. Marine Service has also developed a mobile LNG fuel tank, which it believes solves the problem of the lack of LNG infrastructure while being easy to retrofit to existing fleets and eliminating the need for a bunker barge. The containers have a 33m3 capacity and are approved for loading in stacks of six. LNG America

LNG America has selected TaylorWharton to commence the front-end engineering and design work for the cryogenic topside of the company’s 3,000m3 Gemini Class LNG bunker barge. It is scheduled for delivery at the end of 2015. “Taylor-Wharton has been actively engaged in the development process and instrumental in helping to develop the critical path timeline for a late 2015

in-service date,” said Keith Meyer, chief executive of LNG America. “We are looking forward to working with LNG America on North America’s first LNG bunker barges. TaylorWharton is uniquely suited to provide LNG America the cryogenic expertise for this first LNG bunker barge. Our capability to engineer these types of systems as well as to fabricate large LNG tanks makes us an ideal choice,” said Eric Rottier, chief executive of Taylor-Wharton. “LNG as a transportation fuel and a fuel for the marine market represents a step change in the way LNG is used. We are very pleased to be working on this exciting project with LNG America.” LNG America said it has selected the American Bureau of Shipping (ABS) as the classification society for the LNG bunker barges, currently being designed by Jensen Maritime. ABS will assist LNG America in working with shipbuilders and regulators in developing these first-of-their-kind barges that meet or exceed all technical and regulatory requirements. “We are pleased to be working with ABS on this important domestic initiative. ABS has watched ship propulsion move from wind to coal, from coal to oil, and now from oil to natural gas. They are well situated to help us usher in a new era of clean domestic fuel,” said Meyer.

Barge design

“We are looking forward to working with LNG America on North America’s first LNG bunker barges. These units will be the first of many that will be required if our industry is going to support the transition to LNG as a fuel for the ships entering US ports,” said Jim Watson, president and chief operating officer of the Americas division of ABS. “LNG is an exciting sector for us, and we look forward to using our technical knowledge to support the growth of gas fuel for transportation here, and around the world.” The LNG bunker vessels will provide a critical building block in the bridge between the natural gas industry and the global marine industry, and will allow shipowners and charter parties to receive LNG as bunker fuel the same way they receive oil today.

NYK

Major Japanese shipping group NYK has signed a contract with Hanjin Heavy Industries & Construction in Korea for an LNG bunkering vessel. In a joint initiative to develop a global market for the LNG bunkering business, NYK concluded a framework agreement with GDF SUEZ and Mitsubishi Corporation in May this year. The first project under this initiative will be to build an LNG bunkering vessel to form the core infrastructure for this business, enabling distribution of LNG fuel in European ports.

Fuel gas handling

Meanwhile, the Finnish industrial group Wärtsilä has launched a new technical solution for fuel gas handling. It has brought out an upgraded version of the Wärtsilä LNGPac, a fully integrated fuel gas handling system, and made improvements to the coveted Wärtsilä Gas Valve Unit. Wärtsilä introduced the LNGPac in 2010. It comprises a complete system for LNG fuel handling, which includes the bunkering station, LNG tank and tank connection space with the required process equipment, heating media skid, and control and monitoring system.

The vessel will be delivered in 2016, and will be based at the port of Zeebrugge, Belgium. The vessel will deliver LNG to LNG-fuelled vessels operating mainly in the North Sea and the Baltic Sea. NYK notes that, with increased emission regulations, demand for LNG as a fuel is growing in the seas around Europe. This LNG supply and sales business will initially be targeted at LNG-fuelled car carriers operated by Norway-based United European Car Carriers, as well as other LNG-fuelled vessels operating in the region.

Wärtsilä says it is a unique system that has proven to be a valuable enabler of LNG fuel for marine applications, with more than 20 LNGPac systems in operation or under construction. By upgrading the system to a more compact and technically advanced version, safety and reliability will, Wärtsilä says, be enhanced, while capital and operating expenditures will be reduced. The new system has fewer moving parts, so therefore less maintenance will be required. Also, the compact design and advanced integration of components is said to make installation at the shipyard faster and easier.

Wärtsilä has launched a more compact version of its LNGPac system

World Bunkering Winter 2014

OW Bunker goes bankrupt As Sandra Speares reports, risk management failures were at the centre of the crash

he fragility of management structures in the face of falling oil prices has been well demonstrated by the collapse of major global trader and physical supplier OW Bunker. News that OW was in deep trouble came late in the afternoon of Wednesday 5 November when the company disclosed a US$125 million “fraud loss” in a Singapore subsidiary and also separate risk management losses of US$125 million. OW’s head of risk management, executive vice-president Jane Dahl Christensen, was dismissed immediately. The following day, OW started in-court restructuring procedures for its main operating subsidiaries. Headquartered in Nørresundby, Denmark, OW Bunker was listed on the NASDAQ OMX Copenhagen and had over 600 employees globally. As well as trading and physical supply, it marketed “advanced risk management solutions aimed at controlling costs, minimising risk and protecting against market fluctuations”. At that stage, it seemed likely a deal to save the company would be struck with the syndicate banks. As the drama was unfolding, one informed source said he believed “there is something to salvage” and that the core of the business was good. “What happened was completely unprecedented and the management is fighting tooth and nail

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to put in place a plan for continuity.” He said that the “lights aren’t out and people are working with customers to find solutions” but he admitted: “It is a massive shock”. However, the situation deteriorated quickly and on Friday 7 November the Danish-based company announced that it had “not been possible to find a sustainable solution” and that the companies were filing for bankruptcy. An official bankruptcy notice appeared on the OW website that evening. The company also announced: “As a result of the internal investigation it has been decided to report two key employees in the Singapore-based subsidiary Dynamic Oil Trading (DOT) to the police pursuant to section 299 of the Danish penal code and to relieve them of duty immediately.” The two employees that have been reported to the police by OW deny the allegations of fraud. Their lawyer said that OW had known about the hedging practices of the Singapore subsidiary and that it had been part of OW’s overall business model. OW chairman Niels Henrik Jensen said in a statement: “Since the credit facility was closed down on Wednesday, the underlying business has eroded significantly. The banks hold mortgage over all receivables and consequently, without the provision of new, significant credit facilities in the

Risk management

In May this year OW Bunker started making physical supplies in Los Angeles and Long Beach, California, US

immediate future, it is not possible to save the remaining business. It is now clear that such facilities will not be made available. Nor is a sale as going concern a realistic option. We are therefore left with no option but to file for bankruptcy. On behalf of the entire board of directors and management, we deeply regret this outcome and the consequences affecting the company, its employees, shareholders and business partners.” “We are devastated,” said Søren Johansen, partner at Altor Equity Partners and a board member of OW Bunker. “This is a huge tragedy for all employees, shareholders and customers. The board has turned every stone in order to save the company but has not been able to find a viable solution. In an extreme situation like this, it is in all stakeholders’ interests to get full clarity of the events leading to this enormous loss of value. As soon as the necessary facts and conclusions are available, they must be put on the table.” The bunker industry was aware that OW’s margins were under pressure, but few imagined the company could fail. Its third-quarter figures had showed that earnings had been hit by an unrealised risk management loss. On announcing the figures in October, chief executive Jim Pedersen commented: “Overall, the third quarter result was very disappointing. The

Risk management

fall in the oil price in particular in September was exceptional and led to a US$24.5 million unrealised risk management loss. The margin pressure seen in the second quarter continued, but seems to have stabilised. We reduce our full-year volume forecast in a move to focus on higher margin business.” Due to the slide in oil price, in particular in September, poor risk management resulted in an unrealised loss of USD 24.5 million, USD 2.5 million higher than estimated. Since a jump in the oil price to a 9-month high of above USD 115 (Brent) in the second half of June 2014, the oil price dropped around 20% in Q3 2014 to the lowest level in over two years. This steep fall led to market disruptions in September, and negatively affected risk management as well as other parts of the business. So in early November the market had been expecting an announcement of poor results in the previous quarter. It was not expecting the company to fail, and so quickly. OW Bunker investor PFA Pension said the company’s risk management failure could be of more concern than

the alleged fraud by two of its employees. The company was valued at almost $1 billion in an initial public offering (IPO) eight months ago. Vesper Langmack, chief investment officer at PFA in Copenhagen, told Bloomburg that he “spent a lot of time trying to understand OW Bunker’s risk policies before its initial public offering in March. PFA, which invested DKK100 million kroner ($17 million), wanted assurances that the company was hedging to guard against losses and not to chase profits”. “The risk management and hedging policy was a very important topic during the IPO process, so a loss of this size is a catastrophe,” said Langmack, who oversees about $60 billion in assets. He told Bloomburg in a phone interview: “If there’s been a case of fraud, it’s extremely regrettable, but the matter of risk management is very worrying as it’s something we kept asking questions about during the entire IPO.” In a further comment to Bloomburg, Langmack said he believed the case hinged on how the company used its hedges. “We kept asking them if the hedging was a profit centre or just clean hedging, and then it turns out

they’ve been taking up massive market positions,” he said. “When we asked before the IPO, we were left with the impression all they did was more or less clean hedging, and now it turns out they were gambling.” Estimates vary concerning OW’s share of the world bunker market, but Reuters said the company was estimated to have had about 7%. Other big players are World Fuel Services Corp, Chemoil Energy and Aegean Marine Petroleum Network. In November last year, OW was advising owners to lock in the then current “low” spot prices for Rotterdam Fuel Oil Barges (FOB) by implementing hedging instruments as part of a risk management solution for 2014. Rotterdam FOB prices were then about $570 per tonne compared with about $440 a year later. “Given the shape of the current market, it is clear that there are significant hedging opportunities, and now is the time to implement effective risk management solutions, that lock in costs and maximise levels of profitability for customers going into 2014,” said Brian Thorhauge, then OW’s global head of risk management.

The Marine Noel is the most recently introduced of three chartered barges operated by OW Bunker in Singapore

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LNG

The first LNG-fuelled harbour tug in the Middle East will be designed by Wärtsilä

Starting to go global While most LNG projects so far have been in northern Europe and North America, interest is growing worldwide

ince using liquefied natural gas (LNG) as fuel will allow a vessel to operate in sulphur emission control areas (SECAs) and nitrogen emission control areas (NECAs) without using expensive distillate fuel, it is not surprising that most LNG vessels now in service or being built are intended to trade in the North American or North Sea and Baltic emission control areas (ECAs) However, interest is building in LNG for globally trading vessels and also those in regions where there are, so far, no ECAs. In a move that will see the first LNG-powered harbour tug in the Middle East, DryDocks World (DDW) based in Dubai, has contracted Wärtsilä to design and supply the propulsion for such a vessel. The order was signed in November. The 29-metre-long tug is the first of a series of nine such vessels to be built and operated by DDW. The project is part of a ‘green’ initiative launched by the Dubai government, and is intended to set an example for promoting environmental sustainability throughout the region. Wärtsilä is to provide a full scope of solutions for this eco-tug, emphasising both the company’s leading position in enabling the use of LNG as a marine fuel, and its unique capability to pro-

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vide a range of solutions, from initial design to life-cycle support. In all, Wärtsilä will supply the ship design, two nine-cylinder Wärtsilä 20DF dual-fuel engines, Wärtsilä Steerable Thrusters (WST), type WST-18 Compact thrusters, the automation equipment, and the Wärtsilä LNGPac system. The Wärtsilä LNGPac is a complete fuel gas handling system for LNGfuelled ships. It includes the bunkering station, LNG tank and related process equipment, as well as the control and monitoring system. “The shift towards the use of LNG fuel is building up speed across the world. We at Wärtsilä feel proud that we have been at the forefront of this movement, first through the development of dual-fuel engine technology, and then by developing a full range of integrated solutions serving the complete gas value chain. This will be the first harbour tug in the Middle East to operate on gas, which indicates the growing importance of environmental issues everywhere,” says Ibrahim Behairy, sales director, Middle East, Wärtsilä Ship Power. Meanwhile, South Korean classification society Korean Register of Shipping says that it will work with the Asia-Pacific Economic Cooperation Secretariat (APEC) to promote the use of LNG-fuelled ships in the APEC region.

APEC has awarded a contract to the International Association of Classification Societies (IACS) member to further understanding of the current state and future potential for LNG-fuelled vessels to serve the region’s maritime trade requirements. Work will also include a programme to share knowledge and best practice across the APEC region, with the aim of promoting this new technology. The project gets under way shortly and is expected to be completed by the end of 2015. As long ago as 2011, at the seventh meeting of the APEC Transportation Ministerial, the group confirmed its commitment to “an action agenda to move APEC towards an energyefficient, sustainable, low-carbon transport future”. The Korean Register of Shipping is to lead the APEC-funded project, supported by Japanese and Canadian representatives within APEC’s Maritime Expert Group and Transport Working Group. It will undertake an extensive programme of research, focusing on the current application of LNG technologies, associated safety aspects, seaborne trade statistics and best practice. Results will be shared with APEC member economies to help narrow the technology gap between countries. Kim Chang-wook, executive vicepresident and acting chair and CEO of

LNG Korean Register, said: “We are proud to be internationally recognised as a technical consultancy qualified to deliver high-quality research and expertise on LNG-fuelled ships to the APEC community. I am confident that this project will raise our collective knowledge on the potential for LNG-fuelled vessels and help create a practical environment for the application of this innovative technology for eco-friendly transport solutions.” While LNG-powered vessels other than LNG carriers are starting to come into service, the international regulatory framework for their use is not yet quite in place. However, a draft International Code of Safety for Ships using Gases or other Low Flashpoint Fuels (IGF code), along with proposed amendments to make the code mandatory under the International Convention for the Safety of Life at Sea (SOLAS), was agreed at the inaugural session of the International Maritime Organization’s (IMO’s) SubCommittee on Carriage of Cargoes and Containers (CCC 1) in September. According to an IMO statement, the basic philosophy of the IGF code is to provide mandatory provisions for the arrangement, installation, control and monitoring of machinery, equipment and systems using low flashpoint fuels, such as LNG to minimise the risk to the ship, its crew and the environment, having regard to the nature of the fuels involved. The code addresses all areas that need special consideration for the usage of low-flashpoint fuels. It takes a goal-based approach that specifies aims and functional requirements for each section, forming the basis for the design, construction and operation of ships using this type of fuel. It was agreed that the new IGF code should apply to new ships and to existing ships converting from the use of conventional oil fuel to the use of gases or other low-flashpoint fuels, on or after the date of entry into force of the code. The IGF code would not apply to cargo ships of less than 500 gross tonnage, but the provisions of the IGF code could be applied to such ships on a voluntary basis, based on national legislation.

The draft SOLAS amendments along with the draft IGF code, will be submitted to the parent body, the Maritime Safety Committee, at its ninety-fourth session, which runs from 17 to 21 November this year, for approval with a view to subsequent adoption. The draft amendments include a new Part G in SOLAS chapter II-1 (Construction – Subdivision and stability, machinery and electrical installations) related to ships using lowflashpoint fuels, requiring such ships to comply with the IGF code; and related amendments to SOLAS chapter II-2 (Fire protection, fire detection and fire extinction), covering the use of fuel with a low flashpoint. In a move that could help speed up the introduction of deepsea LNG-fuelled ships, the Maritime and Port Authority of Singapore (MPA), Antwerp Port Authority, Port of Rotterdam and Port of Zeebrugge took part in a bunkering focus group discussion on LNG in October. Held in conjunction with the Singapore International Bunkering Conference and Exhibition (SIBCON) 2014, the talks between the three European port authorities and Singapore covered the following LNG bunkering issues: harmonising technical standards and procedures and examining risk management, emergency procedures and crew competency standards for international shipping. MPA chief executive Andrew Tan said: “As an alternative fuel, the shipping industry is looking to LNG as a cleaner marine fuel to meet international regulations. Given the international nature of shipping, we are excited to work with the Antwerp Port Authority, Port of Rotterdam and Port of Zeebrugge to harmonise the global LNG bunkering standards. We have made good progress in our discussions and will continue with our efforts to prepare the Port of Singapore to be ready for LNG bunkering in the near future.” Eddy Bruyninckx, chief executive of the Port of Antwerp, said: “Antwerp has the ambition to be the most sustainable port in the Hamburg-Le Havre range. Being sustainable is not

a trend for the port of Antwerp, it has become a way of managing our port. Our steps towards the creation of the possibility for ships to bunker LNG in our port form part of this sustainable management. Back in 2011 we expressed our strong belief in LNG as a fuel for the future. In the past years, we’ve developed and published procedures for the safe bunkering of LNG as a shipping fuel, we’ve looked into the possibility of building a LNG bunkership and we are currently in the process of tendering a candidate to build and operate an LNG bunker station for barges. The European Union is supporting us, but, of course, cooperation with other ports with an outstanding knowledge and expertise in LNG, like Rotterdam, Singapore and Zeebrugge, is of great importance to successfully completing the pioneering work we are doing on the bunkering of LNG as a fuel for ships.” Ronald Paul, chief operating officer at the Port of Rotterdam Authority, said: “As the most important bunker port of Europe, we strongly believe in the transition from heavy fuel oil to LNG as fuel for the shipping industry. Together with other ports like Amsterdam, Zeebrugge and Antwerp, we work on the conditions to realise that. The European Union supports us with financial aid for general facilities. It is good to look further than the European borders and also harmonise global LNG bunkering standards. The ports of Rotterdam and Singapore have a long tradition of partnership on environmental shipping issues.” Joachim Coens, chief executive of the Port of Zeebrugge, said: “The Port of Zeebrugge has 27 years of LNG experience, the Fluxys LNG terminal being one of the major European LNG hubs. LNG is without any doubt one of the best possible options to cope with the forthcoming IMO emission limits. Zeebrugge aims to play a lead role in the evolution of LNG fuelling. At this moment, we are adjusting the port regulations, an important step in establishing LNG bunkering operations in Zeebrugge.”

World Bunkering Winter 2014

Douglas Raitt, global manager of Lloyd’s Register fuel oil and bunkering analysis services, argues that flow meters do not mean the demise of the bunker surveyor

he Maritime Port Authority of Singapore recently announced that it will be implementing the mandatory use of mass flow metering during bunkering operations from 2017 onwards. This move has been generally well received by the industry as one that will reduce disputes and enable smoother bunkering transactions. Mass flow metering will be a step change in efficiency, accuracy and transparency for the bunker industry. Currently, the process of dipping tanks, measuring temperatures and volume to convert to mass calculations is prone to variances leading to inaccurate quantity determination that results in potential disputes. The enforcement of mass flow metering as part of the bunker delivery process will enable the industry to measure custody transfer quantities direct in mass through legal metrology principles. This will ensure that the customer receives the quantity of bunkers that they have ordered. Despite the seemingly obvious advantages of using mass flow meters, one group of professionals in the bunker industry has been hesitant to embrace the benefits that this can bring to the bunkering table. Bunker surveyors have been the most vocal critics of the new regulation, and it is understandable as there is

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fear that technology will replace them. In fairness, this fear is not unfounded as technology that automates human functions does have a tendency to make those jobs redundant. The use of mass flow meters will inevitably shift the current status quo, and the practice of dipping tanks will come to an end as a means to settle bunker bills. What then should a surveyor do when his tried, tested and trusted tank gauging methods are no longer viewed as a value-added activity in bunkering transactions? The answer is quite simply to follow in Charles Darwin’s footsteps and embrace the evolution towards mass flow meters. In the words of Darwin: “It is not the strongest of the species that survive, nor the most intelligent that survive. It is the one that is most adaptable to change.” Ultimately, the use of mass flow metering will result in smoother bunkering transactions with fewer commercial disputes, shorter bunker delivery times and a simpler custody transfer process. Each bunker stem represents hundreds of thousands or even millions of dollars, and the ability to measure this accurately should be viewed as a clear indication to anybody, including surveyors in the maritime and bunker industry, of the need to take advantage of the efficiency and transparency that mass flow metering can deliver.

As a surveyor, I firmly believe, as do the mass flow meter vendors themselves, that there will still be a significant role for surveyors in the brave new world of mass flow metering, albeit in a different guise. Rather than the messy business of dipping bunker tanks, the process will become more technologically centred on the use of mass flow meters onboard barges. Some of the new mass flow meterrelated tasks that surveyors will have to undertake include checking the seal integrity on the mass flow metering system against the seal certificate onboard barges and the verification of calibration records to ensure they are up to date with the system. The surveyor, in essence, is the eyes and ears of the fuel buyer and instils confidence in the buyer that the mass flow meter is in good working condition and has been properly calibrated. Ultimately, surveyors who are prepared to upgrade their skills and work effectively with new technology should not be affected by the introduction of mandatory mass flow metering in Singapore. I am confident that this is a new opportunity for the survey community and that it will be an exciting and busy future for those who adapt and work together with the new technology to ensure greater accuracy, transparency and reliability in bunker surveying.

Testing and surveying

We still need the bunker surveyor

Testing and surveying

Question of quality Charlotte RĂ¸jgaard, group technical director at Veritas Petroleum Services, took to the stage at the Singapore International Bunkering Conference to highlight the quality challenges facing the industry, regardless of location

t the recent Singapore International Bunkering Conference, Charlotte RĂ¸jgaard, group technical director at Veritas Petroleum Services (VPS), gave a pres-

entation on Quality Challenges and Future Trends, highlighting the complexity of the subject. She noted that, compared with 2013, the number of samples exceeding the limits this year had increased

slightly for heavy fuel oil (HFO) but decreased for distillates. Geographically, Northern Europe and the Strait of Gibraltar accounted for the most HFO samples exceeding limits. Nearly 35% of samples from

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World Bunkering Winter 2014

made between 6 and 12 October by two suppliers. The results are below the ISO8217:2005/2010/2012 requirement of a minimum 60°C. Three samples representing distillate fuel deliveries in Valencia were also found to have a flash point ranging from 57.5°C to 59.0°C. The bunker deliveries were made between 10 and 18 October by two suppliers. VPS notes that marine fuels with a flash point below 60°C also violate Classification rules and SOLAS Chapter II-2, Reg. 4. It warns vessel operators: “If your ship received bunkers with a flash point below 60°C, we recommend you notify your Classification Society. For safety, avoid hot work, smoking or any other heat source in the vicinity of fuel storage tanks and vents.” Another alert reports eight fuel oil samples representing low-sulphur HFO deliveries in Miami and surrounding US ports, with a combined Aluminium and Silicon (Al+Si) concentration ranging from 77 to 87 mg/kg (averaging 82 mg/kg). Four exceeded the ISO8217:2005 maximum limit of 80 mg/kg while all exceeded the ISO8217:2010/2012 maximum limit of 60 mg/kg. The deliveries were made by one supplier between 7 and 16 October. VPS comments: “The test results indicate that the fuels contain highly abrasive particles that could cause accelerated wear of cylinder liners, piston rings, injectors and fuel pumps if Al+Si is not sufficiently reduced. Efficient fuel treatment is vital to reduce the Al+Si contents to an acceptable level for safe diesel engine use. It is further recommended to take samples before and after the fuel treatment plant to gauge the fuel oil quality at the engine

inlet. This will help in any subsequent assessment of increased engine wear and damages, and in resolving fuel quality disputes.”

Testing and surveying

the Amsterdam, Rotterdam, Antwerp area and also from Gibraltar exceeded limits. Far fewer samples from Middle Eastern and Asian ports, including Singapore, exceeded the limits. The picture was different for distillates. Just under 30% of samples from Singapore exceeded the limit, mainly because of a pour point problem. Røjgaard noted that ISO8217:2012 contains more parameters and stricter limits. In other words, it offers better protection. She noted particularly an increase in off-spec cases related to cold flow properties. But, she warned, being on specification does not necessarily mean fit for purpose. Cloud point is not a spec parameter, but could be an issue, depending on where is the ship heading and the ambient temperatures it will experience. She then drew attention to what she described as the overlooked part of MARPOL Annex VI – Regulation 18.3, which states: 1.3 The fuel shall not include any added substance or chemical waste that 1.3.1 Jeopardises the safety of ships or adversely affects the performance of the machinery, or 1.3.2 Is harmful to personnel, or 1.3.3 Contributes to additional air pollution Clause 5.5 of ISO8217:2012 is similar, Røjgaard pointed out, and in addition states: 5.3 Fuels shall be free from any material that renders the fuel unacceptable for use in marine applications Looking ahead, she anticipated a range of commercial, statutory and technical issues. Commercially, the two main issues would continue to be density/shortlifting and the presence of water. Statutory issues would include the obvious one of sulphur but also flash point. Technical issues that could damage or affect the performance of the engine included cat fines, cold flow properties and microbes. Recently, VPS has issued alerts over low flash point distillates in Barcelona and Valencia, Spain, and highly abrasive particles in Miami. It tested three samples representing distillate fuel deliveries in Barcelona, Spain, with a flash point ranging from 57°C to 58°C. The bunker deliveries were

Charlotte Røjgaard, group technical director at Veritas Petroleum Services

North America

First of just a few. OW Bunker’s initial stem in Los Angeles and Long Beach

US set to enforce 0.10% While the situation in northern Europe may be less clear, ship operators should expect robust enforcement of the 0.10% sulphur limit in North American waters

rom 1 January 2015, ships trading to North America must switch from using 1% sulphur content fuel to 0.10% sulphur content fuel, according to International Maritime Organization (IMO) MARPOL Annex VI regulations for emission control areas (ECAs). This will primarily affect foreign vessel entering Canadian and US waters, as the domestic fleets of both countries already mainly use distillate fuel. In advice issued in mid-October, Skuld P&I Club made it clear that compliance was the only option open to ship operators. It also made the point that tramp ship owners should be ready to comply, in case a charter took them into the ECA. Noting that there was very little time left before the new regulations entered into force, it strongly advised operators who had no immediate plans to trade to or from an ECA to familiarise themselves with the new regulations and ensure they were able to comply with them. As for regulatory compliance with US laws, Skuld said it could “only urge operators to seek to be always in strict compliance”. It cautioned: “Large fines, other penalties and even prison terms have resulted not infrequently from violating US laws, in particular those relating to MARPOL offences. There is no indication that US practice, par-

ticularly that of prosecuting district attorneys, is about to change.” Earlier in the year, the UK P&I Club had delivered a similar message, quoting detailed advice published by US law firm Montgomery McCracken Walker & Rhoads LLP. The law firm noted that, in a new enforcement initiative, the United States Environmental Protection Agency (EPA), in cooperation with the United States Coast Guard (USCG), has boarded vessels to collect bunker samples to determine whether the vessels’ fuel sources meet the soonto-be-reduced 1.0% fuel oil sulphur limit. The EPA had also disclosed that it has been “experimenting” with vessel flyovers to assess vessel smokestack plumes for the same purpose. The club commented: “The EPA’s unprecedented action, coming on the heels of its issuance of administrative subpoenas to several large companies operating ships within the North American ECA, announced stepped-up efforts to enforce lowsulphur fuel requirements within the North American ECA. Until this recent initiative, EPA and USCG officials seemed content to simply monitor compliance efforts by reviewing ECArelated records and documents such as bunker delivery receipts during Port State Control inspections. These joint EPA/USCG initiatives to enforce fuel

standards should serve as a warning to club’s members operating within the North American ECA. The commercial and legal consequences of a failure to comply with the ECA’s fuel oil sulphur limits – or the commercial and legal consequences, even if the United States government has only “reasonable cause” to believe that vessels failed to comply with the ECA’s fuel oil sulphur limits – are potentially severe.” In the US, MARPOL is implemented through the Act to Prevent Pollution from Ships (APPS), which supplements existing civil and criminal legal authorities vested in EPA and the USCG under the Federal Clean Air and Federal Clean Water Acts. APPS gives the USCG and the EPA broad authority to investigate potential MARPOL violations, and allows the USCG and US Customs and Border Protection (CBP) broad authority to detain vessels during the course of investigations. It authorises the government, upon “receipt of evidence that a violation has occurred”, to issue subpoenas requiring production of witnesses, documents, and other evidence, so that the government can investigate. The club notes that companies are encouraged to voluntarily disclose instances in which their vessels cannot obtain compliant fuel oil because it is not available by filing a Fuel Oil

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pleted until after the introduction of the revised North American ECA sulphur limits. Consequently, it is likely that the OGV Fuel Regulation will remain in effect and continue to be enforced. The fuel sulphur limits of the OGV Fuel Regulation and the North American ECA will both be 0.1% as of 1 January 2015, but there are two fundamental differences between the two sets of requirements. The ECA regulation allows alternative emission control technologies, such as exhaust gas cleaning devices (scrubbers), to be used, while the OGV Fuel Regulation does not have a similar provision. Therefore, OGV Fuel Regulation compliance can be achieved only by using low-sulphur fuel. The ECA regulation only requires that a fuel meets the specified percentage sulphur requirements, while the OGV Fuel Regulation requires that the fuel also meets the specifications for distillate grades. Nevertheless, as North added: “It is understood that the California ARB will allow vessels complying with the North American ECA requirements under the above provisions (ie using scrubbers or burning non-distillate fuel that otherwise complies with the 0.1% sulphur cap) by submitting a Temporary Experimental or Research Exemption form.” While distillate is being used throughout US waters, interest in LNG as a marine fuel is growing in North America. In July, classification society DNV GL established a group of LNG experts in the US, the Houston-based LNG Solutions Group – Americas, to, it says, “meet the rapidly growing demand for a wide variety of LNGrelated services”. DNV GL’s director of operations maritime advisory, Americas, BjørnHarald Bangstein, said: “Judging from our list of recently completed projects, you can clearly see the market is about to reach a tipping point, from market, feasibility and risk studies to actual newbuildings, export and bunkering facilities.” Among several new projects this year, Canadian BC Ferries has ordered

three new Intermediate Class vessels from Remontowa Shipbuilding, Gdansk, Poland, for a total of $165 million. The vessels will be classed by Lloyd’s Register (LR). The new Intermediate Class vessels will be the first vessels in BC Ferries’ fleet to operate as dual-fuel capable, using LNG or diesel fuel for propulsion and power. Back in the conventional marine fuel sector, the focus is on picking up the pieces after the sudden OW Bunker collapse. OW was an aggressive newcomer in the North American business. Its operation was headed up by former Chemoil veteran Adrian Tolson. As recently as late September, it took on former Aegean Oil USA’s regional marketing manager Georgia Kounalakis to work on its physical supply operation in North America. A statement said: “Kounalakis, a highly experienced marine fuels professional, joins the region’s senior team to take on responsibility for business development and to help to drive further sales growth across North America, in line with the company’s global expansion strategy.” September must now seem a long time ago to OW’s staff. In the previous few months, OW had announced the start of physical supply operations in New York and New Jersey, as well as at the ports of Los Angeles and Long Beach. It also offered physical distribution services offshore in the Gulf of Mexico. Tolson said at the time: “We have developed both our trading and physical supply operations across North America quite rapidly and with great success over the past two years, helping us to forge a strong market position and clear identity in what is an extremely competitive market. “We are seeing a clear demand from customers for high-value physical distribution services across North American ports, and we remain committed to providing them with the highest quality products and reliable, flexible solutions that help them to manage costs and operate most efficiently.”

North America

Non-Availability Report (FONAR). However, the club warns, the FONAR itself is evidence of a violation and, as recently seen, is a basis to issue an investigative subpoena. Even if these administrative subpoenas do not lead to prosecutions, they place a big burden on the company involved, which has to provide large amounts of information. The club warns: “The use of subpoenas itself raises the enforcement profile of these inquiries, because providing false or misleading information in response to a subpoena is a serious federal crime.” APPS also allows the US government to refuse or revoke a vessel’s clearance to proceed from a port or place in the US if “reasonable cause exists to believe” the vessel violated the ECA. As with other US environmental laws, non-compliance leaves shipowners open to a large range of civil and criminal sanctions: huge financial penalties and, for deliberate non-compliance or giving false or misleading information, the possibility of jail terms of up to 10 years. Overall, the message is clearly: “Be very careful not to accidentally exceed the 0.10% limit and don't even think about chancing it!” So far so straightforward, albeit perhaps rather draconian. But there is one other factor to take into account – California. In September, North P&I Club drew attention to an advisory notice from the California Air Resources Board (ARB), which provides guidance for ships visiting ports in the State of California with regard to fuel sulphur limits when the revised MARPOL Annex VI North American Emission Control Area (ECA) sulphur limits come into effect on 1 January. California has, of course, for some time enforced its own rules requiring distillates to be used. The state’s Ocean-Going Vessel (OGV) Fuel Regulation is currently subject to a ‘sunset review’ by ARB. The regulation has a provision which states that it will cease to apply if the North American ECA requirements meet an equivalent standard. However, North noted, the sunset review is not expected to be com-

Central America

High expectations With the Panama Canal expansion nearing completion, these are exciting times in Central America, reports John Rickards

xpansion is a word much in play in Central America at present, whether in relation to canals, to the desire to reinvigorate flagging local bunker trades, or in terms of investment seeking to draw traffic in the event of a possible postpanamax boom in the near future. The local market very much has an eye on what’s coming over the next few years. With its canal-widening programme proceeding apace, Panama will be hoping that the expected new flood of larger vessels will see a consequent rise in bunker sales, with the country’s own industry bunkering commission criticising the local bunkering structure and competitiveness. Panama sold 3.1 million tonnes of bunkers last year, down from 2012, and nearly 25% short of the recent peak of 2008. Falling vessel calls, down to just over 26,500 last year, according to Platts, and lower average stems have been cited as the main causes of the drop. Average orders are between 500 and 700 tonnes, down almost half on peak levels, with ships choosing to lift bunkers instead in Asia, Colombia and the Caribbean. Nicolas Vukelja Duque, president of Panama Maritime Chamber’s Bunkering Commission, speaking ahead of the 2014 Panama Bunkering Forum, said that bringing sales back up to historical levels would mean integrating and coor-

dinating services, improving efficiency and competitiveness. This would be against the backdrop of newer ports and service offerings in nearby rival states pushing hard for market share. Last year’s event featured discussion on the role the Panamanian government could play in boosting the nation’s bunker industry, but so far there has been no action on the ground. Pricing in Panama has historically been a cause for concern, with intermediate fuel oil (IFO) consistently costing more than at US Gulf and Asian ports. With several Caribbean nations boosting their own bunker offerings and with increased competition from the rest of Latin America, Panama will be hoping that increased traffic following the widening of the canal in 2016 will arrest the slide in its bunker industry. One firm that was banking on a greater slice of the Panamanian market was now defunct OW Bunker, which chartered an additional barge to serve Canal traffic. The 3,778 dwt doublehulled Star Goethals was to offer both low- and high-sulphur IFO as well as marine gas oil (MGO), and joined the company’s existing barge alreadycovering the market. Adrian Tolson, the company’s regional manager for North America, specifically cited the expansion of the canal as a reason behind the deal: “Panama’s marine fuel market is under-

going a period of change, driven by the widening of the canal, which will exert a shift in regional trade routes and impact fuel demands across the Americas. “As these dynamics continue to evolve, OW Bunker is committed to helping shipowners and operators plan their fuel sourcing throughout the Americas, including Panama.” While Panama looks ahead to the long-awaited expansion of the canal, its much-discussed potential rival in Nicaragua continues to make waves. With US$40 billion of financing in place in exchange for a 50-year concession to Chinese businessman Wang Jing’s HKND group, the idea of a new waterway capable of taking ships even larger than today’s 13,500 teu postpanamaxes continues to draw interest from carriers. This summer, press reports suggested that Maersk Line was the latest to voice broad, if tentative, support for the notion. Quoted in ShippingWatch, daily operations head Keith Svendsen said: “We generally support infrastructure improvements. It brings improved opportunities for transport, and thus trade. When we built container ships 20 years ago they were scaled according to the Panama Canal, but the ships today are bigger than the 4,500 teu that could fit on the biggest ships back then. Even after the expansion of the Panama Canal, the biggest ships won’t fit there.”

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banking on the long-mooted project becoming a reality yet, with the possible exception of AP Møller, whose move to massively expand its terminal space in Costa Rica would give it berth space neatly between both canals. That is likely to change as building work progresses and its success, or otherwise, becomes clearer. Elsewhere in Central America, UNO has been adding to its offerings. This autumn saw it introduce a new lubricant that meets ISO9001 and American Petroleum Institute standards to the Nicaraguan market. This can be used by shipping as well as passenger vehicles and heavy machinery. The lubricant is being manufactured in the US. That’s not the only move UNO has made in the region, though. In May this year, the company signed a joint venture deal with Denmark’s Endofa to launch bunkering operations out of Puerto Cortés in Honduras. The two companies are now supplying 380 cSt and 180 cSt IFO as well as MGO by truck to ports along the coast from the storage facility at Puerto Cortés.

Endofa, though, is planning to upgrade the service to use tankers, supplying in port or at anchorage in the same manner as the company’s other physical supply operations. While Endofa’s Kenn Soendergaard called the move “a game-changer” for the Honduran shipping industry, operations and sales chief John Rolfo said the company’s product was competitive with Houston and Panama on both price and quality. In Costa Rica, meanwhile, APM Terminals has finally had the green light from the country’s Supreme Court to go ahead with a new container terminal at Puerto Limón on Costa Rica’s Caribbean coast. The company signed a 33-year design, build, operate and maintain concession with the government in 2011, but the huge development, costing upwards of US$1 billion, has since been mired in legal wrangles after the port workers’ union filed an appeal against it, claiming it would give APM a near-monopoly on maritime trade in the nation. APM still has to win approval from the Costa Rican environ-

Central America

The canal’s route, running from the mouth of the Brito River on Nicaragua’s Pacific coast to the Punta Gorda River on the Caribbean and passing through Lake Nicaragua, has been approved by the country’s planning authorities. Building work is due to start in December and is likely to take until 2020, barring delays. The project will reduce the journey between New York and Los Angeles, and between the US East Coast and Asia by 800km. According to maritime analysis firm SeaIntel, this will reduce bunker usage, thanks to speed savings of between 17% and 30% depending on ship size and accounting for the possibility of using much larger vessels than even the expanded Panama Canal can take. If the vast project comes to fruition, it remains to be seen what it might do to the local bunker trade and to traffic routing. However, there is obvious potential for cost overruns and economic factors to affect both the time to completion and its overall scale and utility, plus the possibility of local and environmental opposition within Nicaragua. Certainly no one is

Central America

mental protection agency, although this is not expected to be an issue. Once constructed in 2018, the huge new Moín Container Terminal (TCM) will able to take 13,500 teu box ships – a sizeable jump from the 2,500 teu vessels that the current Moín terminal can accept – and will offer “world-class” facilities according to APM. The effects of such a sizeable investment and upgrade to Costa Rica’s current container capacity on the country’s bunker trade have yet to be evaluated, but are likely to be significant. At present, Puerto Limón sees some 2,500 ship calls per year, a combination of cruise vessels and ships primarily exporting bananas. Bunkers are largely provided by truck at berth by companies like Clipper Oil and Compass Marine Fuels. The new terminal will obviously greatly alter the port’s traffic profile, and its bunker operations may adjust to match. With TCM attempting to take a slice of the region’s likely-burgeoning post-panamax traffic following the Panama Canal widening, and possibly, further down the line, the completion of the Nicaragua Canal, Costa Rica’s bunker market could be in for something of a boom if suppliers are able to take full advantage of the opportunity the new development offers.

Nicaragua’s waterways – potential 20,000 teu highway

The local market anticipates a boom in traffic once the widening of the Panama Canal is completed

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Caribbean

Building capacity John Rickards reports on a busy Caribbean bunkering scene

nvestment has been the order of the day in the Caribbean over the past few months as island states bid to upgrade or add to their existing bunkering facilities with a particular eye on the cruise market. Many of the islands have long made do with increasingly ageing fuel facilities, but, with the cruise business looking to pick up and the effects of the sulphur cap on US bunkering patterns, administrations across the region are seeking to improve their bunkering capacity.

Early next year, Antigua & Barbuda Port Authority (ABPA) is launching a US$200 million redevelopment of the island’s port, including a new cruise terminal, logistics park and warehousing. The project is expected to be completed within three years, according to the authority. The upgraded cruise facilities will see a consequent improvement in Antigua’s bunker services, with local press reports suggesting that revenues will rise to be several million dollars per year, according to port authority chief

Darwin Telemaque. At time of going to press, ABPA was still trying to finalise funding for the port redevelopment from China, but remained confident of securing the necessary finance. The Cayman Islands is also seeing port redevelopment. In a speech to the islands’ Legislative Assembly, planning minister Kurt Tibbetts said that the islands’ existing oil storage terminal in George Town needed replacement as its pipelines had reached the end of their working life, leaving the terminal

Antigua’s port of St John’s is in line for a major redevelopment

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Caribbean

dangerous and no longer fit for purpose. The replacement will be built on a fresh site, further from existing industrial and urban areas. “It is inevitable that we expand our fuel capacity to meet the islands’ demand,” he said. The current George Town oil terminal doesn’t include bunker supply, but, with the aim of drawing fuel trade from cruise vessels visiting the Caymans, its replacement will. The administration is hoping to attract at least one bunker supplier to operate out of the facility. No estimates have yet been released about the size of the new terminal’s bunker operations or its completion date. One new Caribbean port development has been completed and opened for business late this summer. Phase one of Trinidad and Tobago’s first energy port, Port Galeota, officially opened in September. The US$85 million, eighthectare facility, operated by the stateowned National Energy Corporation of Trinidad and Tobago, has five berths, all dredged to 7.6m draft except for the Coast Guard’s berth. It provides bunkering and energy services, and offers improved access to offshore facilities, such as rig supply, modular stacking of deck cargo, a marshalling and storage area, cargo carrying and potable water storage. With a rise in offshore exploration in Guyanan waters, Port

Galeota should be well placed to serve as a support and refuelling facility for oil majors working off the northern coast of South America. The port is already in use by BP Trinidad and Tobago, Repsol, BHP Billiton T&T and Trinity Exploration & Production, and has a particular focus on the country’s trade with South America, particularly Venezuela and Guyana, and the rest of the Caribbean. Minister of energy Kevin Ramnarine, speaking on behalf of prime minister Kamla Persad-Bissessar, said: “Port of Galeota has the potential for expansion of trade between Trinidad and Tobago and South America and the wider Caribbean, which can facilitate the development of the energy services sector.” The US$110 million second phase of development will begin next year, adding seven berths. Vernon Paltoo, president of the National Energy Corporation, said: “We have grown from strength to strength, expanding and developing into a company well positioned to push the expansion of the energy sector.” Commercial discoveries and exploration off the country’s eastern coast are one of the drivers cited for the expansion of the port, and the government has expressed hope that it will see consequent economic

development and expansion of the local community in Guayaguayare. In the northern Caribbean, Petrojam has increased its Jamaican bunkering capacity to take advantage of the completion of the Panama Canal widening scheme. Petrojam sources most of its crude feedstock from Venezuela under the PetroCaribe programme, amounting to 7.9 million barrels last year, with roughly half of the country’s annual input going into intermediate fuel oil (IFO) production. With Jamaica hoping to make the most of its location on shipping lanes between the US Gulf and East Coasts and the Panama Canal, as well as cruise traffic, Petrojam began increasing its fuel oil tank storage capacity in spring this year. It supplies fuel at the Port of Kingston through a long-standing agreement with Aegean Marine Petroleum, as well as other suppliers who have begun operations in the port more recently. While the company expects full-year fuel sales to be flat for 2014-15, with Petrojam’s overall turn over down slightly to US$1.83 billion, its refinery business that supplies IFO and marine gas oil (MGO) is likely to see a sharp rise in profits over the same period to nearly US$10 million. The company declined to comment on exact bunker volumes and projections for 2014-15.

Puerto Rico’s low sulphur situation is rosy according to bunker traders

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Caribbean

Fax: 1 (876) 620 6868

The region isn’t immune to the effects of sulphur regulation. Owners operating on trades to and from North America are affected, regardless of their eventual destination. And the same 0.1% cap is coming in from January for the islands of Puerto Rico and the US Virgin Islands, which form the separate US Caribbean Emission Control Area (ECA). While their counterparts in Europe have expressed concern over availability, bunker suppliers within the ECA appear to have few concerns. Harbor Bunkering Corporation (HBC) operates four barges and two tugs in San Juan, Puerto Rico, as well as supplying fuel by truck at three other ports on the island, currently delivering 20,000 barrels of IFO and MGO per month. “[Low-sulphur fuel] is already all we supply,” a spokesman told World Bunkering. “The rule comes in January, but already it’s what we do. We don’t have any worries about [meeting demand]. We have Puma Energy serving the whole island, Puma and Total, and they have more than enough.”

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While low-sulphur fuel remains more expensive – and some owners are already introducing surcharges – HBC is optimistic. “We hope we’re going to increase sales – we always do, of course, but we’re hopeful for the next year, though we can’t yet know. We have no worries about the regulation at all. ‘Keep smiling, keep happy’.” Equally happy for the time being with regards to its Puerto Rico interests is US firm Crowley Maritime. October saw construction start on the first of the two Jones Act combination container and ro-ro ships it ordered last year from VT Halter Marine’s Pascagoula yard. The ships will be powered by liquefied natural gas (LNG). “We have waited with great anticipation for the Commitment Class build programme to start,” said John Hourihan, senior vice-president and general manager of Crowley’s Puerto Rico/Caribbean liner services. “These new ships will embody superior technology and construction and we are anxious to get them into service for our partners in Puerto Rico.”

The ships will be able to carry 2,400 teu along with 400 vehicles in their ro-ro section and will replace Crowley’s towed triple-deck barge fleet, which has served the Puerto Rico trade continuously since the early 1970s. LNG has been mooted as an alternative to fuel oil for many Caribbean islands, both for transport and for shoreside power generation, freeing them from dependence primarily on Venezuelan crude on the back of the US shale gas boom. Puerto Rico has already taken steps in this direction, principally to reduce domestic electricity costs. US firm Excelerate is currently building a new floating offshore regasification plant near Salinas and Guayama on the island’s southern coast, due to begin operations in 2016. If owners willing to adopt LNG on Jones Act trades see LNG bunkering facilities develop alongside supply terminals then more might follow in Crowley’s footsteps, while owners like Crowley will be in pole position to take advantage of improved fuel provisions.

Changing scene

South America

Montevideo is the destination for the fastest LNG-powered ship in the world, but has no bunkering facility of its own

John Rickards reports on the latest developments in this expanding market

hange has been in the air over the past few months across South America, with bunker suppliers looking to expand their operations and owners to reduce their fuel costs. While falling oil prices throughout this year had hurt OW Bunker’s bottom line and had seen investors shying away from the now bankrupt multinational, the company was expanding its market coverage until the end. This summer, it entered a strategic partnership with Colombia’s Petrocosta CI to supply bunkers across Colombia and expand its reach across Latin and South America.

Petrocosta CI handles the sourcing, blending and storage as well as the transportation of marine fuel products to the purchaser, while OW Bunker markets them through its existing network as well as providing risk management and other related services. The venture offers low-sulphur fuel oil (LSFO), marine gas oil (MGO), intermediate fuel oil (IFO) and lubes out of Cartagena, with potential expansion into key ports along Colombia’s Caribbean Sea coast, where Petrocosta operates as the market allows. The move came after OW Bunker opened an office in Cartagena at the start of the year, adding to its distribution

Vale is actively looking to convert its massive ore carriers to run long distance on LNG

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and marketing operations in Panama, Uruguay, Brazil and Chile. The company’s regional manager, Pedro Gómez, said: “As Latin America’s trade growth is poised to rise, entering into a strategic partnership with Petrocosta CI is a strategic, timely move that will allow us to further strengthen and expand our services for customers in Colombia. Based on our existing relationship, we are mutually confident that our ambitions and operational synergies are closely aligned.” Petrocosta has a fleet of four small barges and a 8,500 metric tonne (mt) floating storage vessel used for blend© Vale

South America 54

ing and processing to ISO specifications and sources its fuel from Colombian refineries. The company’s commercial director, Antonio H Reinoso, said: “OW Bunker has access to a global customer network, as well as the financial strength to help facilitate our market growth, especially as there is potential to increase our reach across Colombia’s northern coast. Through this agreement, we will create a stronger, more flexible marine fuel supply chain for our customers in Colombia.” OW Bunker hasn’t been the only company to bolster its Colombian offerings over the past 12 months. Another joint venture between Bunkers International and CI Vanoil began offering bunker supply along the Colombian coast from Cartagena using the 5,500 mt BT Cartagena Sun in 2012, but earlier this year announced that it would be dedicated to supplying bunkers at Colombia’s main crude port of Coveñas. “Currently, ships calling at the port have had little or no option for marine fuel and we are confident that our high-quality lower-sulphur fuels will be

of interest to our customers there,” said John Canal, president of Bunkers International. “We now have the ability to service the large crude oil tankers that call at Coveñas, as well as vessels calling for bunkers only.” The tanker supplies 380 cSt LSFO as well as high-sulphur fuel oil (HSFO) at 500 cSt and 380 cSt. One company with question marks over its own LSFO supply is, perhaps surprisingly, Brazil’s Petrobras. Despite being a major producer of low-sulphur fuel, the company’s global bunker business manager, Marco Antonio Costa Tritto, told this year’s Singapore International Bunkering Conference and Exhibition that Petrobras would not be investing in greater production of LSFO until the company was more certain of demand. Even though the new raft of MARPOL rules means that demand is expected to rise sharply as global sulphur limits are cut to 0.5% by 2020 or 2025, depending on the International Maritime Organization (IMO) review, and even though Tritto acknowledged that world LSFO supply, as well as Petrobras’ own,

would still be inadequate by that point, he said the company would have to wait for the market picture to settle before committing to greater production. “It seems that the authorities are very keen to implement the sulphur regulation by 2020 or 2025, but producers are still adopting a wait-and-see attitude,” he said. He cited uncertainty over switches to liquefied natural gas (LNG) fuel by some owners, the use of scrubbers, and other alternatives on some trades as reasons for the company’s reticence over LSFO. However, this hasn’t stopped Petrobras improving its local bunker offerings. The company introduced a newbuild 2,300 mt barge into the Rio de Janeiro market this summer, saying that Rio’s competitive pricing compared with other Brazilian ports had made it an attractive option to improve service. Before much longer there will be further newbuilds entering Brazilian service as well, thanks to a massive investment in shipbuilding by Brazil’s state-run Merchant Marine Fund (FFM). This summer it announced financing

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South America

plans for 110 vessels, mostly for inland service, and the upgrading of three shipyards, two being modernised and one redesigned, to the tune of US$1.8 billion in total. Included in the orderbook are four bunker tankers and three tugs. Fourteen companies have been earmarked to cover the orders and they will have a year to cover the paperwork and demonstrate their capacity to fulfill the FMM project, making 2016 the earliest the new tankers are likely to enter service. One company giving Petrobras pause for thought is Brazil’s iron ore giant Vale. It first mooted the possibility of using LNG power on its vessels in 2012, but this autumn the company firmed up its language on the subject at the International Mining & Resources Conference (IMARC) in Melbourne. With iron ore prices sliding to a five-year low, Vale’s director of strategic planning Stephen Potter said that the company was aware of the challenges in the market and the economical as well as environmental advantages of slashing fuel use on the company’s Valemax very large ore carriers. “Our new generation of large ships is very important, it is probably our biggest opportunity to reduce carbon dioxide emissions in our value chain,” he said. The company says its Valemax vessels offer a 35% reduction in CO2 per tonne compared with smaller conventional ore carriers. “We do it for money as well, they are much more competitive. Brazil faces a desperate disadvantage compared with [Vale’s Australian competitors in the Chinese ore trade], being on the other side of the world from China.” “We hope to take it further. We are hoping to convert our vessels to LNG.” The company has previously said that the size of the vessels makes them ideal for running on LNG as they have enough void space for sufficient fuel tanks to take them from Brazil to China and back without needing to bunker, neatly skirting the question of the spread and availability of LNG bunker facilities. But with its existing run of Valemax orders coming to delivery this year and the uncertain state of the iron ore market, most analysts expect it to be some time before the company orders LNG newbuilds or, as now seems more likely, converts its existing vessels. One company that is making LNG availability less of an issue, at least for relatively small quantities, is Argentina’s Galileo Technologies. The company has been pushing its Cryobox Nano modular plug-and-play gas liquefaction system for shipping use for some time, inking a deal this summer with Greece’s Kaminco to market the trailer-portable technology to Greek owners looking for economical solutions to LNG switching. Galileo has been using the system to supply LNG for the high-speed catamaran ferry Francisco, which Buquebús began operating across the River Plate between Buenos Aires and Montevideo at the start of this year. This summer saw Buquebús formally open its own 84 tonne-per-day (the amount of LNG the ferry uses per day, the same as generated by its original seven Cryobox units) dedicated production facility using Galileo technology in Domselaar, San Vicente. The compact and reputedly economical plant was opened by Argentinian president Cristina Fernández de Kirchner in August. The 50-plus-knot 1,000-passenger/150-car ferry is the first vessel built under the High-Speed Craft Code to be LNG-powered and was introduced to compete with airlines on the 125 nautical mile journey.

Offices in Rostov-on-Don, Taganrog, Yeisk and the Port of Kavkaz Fleet of 13 own bunkering barges complying with loading and supplying regulations Own storage facilities giving flexible bunker delivery options Own terminal at the Port of Temryuk, providing safe fuel loading on tankers of up to 5,000 DWT Fuel deliveries compliant with MARPOL and SOLAS regulations

Our team is pleased to offer you our experience and knowledge, best prices and excellent service on a 24/7 basis.

For more information, contact: Rostov-on-Don Tel: +7 (863) 242-44-86 +7 (863) 242-44-87 +7 (863) 242-44-88 E-mail: rostov@ybunker.com Yeisk Tel: +7 (86132) 2-60-64 E-mail:yeisk@ybunker.com Port Kavkaz Tel: +7 (86148) 4-43-47 E-mail: kavkaz@ybunker.com

www.ybunker.com

Russian update

Expansion continues While international tensions may be a cause of concern, Russia’s shipping and bunker industries continue to grow, as Olga Bogacheva reports

Oil flows to be diverted from Latvia to Russia

Russian oil companies and Transneft plan to increase fuel transfers in Russian ports by reducing fuel flows through Latvia. Mikhail Gryaznov, director of the Department of Oil and Gas Refining at the Ministry of Energy, held a meeting recently to discuss increased oil handling in Russian ports. Transneft proposed redirecting fuel currently delivered through Ventspils and Riga in Latvia. The goal is to keep the Russian port infrastructure busy. The terminals in Lithuania and Latvia were built in Soviet times within the framework of industrial development of the USSR. An oil trunk pipeline was built and there were no other alternative export terminals then. However, new oil terminals have been erected in the Baltic ports of UstLuga and Primorsk, so oil flows may be easily redirected now. According to the Russian Federal Customs Service, 10 million tonnes of Russian oil products are transferred through Latvian ports. Oil turnover in Ventspils and Riga reached 22.6 million tonnes in 2013. Oil companies Surgutneftegas, Rosneft, Lukoil, Bashneft, Tatneft and Gazprom Neft supported redirection of oil flow to Russian ports. A representative from Rosneft claimed the company is ready to redirect its

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products to the ports of Novorossiysk and Primorsk if there is sufficient pipeline and railway capacity and if it is economically feasible. Gazprom Neft is ready “for complete redirection of export oil flows to Primorsk, Ust-Luga and St Petersburg ports”. However, switching to the Russian ports would have to be justifiable economically. For that to be the case,Transneft says it would be necessary to reduce tariffs on Russian railways and also handling costs at Ust-Luga and St Petersburg. Some analysts says that the Baltic Sea ports are already able to compete with foreign ports in terms of price for fuel delivery onboard ship. In the first half of 2014, the tariff for transportation of diesel fuel from Ryazan refinery to Ventspils port was RUB1,800 per tonne (up 5.1% compared with the same period in 2013) and RUB1,920 per tonne to Primorsk port (down 0.2%). Avoidance of Latvian oil handling services is probably connected with sanctions against Russia. The move are also understandable politically as there has been no secret about the complicated relations between Russia and the Baltic States since their independence. It is known that the turnover of Latvian ports increased by 3.9% – up to 55.54 million tonnes – during the first nine months of 2014, compared with the

same period in 2013. In Riga port, 30.04 million tonnes of goods were handled between January and September, up 13.8% compared with the same period in 2013. Turnover reached 20.6 million tonnes (down 8.7%) at Ventspils and 3.7 million tonnes (up 7.1%) at Liepaja. The major part, 26.6 million tonnes, consisted of bulk cargo. Transfer of liquid bulk cargo comprised 19.93 million tonnes, while general goods accounted for 9 million tonnes. The surplus of general goods handling was 1.7% against the previous period, with bulk cargo at 3.5% and liquid cargo at 5.4%. Passenger maritime traffic in Crimea set to grow

In another move with political connotations, the development of express passenger services between Caucasus and Crimea was discussed at the October meeting of the Praesidium of the Russian Federation’s Maritime Board. Konstantin Palnikov, director of the Department of State Policy for Maritime and River Transport at the Russian Ministry of Transport, gave a talk on the delivery and production of domestic civilian shipbuilding in order to develop passenger services in the Azov-Black Sea basin. He discussed issues relating to passenger services and also passenger terminal construction in Crimea.

Physical supplier of Fuel Oil and MGO in the ports of Saint-Petersburg and Ust-Luga

www.forumbunkering.ru

The Ministry of Transport believes the best way to develop express passenger services is to set up an organisation similar to the United Transport Directorate, the company providing ferry services between Caucasus and Crimea. Initially, the main express service routes around the Black Sea near Crimea will be Azov – Temruk, Chernomorskoye – Temruk, Sochi – Kerch.

At the same time, 1.6 million tonnes of marine fuel, up 48.6%, was sold in the domestic market to generate revenues of RUB28.1 billion. The company now has the largest share of the Russian bunkering market, with 18.9% of all sales. The company has also recently won bids to supply Atomflot, Rosmorport and Gazflot. Evpatoria project

Gazprom Neft Marine Bunker boosts sales

Gazprom Neft says its marine fuel sales grew by 32% to 1.94 million tonnes in the first half of 2014, compared with the same period in 2013. Last year, 1.08 million tonnes were sold during the first quarter and 0.86 million tonnes in the second quarter. The company says that this growth is the result of development of the bunkering markets in the Russian far East and the Black Sea and new clients in the Baltic ports. During the first six months of 2014?, 370,000 tonnes of fuel, down 5.1%, was exported to generate revenues of RUB9.84 billion.

In another Crimea-related development, St Petersburg engineering company Lenmornii and Evpatoria Port in Crimea have signed a cooperation agreement for the reconstruction and restoration of the port’s facilities. When preparing the agreement, the two parties examined the current state of the port’s facilities and discussed plans for reconstruction and modernisation. A spokesperson from Lenmornii said that reconstruction of Evpatoria port is aimed at increasing turnover and will ensure safe handling of both passenger and freight traffic. Evpatoria port is located at Karantinniy Cape in the western part of

Russian update

A special new programme has the goal of increasing annual passenger traffic to 250,000 people. Passenger terminals in the popular resorts of Alushta, Alupka, Semeiz, Malorechenskaya, Sudak, Gurzuf and Mishor should be reconstructed by 2020. In addition, Crimean ports are to be rebuilt to accept cruiseships. In particular, the reconstruction of Feodosia port’s second berth will increase passenger traffic to 200,000 people. This harbour has little protection from wind and waves, so reconstruction will include building new breakwaters. In Sevastopol, berths for city water transportation will be rebuilt to increase annual passenger traffic to 600,000 people. Palnikov also described issues affecting express passenger services between Caucasus and Crimea. “There are no shipping companies in Crimea strong enough to order high-speed passenger vessels. There are a lot of small companies owning one or several small passenger ships. They make money from short marine excursions for tourists. They can’t order a big ship.”

Daewoo Shipbuilding and Marine Engineering (DSME) in South Korea has ordered a total of 54 Wärtsilä dual-fuel engines to power 172,600m3 icebreaking liquefied natural gas (LNG) carriers being built for use in Arctic conditions to serve the Yamal LNG project in northern Russia. The ships will be owned by a joint venture between Teekay LNG Partners of Canada and China LNG Shipping and another joint venture between China Shipping LNG Investment Co and Japan-based Mitsui O.S.K. The order for engines was placed with Wärtsilä’s Korean joint-venture company, Wärtsilä-Hyundai Engine Co in October. The Wärtsilä machinery is capable of operating on LNG, heavy fuel oil (HFO) or low-viscosity marine diesel oil (MDO), but LNG will be the main fuel. When operating in Arctic waters, the engines will be operating in ambient temperatures as low as -50˚C on LNG carriers breaking through ice more than 2 metres thick, in operating modes that allow dramatic variations in engine load within a limited period of time. Wärtsilä’s ability to meet these demanding design criteria was a key factor in the award of this contract. For each LNG carrier, Wärtsilä will supply 12-cylinder and nine-cylinder Wärtsilä 50DF dual-fuel engines. The total power output from the Wärtsilä engines is 64,350 kW per vessel. “This very important order once again emphasises the technical leadership that Wärtsilä has established in dual-fuel engine technology. The fitting of Wärtsilä 50DF engines onboard the first LNG carriers in 2006 set a trend in the industry and, since that introduction, 65% of all new LNG carriers have been fitted with Wärtsilä dual-fuel engines. The success of this particular engine over the alternatives is based on its superior propulsion efficiency and the clear environmental advantages that operating on gas allows,” said Lars The icebreaking LNG carriers for Russia’s Yamal LNG project will be Anderson, vice-president, Wärtsilä equipped with Wärtsilä 50DF dual-fuel engines Ship Power.

World Bunkering Winter 2014

Company news

JSC Bunker Company An all-seasons professional offering guaranteed quality of both products and services

SC Bunker Company is a team of professionals whom you can trust to carry out all-seasons bunkering operations to international standards. With us, you receive efficient logistics solutions for fuel supply in the north of Russia. Being the leading physical bunker supplier in the region, with 18 years of experience, JSC Bunker Company has facilities to provide guaranteed quality of both bunkered products and bunkering service. All supplied bunkers observe ISO82172010 specifications, undergo strict quality assurance and are verified by independent laboratories. With its own fleet and oil terminal, JSC Bunker Company is fully equipped to provide barging, storing and blending services. The company operates five of its own bunkering vessels with a total deadweight of 8,000 tonnes, complying with loading and supplying regulations. Dedicated tanks provide complete segregation of high-/lowsulphur fuel oil and gas oil. Having its own storage facilities gives flexibility in bunker supply and the ability to organise fast deliveries in the required volumes. Our regular bunkering clients include leading shipping and dredging companies. In addition, we have long-term contracts for barging and storing with large companies such as Rosneft and Lukoil. For example, in 2014, our high-quality logistics infrastructure allowed us to transport about 60,000 tonnes of fuel oil for LukoilTrans in the Naryan-Mar and Pechora regions. Several years ago, we were the first company in the region to deliver bunker fuel to Baydaratskaya Bay and address the needs of vessels working there. In 2014,

the amount of fuel supplied to Van Oord, the Dutch contractor executing dredging operations in Baydaratskaya Bay, amounts to 10,000 tonnes of both dark and light marine fuels. Annually, along with transportation and bunkering, food supply and sludge and garbage removal is arranged for the convenience of the customer. We are continuing to expand our operations in Russia, launching bunkering services at the port of Sabetta. This year, we arranged permanent bunker barges at Sabetta to meet the needs of Mordraga LLC (DEME Group) vessels operating on site and delivered about 20,000 tonnes of fuel oil and gas oil. We are always open to new projects that allow us to apply our experience and develop our technical and operating expertise to meet the needs of our partners. â??

Tel: +7 (0) 8182 657793 Fax: +7 (0) 8182 420327 E-mail: arkh@jsbunker.ru Website: www.jsbunker.ru

World Bunkering Winter 2014

Yaroslavsky builds bunker tanker

The Yaroslavsky Shipbuilding company has delivered Rassvet, a new bunker tanker, to Cherepovets port. The vessel passed government acceptance trials and was transferred to the customer, the Volga-Baltic Basin Internal Waterways Administration. Three bunkering tankers were built by the yard in 2014. The order was part of local and federal government initiatives to boost domestic water transport and to develop the country’s transportation system between 2010 and 2020. The new-generation bunker tanker was designed by St Petersburg engineering

company MIB-DIZAYN-SPB. The vessel is intended for handling and transportation of oil products with flash points over 60°C. The 61.3-metre-long vessel can carry 526m3 bunkers and is an ice-class vessel capable of non-escorted transit in loose brash ice up to 30cm thick. The Yaroslavsky Shipbuilding company was founded in 1920 and made a significant contribution to the development of the Russian shipping industry. The company was reorganised as a public joint-stock company in 1993, developing from a small boatyard to a modern shipbuilding company producing vessels of various classes for civil and military purposes, with deadweights of up to 2,500 tonnes. Lukoil’s new marine fuel

Lukoil has launched a new grade of marine fuel, TSE, intended to comply with the 0.10% sulphur limit coming into force on 1 January 2015 within emission control areas (ECAs). The company says the new fuel is in an intermediate position between fuel

oil and distillate products, having characteristics which are common to both. According to Lukoil, TSE is similar to DMA, but with a higher viscosity and improved lubricity. Gazprom Neft Marine Bunker is also developing a similar 0.10% sulphur product. RN-Bunker’s new Black Sea tanker

Rosnefteflot says its newest bunker tanker has started operations in Tuapse port. This is the next step in Rosneft’s programme to develop bunkering services. The 7,000 dwt RN Tuapse will, the company says, improve its position in the bunkering market, increase motor fuel sales in the Black Sea and expand Rosneft’s global presence. Rosnefteflot (formerly the Far East Marine Company) was founded in 1998. The stockholders are Rosneft and Sovcomflot, market leaders in their business. It has branches in St Petersburg, Murmansk, Nakhodka, Yuzhno-Sakhalinsk and a separate division in Tuapse and operates 33 vessels of various types.

Russian update

Evpatoria harbour, part of the Kalamitsky Gulf in the Black Sea. This is an ice-free port with year-round navigation. There is a ferry terminal, a passenger terminal and a berth for handling general cargo. Fresh water supplies are provided in the port. Currently, there are no bunkering services, motor oil supplies or stevedore services. Tankers and vessels with hazardous cargo are not accepted.

The bunker barge Rassvet, built by the Yaroslavsky yard

World Bunkering Winter 2014

Innovation

Finding the best deal Mark Kaminski, the chief executive officer of new company RusBunker, explains to World Bunkering the advantages of its electronic trading platform

usBunker was established to provide a wide range of useful tools for players in the bunkering market, Mark Kaminski tells World Bunkering. However, the main purpose of the RusBunker Electronic Trading System (ETS) is to hold electronic tenders and find the best offers for fuel supply. The best offer will allow vessel owners/charterers to make deals on favourable terms. Electronic tenders are held on the basis of applications completed by vessel owners in their personal accounts at RusBunker. A Dutch auction is then held, with fuel suppliers making their offers.

World Bunkering: What market response/take-up have you had so far?

Mark Kaminski: The market reaction was predictable and positive, in line with our business strategy. The only unexpected thing was that we came across no negative responses. We expected some responses such as ‘Something like ETS RusBunker won’t

work’ or ‘There is no need for it’, but that didn’t happen. All responses can be divided in three categories : conservative, or should I say, wait-and-see, positive and very positive. Conservative responses mostly come from the big bunkering companies that have established themselves in the market, have their own niche and client portfolio. They have good channels of supply and markets for their products. They are not willing to change anything in their work, they act and think more by inertia. The main point they stick to is ‘We are doing well anyway, why change anything?’. But this does not mean that where shipowners buy fuel via ETS these companies will be left out. It’s actually those wait-and-see companies that will join ETS. The work via ETS does not exclude co-operation between the shipping companies and between the bunkering companies themselves. What we are trying to achieve with ETS is to widen sales opportunities and trade tools. On top of that,

TENDER SCHEME

WB: Have you come up against any unexpected challenges?

Electronic tender

Registration of tenderers

Fuel supplier No2

Fuel supplier No1 During the tenders, tenderer’s offers are anonymized

Ship-owner’s details

Auctioning Winners details Entering into direct contract Tender Winner

registration is free and there is no membership fee – the only fee is paid when the sale is done, by the winner of the auction. Some of the wait-and-see companies, understanding the simplicity of the above points, throw in another argument, saying that in the bunkering business personal relationships are of great value, and that these are not possible using ETS. Having said that, however, they use Skype, Facebook and other non-contact communication means on a daily basis. Many work for years without seeing each other and only meeting at huge industry events like the Singapore International Bunkering Conference. So we are talking about different sorts of personal relationship. This needs to be understood by shipowners and their management teams. Surprisingly, even some traders fall within this conservative category. They take ETS as an alternative to their function, which only shows that they completely misunderstand and misinterpret its role.

Ship-owner, charterer

MK: While creating ETS, our fundamental principle was fair competition and, as such, it incorporates an anti-corruption constituent. Ah, there’s the rub! We even came across outright sabotage of our product in some cases. Users intent on disruption either delivered incorrect information to their bosses or made every effort to delay registration of their companies with all manner of absurd excuses. WB: In your presentation carried in World Bunkering you mentioned that traders and brokers, as well as suppliers and owners, could use the system. Has that happened?

MK: In reality, it’s traders who benefit from ETS the most. In our system, traders can work from both sides – for shipowners organising the auction and

World Bunkering Winter 2014

ested in this new price-making instrument and that small to medium-sized companies are also eagerly anticipating the activation of ETS. Larger bunkering and trader companies have adopted a wait-and see attitude. WB: Has take-up varied by geographical region?

MK: I would like to stress that ETS RusBunker is a global platform. It is not limited by region. It all depends on how quickly the database is filled in. If at any given port there are bunkering companies and they show that port as their point of service, then they are welcome. WB: Could RusBunker be drawn into disputes between supplier and owner?

MK: ETS RusBunker clearly keeps a distance between shipowners and suppliers, as this gives more credibility to the platform. The deal does not go through us. As soon as the auction is closed, the participants get access to information about each other and all subsequent communication is as normal. We only help make a fair price – and, so far, no fairer open auction pricemaking tool has been invented. WB: Quality issues are becoming ever more important. Does your platform make it easy for buyers to specify required quality parameters such as ISO and sulphur content?

MK: Yes, the quality of fuel is a sore point these days, bearing in mind tough competition. But I would look at the bigger picture here. It’s not only about the quality of fuel, it’s about cheating on quantity, overriding standards, failing to fulfil the terms of delivery and payment and much more, which I would identify as one notion – the quality of a deal. Quite often the contracting parties know little or nothing about each other. At the start of an auction a shipowner can exclude from their list companies with a negative or weak rating according to the blacklist. The same applies to the suppliers. They can choose not to register for an auction initiated by a shipowner with a dodgy reputation. In fact, fear of reputational loss imposes self discipline – few companies want to be blacklisted. To start an auction, the shipowner fills in a standard application form for

bunkering, which includes information on the vessel, port, volumes, and quality of required bunker fuel. This form can be expanded if required to enter additional information. ETS is very flexible as fuel companies can specify all the fuel types they work with and the system will put it in the register. So there is no real problem about quality.

Innovation

suppliers participating in it. They both receive access to a larger information cluster, the opportunity to be more flexible with allocation of their material and financial resources. And above all, using the information and financial opportunities offered, they can occupy the niche of a credit agent between shipping and oil companies. To sum it up, the motto of the first group is “We will stand till the end, until life makes us change”. As for the two other groups, they can be united, being mainly shipping companies and medium-sized and small bunkering companies. Why shipowners get involved with ETS is clear. Harsh competition and fighting for every saved dollar requires them to use the most efficient instruments, so our system fits the bill. And, again, ETS does NOT exclude other instruments helping to identify optimal price. As for price nomination, in my opinion there is not any objective way of price determination for a certain port – any formulas and methods are subjective. Only a factual price and a factual volume can give you the guide price. An opinion poll of the locals will not help. Our competitive advantage is that on our website, in the analysis section, we will publish the outcomes of closed sales, with all the factual volumes and prices. This will lead us to issuing the RBI index as an instrument in future contracts. As for medium-sized and small bunkering companies, we offer what for them is crucial – access to information. Minimal administrative expenses, flexibility in their operations and quick decision-making are their other main requirements. With our information base, this is their chance to compete. We cannot guarantee the honesty and fairness of counterparties. The responsibility for decision-making is always on the businessman. However, we can help them to have a better picture of counterparty qualities. For this we have a ‘blacklist’, where dishonest ETS participants will be listed. There will also be a rating system introduced, which will reflect marks given by participants for the quality of the deal, as well a reviews section. The motto of this group is “Let’s do it quicker”. So, we believe shipping companies will be very much inter-

WB: How do you see the future for ETS?

MK: I believe the future lies with electronic trading platforms like ours. So far, we are the only company to offer online auctions of this kind. People ask whether there is anything like this anywhere else. It appears there isn’t. The idea was lying on the surface. We only developed it further. By the way, the resistance on the part of mid-level managers only emphasises the seriousness of RusBunker’s role within the bunkering market. In the past, few people believed there could be a future for automobiles. And who believed planes made of metal could fly? Even today people wonder how they fly without flapping their wings – just kidding! But, seriously, we do offer a new level of relations between participants in the bunker market, helping them make significant savings. Besides, it’s honest and transparent as well as simple and practical. At the moment, the turnover of the world bunkering market, at a conservative estimate, is valued at US$150 billion a year. If we get 5%-10% of that, I would consider the project a success. Our start-up is only three months old. Building up the database is slow, owing to passive thinking, but it still falls in line with our plan of development and strategic advance. However, we are in talks with a shipping company and a global trader. For them this is an experiment, a novelty. You can’t stop the business process and the risk is high if it fails. But we look on the bright side of life and hope that in the next couple of months the auction will start working. The first results can be evaluated after the project has been up and running for three years. In the meantime, for RusBunker, it’s work, work and work.

Innovation

Lars Fischer is managing director of Softship Data Processing Ltd, Singapore, a wholly-owned subsidiary of Softship AG, a leading provider of software solutions to the international liner shipping sector. www.softship.com

Fuel focus for software Softship Data Processing’s managing director, Lars Fischer, explains how software packages can boost efficiency

sing software to introduce automation and efficiency to cumbersome internal processes has been a feature of large shipping companies for 20 years or more. The advent of cheaper and more available technology platforms has encouraged automation to spread to smaller operators, who are now finding themselves able to afford such software. Alongside this, shipping companies have understood that purchasing ‘packaged’ software – off-theshelf solutions that are easily customisable to suit individual requirements – is a much better option than commissioning bespoke applications. A packaged solution weighs in at a fraction of the cost of a tailor-made application, and it benefits from having been tried and tested in a range of ‘live’ shipping environments. By and large, automation has penetrated more deeply into the container sector, where there is a requirement to exchange many individual pieces of data relating to boxes, voyages and port calls. But non-container operators have also benefited from using software that streamlines invoicing and other back-room processes. Until now, automation has not extended to cover the bunker process, but, increasingly, carriers are demanding that software houses place a focus on fuel. Unsurprisingly, this has been driven by the rising cost of bunkers, the need to manage

fuel consumption and the current and incoming sulphur regulations. Many operators are using sophisticated software algorithms to ensure they achieve the best possible profit per voyage for the ships in their fleet. The integration of a set of bunker tools into existing scheduling software now gives the operator an immediate and accurate forecast of anticipated bunker costs as the schedule is being created. Good software will also manage various bunker types and make accurate adjustments when switching to alternative fuel when, for example, the vessel enters an emission control area. When a schedule hits a problem – poor weather, vessel breakdown, port congestion, for example- it is important for the operator to understand fully the impact of the delay and to take action to get the vessel back into its optimum operating pattern. Using a combined voyage and bunker software package, an operator can run a series of options to understand how making changes to a vessel’s speed or routing will affect bunker consumption. They can then select the solution that has least impact on the bottom line while retaining the best level of customer service. At the same time, they are able to see – at a glance – the amount of bunkers remaining on the vessel following any changes made to the schedule. If onboard fuel is likely to fall below a pre-set minimum threshold, the software will alert the

operator and suggest a suitable port to take on more bunkers. Aside from scheduling and planning, new bunker tools are also being used to streamline the purchasing process. Existing bunker contracts are stored within the software and tied to all new orders. On delivery, the delivery order is then automatically matched with the original order and any discrepancies highlighted. Later, this information is used to reconcile invoices presented against agreed volumes and prices. Mismatches are highlighted before invoices are paid. If a schedule delay or alteration requires the vessel to take bunkers outside of its usual pattern, intelligent software will automatically create a pro-forma bunker order for the vessel operator. Using this type of software also gives a certain transparency over bunker usage as up-to-date fuel statistics can be made available at the press of a button. This allows management to analyse and monitor consumption and cost per voyage, per nautical mile, per hour and even per container. Remedial steps can be taken early on if required. Software can’t run a shipping company, but it can handle repetitive, resource-heavy processes that require absolute accuracy and immediate attention. With bunker costs accounting for around 60% of a vessel’s operational expenditure, another tool to monitor and manage this function can only be a good thing.

World Bunkering Winter 2014

Legal

Sanction worries Sanctions are a hot topic for bunker suppliers, reports Sandra Speares

anctions against Iran are one of the bigger legal issues facing the bunker community and specifically in the United Arab Emirates (UAE), according to Patrick Murphy, legal director, based in Clyde & Co’s Dubai office. He says that the courts in Dubai do not report judgments in the same way as would be the case in the UK or Singapore, so there are not specific bunker cases to point to. Fujairah is the big bunker centre in the UAE and the Fujairah courts are happy to arrest vessels stopping in Fujairah to bunker. Because there is a high level of traffic in and out of the port, “it is quite a good place to arrest, albeit not straightforward,” he says. One main issue in the UAE is the Iran connection and how one deals with bunkers that might have been refined in Iran but end up in the UAE. It is often difficult to establish where the bunker fuel actually came from and it is possible those bunkers could get into the supply chain. The issue is essentially that any vessel entered with an International Group P&I Club is unable to load and carry bunkers of Iranian origin as that would invalidate their insurance. There has been no easing of the sanctions following Iranian negotiation with international powers like the US, he explains. “They remain in force and everybody has got to comply with them until such

World Bunkering Winter 2014

time as the law is changed.” Although the impression may have been that the temporary agreement with international powers has sorted everything out, this is not the case and the US has been tough in its approach to prosecuting people who it believes have breached the sanctions regime. In order not to weaken its own position vis à vis Iran, it believes pressure needs to continue to be applied on Iran to keep the negotiations going. “Everyone hopes that the situation will be resolved soon,” Murphy says, “not least because Iran has huge growth potential.” Ukraine and Russia

An overwhelming 80% of commodity traders, financiers and their insurers are

worried by the increasing impact of sanctions on their business, according to a live poll conducted by Clyde & Co at their seminar ‘Russia and Ukraine: A New Horizon’ earlier this year. The aspects of sanctions that cause businesses greatest pain are their unpredictability – cited by 42% of those present, followed by impact on the bottom line (35%) and speed of implementation (23%). Commenting on the findings, Clyde & Co partner and sanctions specialist John Whittaker says: “Lack of predictability is a real issue for traders who will have multiple trades at various stages of completion when sanctions bite. Goods will be crossing borders and stored in the warehouses of third parties sometimes of uncertain ownership. Rule changes are

Legal

typically enacted with no notice and have instant effect, so they create significant contract and compliance uncertainty for everyone involved in the value chain.” The majority (62%) of businesses attending the seminar complained that lack of clarity over how to comply with sanctions was causing them to lose out competitively and over half (53%) agreed that sanctions were impeding their ability to conduct legitimate trade. “The sheer complexity of multi-sector, multi-regime creates a level of fear that means companies put some trades into the ‘just too difficult’ category” says John Whittaker. “Businesses need to become much more ‘sanctions-engaged’ if they are to avoid inadvertent breaches and sidestep the unintended consequences of sanctions on legitimate trade.” Fuel quality

Skuld P&I Club has on many occasions assisted its members with disputes over the quantity of fuel supplied during refuelling. “Despite a greater attention being paid to vessel fuelling operations these days, both for the purpose of reducing the risk of accidental spills as well as due

to the increased cost of fuel over the last 10 years, these types of disputes continue to arise,” the club says. Skuld notes that in the recent Loss Prevention Bulletin, published by AVA Marine Group’s The Bunker Detective, the issue of the “cappuccino effect” is explored in detail. While it is not the only issue, it remains one of the most common reasons for argument over alleged supplied quantities of fuel. The P&I Club says: “A close focus on bunkering operations continues to be a key operational issue for both owners and charterers. While there may be a temptation to save on costs by not always having a representative attend to the supply of the fuel, it is something that members should consider investing in as a loss prevention and evidence preservation measure. “Furthermore, it is important to ensure that chief engineers have sufficient time to properly prepare for the receipt of fuel and can take the necessary steps to check that the supply is made properly. That will mean planning onboard duties in advance for the supply period, and ensuring that the chief engineer is free from other duties and

Payment fraud

frauds in its detailed Guide to Fraud in the Maritime Industry, particularly under the port-related frauds section. It recommends key loss prevention steps, including to “ensure billing departments do not simply process invoices without verification”. a. b. c. d.

Skuld has also warned that fraudsters have sought to obtain payment for alleged services provided with respect to alleged pollution matters and clean-up work. It pointed to the fact that the Port of Fujairah has warned against possible fake invoicing for waste disposal. The club says: “In any such situation, the attempt is often combined with threats against the member / named vessel. Such threats may involve supposed legal action, threats of arrest or ‘blacklisting’.” The fraudsters rely on concern over such consequences to convince the victim to pay the demanded sum. Skuld says it has previously warned of such fake invoicing

has had appropriate rest so that he can attend to this task with a fresh mind and clear focus.” Skuld members have reported that when they have sought to carry out checks on the supply operation they have sometimes received little or no cooperation from the supply barges and/or were advised that the barges would withdraw from the supply. While there may be significant commercial pressure on vessels to complete fuelling operations quickly, these must be balanced against the need to not be pressured into making short cuts or failing to follow up on noted issues of concern over the supply process, the club says. “In case masters and chiefs find they face a difficult situation, they should not hesitate to contact local club correspondents for assistance.” The club describes the introduction of mass flow meters by 2017 in Singapore as a “very welcome development” that is likely to reduce disputes over fuel supply quantities. It says: “Singapore will be at the front of developments that all owners and charterers should welcome as a positive step to reducing the impact of this issue.”

“Red flag” invoices include: non-standard invoices; non-regular invoice items; unknown supplier companies or personnel; aggressive approach by the supplier.

Such “red flag” invoices should be checked with the operations department to ensure that they do relate to valid supplies of services made to the vessel. Where there is any doubt, a phone call should be made to establish further contact with the alleged supplier, as fraudsters will sometimes pretend to be acting on behalf of legitimate companies. In cases where it is not possible to verify either the invoice or the supplier, further investigations should be conducted by the management and legal department of the company concerned. The club also had special advice for members regarding pollution incidents. It said: “In any event where a pollution incident is alleged, members should urgently contact the Association, irrespective of the situation. “Pollution matters must always be treated as a priority, and the Association will treat the matter as a casualty situation and activate the emergency response plan.”

World Bunkering Winter 2014

Wärtsilä low pressure dual-fuel engines to power container feeder vessels for Baltic sea operations

series of new 1400 teu container vessels, which are being built for German shipowner GNS Shipping and managed by Nordic Hamburg, will be powered by sevencylinder Wärtsilä RT-flex50DF dual-fuel, two-stroke main engines. The ships are being built at the Yangzhou Guoyu Shipbuilding yard in China, and are expected to be in operation during the latter part of 2016. They will operate on a long-term charter contract for Containerships OY of Finland. The Wärtsilä contract was signed in August. Firm orders have been made for four vessels, and more ships are likely to be built as part of the same series. The ships will be the first container ships to use Wärtsilä’s two-stroke, low-pressure,

dual-fuel (DF) technology. When operating in gas mode, the engine meets the International Maritime Organization’s (IMO’s) Tier III regulations without secondary exhaust cleaning systems. “When our two-stroke, low-pressure, DF technology was introduced we knew that we had gone beyond merely extending our DF engine portfolio. This is an engine that really makes a positive difference to the global shipping sector. It not only meets the Tier III requirements when operating with gas fuel, but it also offers considerable capital expenditure and operational expenditure savings. It is truly an engine that fits the needs of today’s market,” says Rolf Stiefel, director, two-stroke sales, Wärtsilä Ship Power. “When we selected the engines we looked at two factors: the economics and

the environmental footprint. On both counts, we found the Wärtsilä RT-flex DF-type engine to be the best solution for the specific vessels and trade patterns. We are confident that the liquefied natural gas (LNG) concept pioneered together with Wärtsilä for these feeder container vessels will make a difference to the container trade in Europe, and will remind people that shipping is an innovative industry with the smallest possible ecological footprint when it comes to the transport of goods,” says Rowil Ponta, managing partner of Nordic Hamburg Group. Wärtsilä says the technology behind the RT-flex50DF engine enables the low-pressure, dual-fuel benefits that are already available to four-stroke engines to be applied to two-stroke engines as well.

Equipment and services

Dual-fuel two-stroke main engines for boxships

ECA compliance software

The series of new 1400 teu container vessels being built for GNS Shipping GmbH & Co KG, managed by Nordic Hamburg, will feature seven-cylinder Wärtsilä RT-flex50DF dual-fuel two-stroke main engines

World Bunkering Winter 2014

Global cloud software company Inatech has launched a rules-based application and reporting tool that gives shipoperators the information and reports needed to demonstrate continuous compliance with the 2015 Emission Control Area (ECA) regulations. ECA Compliance, part of Shiptech, Inatech’s cloud-based fuel management product suite, allows shipoperators to constantly record, track and report on their adherence with ECAs, ensuring that stakeholders can see continuous compliance. The application also alerts ship-

Equipment and services

operators, reminding them to change fuel type on entering or leaving an ECA. From January 2015, ships travelling in ECAs will need to burn fuel containing less than 0.1% sulphur. In addition to complying with the regulations, owners will have to provide evidence that they purchased compliant fuel; produce reports that show fuel onboard meets the standard; record fuel changeover as the ship moves in and out of the ECA; and have written procedures in place to show how fuel changeover is done. Inatech’s chief executive Jean-Hervé Jenn said: “Not only will shipoperators need to comply with ECAs from 2015, they will also be required to prove compliance. This means operators need to record large amounts of data and then report on that data in order to satisfy the detail required by port authorities. ECA Compliance records, tracks, alerts and optimises vessels while they trade in and out of ECA zones, meaning operators can be sure that they are prepared for the introduction of ECAs.” Inatech says: “The change in regulations will impact price, fuel procurement and fuel quality. The increase in demand for low-sulphur fuel can affect price, while lack of availability will force shipoperators to rethink fuel procurement. This volatility is likely to lead to an increase in lowquality fuel such as off-spec fuel or fuel pumped with air to increase the volume – the cappuccino effect.” A company statement adds that its Shiptech product addresses these issues by streamlining fuel procurement, avoiding last-minute purchases and supporting negotiations. Inatech says that its system ensures accuracy of both quality and quantity of fuel through integrated operations and claims handling. It also provides reporting to assist decision-making. ECA Compliance includes additional reporting tools, which will mean operators are prepared for incoming ECA regulations. It also records detailed information about fuel procurement, allowing the Compliance Application to produce reports to any level of detail that is required. Heat recovery system

US-based Calnetix Technologies has launched what it describes as a “revolutionary new system” that produces up to 125 kW of power for a ship’s electric load from heat recovered out of

the engine’s jacket water. According to the manufacturer, the Hydrocurrent™ system has a small footprint and can be retrofitted easily in existing ships without making any major modifications to the engines. It is designed specifically for the shipboard environment and requires very little maintenance. Operator assistance is minimal; the system turns on and off automatically based on the heat source temperature. The Hydrocurrent™ system has been developed by Calnetix in conjunction with Mitsubishi Heavy Industries Marine Machinery and Engine Company (MHIMME) and was launched at the SMM Hamburg trade fair last week. It has been designed and built to ClassNK and Lloyd’s Register guidelines. “Hydrocurrent™ pays for itself in a very short time by reducing the load on the ship’s bunker-fuelled generators,” said Vatche Artinian, Calnetix chairman and chief executive. “This can translate into fuel savings of up to 200 tonnes per year.” Calnetix’s system uses an organic rankine cycle (ORC) heat recovery process with Calnetix’s patented Thermapower and Carefree Integrated Power Module (IPM), which efficiently converts thermal energy into mechanical power. The Calnetix system is claimed to be unique in that it can pull usable heat from a source with temperatures as low as 80°C (176°F), unlike other heat recovery systems that require much higher temperatures. The Hydrocurrent™ system converts excess waste heat into electric power without affecting engine performance, while still leaving sufficient heat in the jacket water for the fresh water maker. The Hydrocurrent™ ORC module is a closed-cycle evaporator-condenser phasechange loop, using an organic fluid that has a very low boiling point. The fluid is pumped through an evaporator that pulls heat from the engine’s jacket water. The superheated vapour is expanded across the Carefree™ module, producing electric power, which is connected to the ship’s grid. The warm vapour then flows into a seawater-cooled condenser, where it turns back into liquid form. The CarefreeIPM consists of a high-speed turbine expander and highefficiency permanent-magnet generator in a single hermetically sealed housing. The friction-free magnetic bearings require no lubrication or maintenance.

New lubes

Chevron Marine Products LLC has launched two engine oil products, which, it says, will “help vessel operators get the best from their engines while achieving compliance with the January 2015 introduction of low-sulphur emission limits in the IMO emission control areas”. Both new lubes are for continuous operation on low-sulphur fuel. One is for two-stroke and the other for four-stroke engines. The company notes that, from 1 January, vessels operating in ECAs in European and North American waters face a choice of operating on low-sulphur fuels or implementing the alternative path of scrubber-based after-treatment. It says: “With the majority of operators clearly appearing to opt for operation on lowsulphur distillate fuels, there is an opportunity to improve performance through the use of lubricants specifically optimised for the lower acidity of the new, cleaner and more environmentally friendly fuel.” Chevron Marine’s Rafael Teodoro says: “These next-generation lubricants are likely to be of interest to customers operating exclusively within, or frequently to and from, ECA zones and hence opting to operate exclusively on low-sulphur distillate fuels. We are launching these new lubricant products ahead of the new regulations, enabling Chevron customers to get the very best from their engines from day one operating on ECA-compliant fuels.” The new Taro Special HT LF is the latest Chevron two-stroke marine propulsion engine cylinder oil – and, it says, one of the first such products worldwide to be fully approved for continuous operation using low-sulphur distillate fuel. Delo SHP is the company’s four-stroke medium speed direct drive or gen-set lube oil. Chevron says: “In switching to continuous use on low-sulphur fuel, operators should recognise that their existing lubricant is unlikely to be optimised for their new, less acid-forming fuel. Taro Special HT LF and Delo SHP will help minimise wear and deposits throughout the combustion chamber exhaust area that might otherwise be expected through the use of current lubricants, which have excess reserve alkalinity for application with lowsulphur fuel.” Taro Special HT LF and Delo SHP will be available from 1 December in “key” Chevron ports within ECAs, as well as in Singapore and Korea.

World Bunkering Winter 2014

SIBCON review

SIBCON draws the crowds Singapore uses its biennial bunker industry gathering to launch a range of new initiatives

rganised by the Maritime and Port Authority of Singapore (MPA), the 18th Singapore International Bunkering Conference and Exhibition (SIBCON) attracted some 1,600 delegates from over 50 countries. Held from 14 to 17 October at the Resorts World Sentosa, SIBCON was officially opened by the country’s minister for transport, Lui Tuck Yew. He told delegates that the bunkering industry had to grapple with a rather challenging environment. “In the face of

these challenges, we must look towards the adoption of new technologies and new modes of operation, and seek to transform the bunkering industry such that we can ensure continued growth in a sustainable manner,” he said The conference programme focused on the latest industry developments worldwide under the theme ‘Driving Transformation in the Marine Fuel Industry’. The conference programme offered a line-up of distinguished speakers who addressed current developments and issues pertaining to the industry.

Lui also officiated at the global launch of the Society for Gas as a Marine Fuel (SGMF), the new non-governmental organisation established to promote safety and industry best practices in the use of gas as a marine fuel. Terence Yuen, country president of BP Singapore, Jeremy Nixon, chief executive officer of NYK Line’s Global Liner Management Division, and Chris Midgley, head of oil markets analysis, Shell International Petroleum Company, delivered keynote and industry addresses on market drivers and how the industry should respond to these challenges.

Serious business: SIBCON in session

World Bunkering Winter 2014

SIBCON review

MPA introduced several new initiatives at SIBCON “as part of Singapore’s continued efforts to enhance our bunkering processes and prepare the bunkering industry to meet the demands of the future. It had already been announced that Singapore will implement the mandatory adoption of mass flow meters for bunkering marine fuel oil (MFO) from 1 January 2017. To help the industry in the transition, bunker suppliers and bunker craft operators will be eligible for benefits under the Productivity and Innovation Credit (PIC) scheme, administered by the Inland Revenue Authority of Singapore (IRAS), for expenditure incurred in adopting the mass flow meter with effect from the year of assessment (YA) 2015. This new measure is on top of the S$80,000 (US$64,000) lump sum incentive from MPA upon the authority’s approval of each fitted mass flow meter system for eligible bunker tankers.

MPA also announced the appointment of the A*STAR National Metrology Centre (NMC) as data verifier for the mass flow meter acceptance test. The test data will be analysed by NMC to determine the measurement uncertainty for compliance with the Singapore Standard Code of Practice for Bunkering (SS600) . In addition, enterprise development agency SPRING Singapore launched the latest editions of SS600:2014 and the Singapore Standard for Quality Management for Bunker Supply Chain (SS524:2014). The revised SS600 includes better safeguards to provide greater transparency in the bunkering transaction, thereby strengthening customers’ confidence in Singapore’s bunkering industry. The revised SS524 incorporates the latest developments in international quality management systems and practices. Companies adopting the standard will be on par with international benchmarks. In another move, MPA will require all bunker surveying companies to be

licensed with effect from 1 January 2017. Currently, bunker surveying companies are accredited, not licensed. MPA says the move will seek to raise standards for bunker surveying companies and allow the authority to have greater oversight of bunker surveying companies and their bunker surveyors. By early 2017, MPA also intends to start work on a pilot programme with interested parties from the liquefied natural gas (LNG) bunker supply chain. MPA will provide funding of up to $2 million per vessel for up to six LNGfuelled vessels for the pilot programme. There are several established modes of LNG delivery, such as the use of ISO tank containers. MPA chief executive Andrew Tan said: “The bunkering industry is an important and integral part of our global hub port. As a top bunkering port, we will continue to raise our bunkering standards to ensure fuel quality and reliability. MPA continues to work closely with all our stakeholders to address the key issues and prepare the bunkering industry for the future.”

An informal moment: IBIA chief executive Capt Peter Hall takes the opportunity to meet SIBCON delegates

World Bunkering Winter 2014

Tranzit-DV Group is hosting its second International Business Conference – “Russian Far East Bunker Outlet: Present and Future” – in March 2015 in Petropavlovsk-Kamchatsky

onference organiser Tranzit-DV Group is a leader on the Russian Far East bunker market. Representatives from shipping companies, international traders, fuel oil producers and government authorities will participate in the conference. Tranzit-DV Group conferences are a new platform for exchanging views and sharing relevant information about the Russian Far East bunker market. In today’s fast-paced world, changes constantly occur, followed by changes in legislation. The bunker market, one of the emerging segments of the Russian economy, is no exception. During the past year, this sector of the economy has been affected by changes that were supported by the government, and the organisers of the conference will explain them to the participants. Experts and industry specialists will present reports on the following issues: • Russian Far East united bunker outlet. • Analysis of the Russian and international bunker market. • Production issues concerning lowsulphur fuel oil (producers, production volumes, market trends). • Emission control technologies (scrubbers, liquefied natural gas). • International bunkering standards. • Bunker fuel oil quality issues in the Russian Far East. • Implementation of new environmental standards in Russia. The first International Business Conference – “New Vision for Sea Shipping Routes: Europe – Asia – North America” – was held in March 2014 in Petropavlovsk-Kamchatsky and hosted over 70 representatives from both Russian and international companies. The participants noted the tangible benefits of the conference, which provided them with relevant information about bunker market conditions from direct market participants and gave them an opportunity for networking.

As a result of the conference, Tranzit-DV Group and other participants signed a number of agreements. Our conference is a good opportunity to combine business and recreation. The participants can enjoy the beauty of Kamchatka’s volcanoes, bathe in the hot springs and engage in pleasant conversation with each other.

“Many thanks to the organisers. Everything was excellent! I was very grateful for the opportunity to see Kamchatka. We received a lot of useful information for our work and met with knowledgeable professionals.” Galina Gavrilova, commercial director, JSC DITEKO

“Thank you for your company’s warm hospitality. I greatly enjoyed the conference and other programmes. I appreciate everything and we look forward to seeing you and your colleagues again.” Je-Young Lee, senior manager, administration division, Korea Maritime Institute

“Thank you for your valuable, well organised conference. Please give my best regards to all the Tranzit-DV Group team.” Sergei Mezenin, territorial director of the Far Eastern federal district, SOGAZ Insurance Company World Bunkering Winter 2014

Why Kamchatka?

Petropavlovsk-Kamchatsky was chosen as the conference site because it gives the participants an opportunity to view the city’s non-freezing deep-water sea port, situated near active sea trade routes. The port is an “eastern gate” for the Northern Sea Route and has the potential to become a major bunker hub. Petropavlovsk-Kamchatsky port has strategic significance for the development of sea trade routes in the Pacific and the Arctic oceans. At present, our company is implementing a new container line project for transit cargoes. This uses a transport corridor from the northeast provinces of China through ports in the south of the Primorsky region to Europe (along the Northern Sea Route), the US and Asian-Oceania countries. Thanks to this project, Petropavlovsk-Kamchatsky port will become attractive for sea bunkering and transit cargo transshipment. Both the business world and the local government are interested in creating a bunker hub in Petropavlovsk. The regional authority has high hopes of increasing the volume of cargo shipped by the Northern Sea Route and is planning for further development of the port. The Ministry for the Development of the Russian Far East listed Petropavlovsk-Kamchatsky as a territory of advanced social and economic development (TASED) in the framework of the federal draft law on TASED. The conference will span three days, with working sessions on 18-19 March, followed by recreation and sightseeing around Petropavlovsk-Kamchatsky on 20 March. To attend the conference you need to register by 27 February. If you apply by the end of November 2014, you’ll get a 30% discount on your registration fee.

Company news

Welcome to Kamchatka 2015!

CONTACTS: Tel: +7 (423)249-11-99, 243-28-28 mailto: conference@tranzitdv.ru http://milc.biz

Company news 72

YugBunkerService With its own storage and loading terminals and 13 bunkering barges, YugBunkerService is one of the leading fuel providers in southern Russia

ugBunkerService is a rapidly developing group of companies providing bunker services at the ports of the Black and Azov sea, and at the number of internal and river ports in Russia. The group supplies a full line of top-grade marine fuels (a wide range of IFO and MGO) and engine oils to sea-going and river vessels. YugBunkerService has been in bunkering for 17 years. Since launching our business in 1996, our priority has always been to meet and satisfy the requirements of our clients, providing superb service and high-quality fuel products at fair price. Years of hard work in the field have given us invaluable experience and the opportunity to establish a well-developed infrastructure for delivery, storage and bunkering of marine fuel. As a result, we have grown to become one of the leading fuel providers in southern Russia. Having our own marine storage and loading terminals, plus a fleet of 13 vessels with deadweight ranging from 200 to 5,700 MT, we are flexible and capable of coping with the demands of all our clients, from small independent carriers to large shipping lines. Being one of the biggest and most reputable bunker companies in the regional market, YugBunkerService has long-term and mutually beneficial relationships with large Russian, Turkish, Ukrainian and Greek shipping companies, as well as with a number of bunker traders operating at the Black and Azov sea.

YugBunkerService is a member of the Russian Association of Marine and River Bunker Suppliers, and of the International Bunker Industry Association. Recently we expanded the number of ports that we service at and currently we are operating bunker deliveries at the ports of Rostov-on-Don, Azov, Taganrog, Yeisk, Kavkaz, Temryuk, Taman, Saratov, Syzran, Samara, Volgograd and Astrakhan.

Our team is pleased to offer you our experience and knowledge, best prices and an excellent service on a 24/7 basis. ⏏

Key information • Offices in Rostov-on-Don, Taganrog, • • •

•

Yeisk and the port of Kavkaz Fleet of 13 own bunkering barges complying with loading and supply regulations Our own storage facilities, giving flexible bunker delivery options Our own terminal at the port Temryuk, providing safe fuel loading on tankers of up to 5000 DWTs Fuel deliveries compliant with MARPOL and SOLAS regulations.

Our competitive advantages • Wide range of top-grade marine fuels • • • •

from leading Russian oil refineries Well-developed and extensive supply network; Best prices for our clients Equal high-quality services at all our ports of delivery Widespread compliance of our barges and loading facilities with all legal and environmental requirements.

For more information, contact: Rostov-on-Don Tel: +7 (863) 242-44-86 +7 (863) 242-44-87 +7 (863) 242-44-88 E-mail: rostov@ybunker.com Yeisk Tel: +7 (86132) 2-60-64 E-mail: yeisk@ybunker.com Port Kavkaz Tel: + 7 (86148) 4-43-47 E-mail: kavkaz@ybunker.com Website: www.ybunker.com

World Bunkering Winter 2014

Over the past three decades, leaading oil products supplier Tranship has built up a strong reputation as a reliable operator

stablished in 1979, Saudi Shipping & Maritime Service – generally known as Tranship – is a leading oil products (bunker) supplier and trading company. Based in Jeddah, Tranship has successfully chartered out its future strategic direction and has established a reputation as a reliable supplier, with services rendered promptly at all times. Professional service

The company’s dedicated team of managers is ably supported by highly qualified and experienced staff, who are extremely motivated and devoted to working innovatively in the best interests of our customers. We have been licensed since we became established to operate as bunker suppliers at Jeddah, maintaining an excellent reputation among buyers, brokers and shipowners all over the world. So far, we

have successfully distributed more than eight million tons of bunker fuel to clients’ ships over the past three decades. We currently have two oil tankers: MT Marwah-7 (4,999 tons DWT) built in 1991; and MT Marwah-6 (2,261 tons DWT) built in 1992. Both oil tankers are classed under the Japanese Classification Society (NKK). The tankers are equipped with the latest accurate electronic controlled dynamic blenders on board for blending all grades of CST to meet the exacting requirements of our valued customers. ⏏

For more information, contact: Saudi Shipping & Maritime Services (Tranship) 3rd Floor, Al Jawhara Building Madina Road, Baghdadiya Area, P.O. Box 7522, Jeddah 21472 Kingdom of Saudi Arabia. Tel : + 966 2 642 4255 (4 lines) Fax: +966 2 643 2821 E-mail: bunker@tranship.com www.ssmsc.com

Company news

Saudi Shipping & Maritime Service (Tranship)

Morskoy Trust LLC A fuelling company that is going from strength to strength

stablished in 2007, Morskoy Trust LLC fuel supply company is based in the city of PetropavlovskKamchatskiy in Russia. Its main activities are fuelling of fishing vessels operating in the Sea of Okhotsk and the Bering Sea, wholesale and retail sale of oil products in the Far Eastern sea ports, and oil transportation. The company operates 11 vessels, comprising eight oil carriers and three fuel vessels, with a total deadweight of 47,550 tons. All the company’s vessels are ice-class ships capable of operating in any navigation area throughout the year. They meet all the requirements of the Russian Register of Shipping and the latest requirements of MARPOL 73/78 – International Convention on Marine Pollution. World Bunkering Winter 2014

All vessels are equipped with heating cargo systems, which makes it possible to transport any oil products and they can carry several types of various oil products at one time. During in the 2013 navigation our tanker Svatoy Petr sailing via Northern Sea Route. Morskoy Trust holds membership with the

Russian Association of Marine and River fuelling companies. It has undergone strong growth in recent years, due to its constantly increasing number of customers, highly qualified staff and reliable business partners. ⏏

Morskoy Trust LLC 9/6 Torpokov Street, Building 1 Petropavlovsk-Kamcharskiy, Kamchatka Region Russia 683031 Phone/fax: 8(415-2) 23-07-63, 23-29-04 E-mail: tanker-41@mail.ru

Company news

Forum Ltd. Providing direct access to high-quality fuel oil, 24/7

orum Ltd. supplies bunker fuels in the port of Saint-Petersburg. The company entered the market in 2011 and has proved to be a reliable supplier of bunker fuels, providing clients with fuel oil produced by Antipinsky refinery, an independent modern refinery with monthly production capacity of over 200 000 metric tons. Our main product is straight run fuel oil complying with ISO-F-RME, ISO-F-RMG and Regulations 14 (1) and 18 (1) of MARPOL 73/78, Annex VI. We supply MGO (DMA) 0,1% sulphur from the leading refineries in Russia as well. The company has several contracts with leading shipping companies to ensure smooth and secure supply. Product transshipment is carried out on the most up-to-date terminals of the region. Quality is the corner stone of bunker business, therefore, in collaboration with world-acknowledged surveying companies, we ensure the highest quality of the products we deliver. All our products are compliant with ISO 8217:2010(E) standard.

Since its beginnings of 2011, Forum has earned the trust of customers and partners by supplying high-quality products at competitive prices and on flexible payment terms. The company ensures a consistent supply of fuel oil, working on a contract basis as well as the spot market. We provide our services for a vast number of major companies in the shipping industry, as well as traders 24 hours a day, 7 days a week. ⏏ Our competitive advantages are: • direct access to high quality fuel oil; • products conform with ISO8217:2010 (E)

plus the later amendments; • 24/7 services;

www.worldbunkering.com AuTuMN 2014

Maritime Security

ityinternational.net

www.maritimesecurityinternational.net

International

www.maritimesecur

For more information and bunker enquires please contact us at: Forum Ltd. Office 411, Barochnaya str. 10/1, St. Petersburg, 197110, Russia Bunker trader: Aleksey Miloradov Phone: +7 (812) 449-65-91 Mobile: +7 (921) 757-11-33 Yahoo ID: aleksey.miloradov E-mail: trade@forumbunkering.ru www.forumbunkering.ru

Falling trend

a drop in piracy has fuelled A decrease in Somali at the lowest level leaving incidents attacks worldwide, for six years

Wage talks

met in February Industry bodies wages for seafarers

AuTuMN 2014

to discuss minimum

goods the Clandestine number of initiatives to halt a drug There have been goods, including movement of clandestine smuggling

Spring 2014

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THE ONLY OFFIC IAL MAGAZINE OF

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Spring 2014

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www.asiapacificshipping.org World Bunkering Winter 2014

Next issue

World Bunkering S P R I N G 2 015 iss u e SPECIAL FEATURES Traders The OW Bunker collapse has sent shock waves through the bunkering industry. What impact will the failure of such a big player have? Will there be other casualties?

Fuel Quantity As the introduction of the mandatory use of mass flow meters in Singapore draws nearer we look at the flow meter market and ask the question; â&#x20AC;&#x153;Should most ships be equipped with flow meters?â&#x20AC;?

Lubricants The lubricant manufacturers are all responding to the now complex needs of ship operators coping with slow steaming and fuel switching, but there are different approaches.

IT As the drive for fuel efficiency continues the use of information technology inevitably increases. We take a look at what is on offer.

GEOGRAPHICAL FOCUS Northern Europe The big story in the region is the introduction of the 0.10% sulphur limit. How robustly will the new limits be enforced in the early months of the New Year.

Indian Subcontinent Our annual survey of this important region, with separate reports on India, Pakistan and Sri Lanka.

UAE The Middle East bunker scene is a complex one. On the one hand Fujairah and nearby locations continue to develop both as major refuelling ports while volumes also increase in Dubai and other ports within the ME Gulf. WINTER 2014

RUSSIAN UPDATE

News, Views, Analysis

WINTER

REGULAR FEATURES

moves fo

BUNK

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EVENT PREVIEWS

IBIA

World

Interview, Industry News, Environment, Testing, LNG, Risk Management, Innovation, Legal News, Equipment and Services, Diary

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THE ONLY OF FIC MAGAZIN IAL E OF

w w w. wo r ldbunker ing .com World Bunkering Winter 2014

2014

Diary

1-2 December 2015

Mediterranean Bunker Fuel Conference Barcelona, Spain These are uncertain times for the bunker fuel industry; fuel prices are rising, demand patterns and emission control deadlines are looming. By the time of this conference, we will be just one month away from the imposed emission regulations on sulphur content, the industry is about to face its biggest change in years.

21-23 April 2015 Sea AsiA

Since its launch in 2007, Sea Asia has firmly established its place in the marketplace as the platform for industry to do business, network and unveil new products and services in the Asia Pacific region. A record number of attendees in 2013 further reinforced the exhibition and conference as the region’s leading shipping and maritime event, paving the way for another edition in 2015.

www.sea-asia.com

http://www.platts.com/conferencedetail/2014/pc451/inde

9 February 2015

IBIA Annual Dinner – London, UK Drumroll please – we have a new venue for the 2015 Annual Dinner. We will be at the Park Plaza Westminster, a stunning venue on the banks of the River Thames. Right in the heart of London, it is close to all the IP Week activities, and as a purpose-built venue, it has great flexibility for the dinner. So expect new innovations to go with it!

www.ibia.net/event/annual-dinner-2015/

25-26 Februaury 2015

IBIA Regional Forum – Gibraltar Organised by IBIA, with a training course on Tuesday 24 February

www.ibia.net

2-5 June 2015 Nor Shipping

Nor-Shipping is the leading maritime event week. Its top-quality exhibition, high-level conferences and prime networking opportunities attract the cream of the international maritime industry to Oslo every other year.

11-14 March 2015 Europort – Istanbul

www.messe.no/nor-shipping

Exposhipping - EUROPORT ISTANBUL 13th International Maritime Exhibition is being organised between 11th and 14st March 2015 at the Istanbul Exhibition Centre on behalf of the IMEAK Turkish Chamber of Shipping with the cooperation of UBM NTSR International Exhibition and Congress Organisations and AHOY ROTTERDAM .

www.europort-istanbul.com

18-20 March 2015

Russian Far East Bunker Outlet: Present and Future Representatives of the business community and the Russian federal government will meet to discuss the prospects for the development of the Russian Far East bunker supermarket, to analyze international and Russian bunker markets, to discuss international standards of bunkering and new emission control technologies, ect. We invite you to take part in our Conference.

www.en.milc.biz

23-25 March 2015

CONNECTICUT MARITIME SHIPPING 2015

27-30 October 2015 Gastech Singapore

One of the world’s largest and most prestigious LNG and natural gas conferences and exhibitions, Gastech, is coming to Singapore in 2015, reflecting the country’s growing strategic importance as a regional hub for the Asian gas market.

www.gastechsingapore.com

Where experts from around the world speak on many issues that will shape the future of the maritime industry.

www.shipping2015.com

3-5 November 2015

Europort – Rotterdam 2015

23-25 March 2015

The 9th International FUJCON 2015 Fujairah, United Arab Emirates FUJCON enjoys international recognition and attendance from 46 countries covering diversified sectors of the bunkering industry. Recognised as an international service anchorage, Fujairah is among the world’s top three bunkering locations & a global hub for both oil storage and oil product supply. It is an opportunity to meet with leading fuel oil/bunker producers, traders, shipowners & managers, terminal operators, refiners, classification societies, maritime lawyers, consultants and bankers.

www.cconnection.org/event/FUJCON/2013/resources/CC14276_ FUJCON2015_Postcard_FA_WB.pdf

From 3 - 6 November 2015 Europort, organised in the world port city of Rotterdam, will be the international maritime meeting place for innovative technology and complex shipbuilding. Europort has a strong focus on special purpose ships including offshore vessels, dredging vessels, construction vessels, naval vessels, workboats, inland vessels, fishery vessels and super yachts. With almost 30,000 professional visitors and 1100 exhibiting companies Europort belongs to the world’s leading maritime meeting places.

www.europort.nl

1-6 November 2015

IBIA Annual Convention – Cancun More details will available soon

www.ibia.net

World Bunkering Winter 2014

Organisers

Held in conjunction with

Recognised as

21-23 April 2015 Marina Bay Sands速 Singapore

EDITION

Join one of the largest gatherings of maritime & offshore players in Asia

13,167

90%

385

Passed through the doors of Sea Asia 2013

Of exhibitors surveyed are likely to return to Sea Asia in 2015

Countries were represented at this global event

Companies exhibited at Sea Asia 2013

Principal Sponsors

Supporting Organisations

EXECUTIVE SHIP MANAGEMENT