Maritime CEO Fuels and Lubes Special 2019

Fuels & Lubes BY

Your essential IMO 2020 compliance guide In association with:

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Shipping’s Y2K bug?

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o you remember the fear mongering as the clocks ticked down to the dawn of the new millennium? The Y2K bug was meant to be Armageddon for computers as it was feared many programs could not switch to the 2000 date. Hysteria and confusion ensued, headlines painting doomsday scenarios as the clock ticked towards the new century. In total, it has been estimated more than $300bn was spent by governments and the private sector to ensure computer systems did not suffer any calendar glitch come January 1, 2000. Looking back, it all seems to be have been a lot of hot air over nothing. Sound familiar for those of us in shipping?

In the 20 years I’ve been covering shipping no regulation compares to the 2020 sulphur cap for the diverse range of views and complex choices owners face with nine months to go.

Ultimately the bet owners have made – which largely comes down whether to install a scrubber or not – is all going to play out next year in the price spread between low and high sulphur fuel oil prices. By

my very rough estimates more than $7.5bn has been spent on scrubber installations to date. One faction in the bitter scrubber tussle will be left out of pocket as the price differential becomes clear.

In compiling this magazine we surveyed 100 owners and managers on a diverse range of fuel topics – only 19% of whom felt the difference in price between 3.5% and 0.5% by the end of next year will be above $100 per tonne.

Personally I can’t help feeling that by this time next year – much like the Y2K bug 20 years ago – we’ll largely be looking back and wondering what all the fuss was about.

As I have stated before, next year’s sulphur cap implementation is trivial in terms of importance compared to shipping’s pledge to cut its CO2 emissions in half by 2050. If ships continue to trade for 25 years then we have until the middle of the next decade to come up with some radical designs for greener vessels.

Over the following pages readers will get advice on how to navigate 2020 and beyond. ●

Twitter: @Splash_247 LinkedIn: Maritime CEO Forum Facebook: Splash Maritime & Offshore News

CONTENTS 2 4 6 8 10 11 12 14 16

Fuel choices Lubes Scrubbers LNG Biofuels Hydrogen Concept Ships Interview MarPoll

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FUEL COSTS

The price spread All eyes are on the bunker futures market

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ifty-three dollars. That’s the average figure the 100 owners and managers polled for this publication believe will be the difference between high and low sulphur fuel oil per ton come the end of 2020, 12 months after the global sulphur cap has been in existence.

If that projection holds true then the hypothesis favouring scrubber investment will not have worked out for the many owners who have opted for exhaust gas cleaning systems. The average cost of installing a scrubber is in excess of $3m, no small chunk of change, and something that only pays back swiftly when heavy fuel oil becomes around $100 cheaper than the 0.5% sulphur content variety.

Jens Ismar, the head of Norway’s

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Western Bulk Chartering, reckons buyers of scrubbers have little time to make their investments stick.

“Payoff has to be within two years in my mind as anything beyond that is hard to justify,” he claims.

The first indications on what the price spread might be next year are coming through.

The initial 0.5% Singapore Marine Fuel futures trade, brokered by the Freight Investor Services (FIS) Fuel Oil desk in January, was done at a $200 differential to high sulphur fuel oil (HSFO) and since then, the market has narrowed to around the $180-$185 level. The 0.5% Rotterdam Barges difference is pricing slightly lower at about $170.

It should be noted that the

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We are not sensing any panic in the air

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current Platts low sulphur fuel oil (LSFO) index numbers are pricing 0.5% Rotterdam and 0.5% Singapore levels at around a $20-$30 premium to HSFO. This may seem surprisingly low compared to the spread in the derivatives market, however the physical market has not yet had a single trade reported publically.

“The current spreads are notably below those expected by the market in 2020 but it is important to note that prompt demand for compliant fuels is yet to emerge,” brokers Gibson observed in a recent report. maritime ceo

FUEL COSTS

What’s impossible to predict however are the price differentials around the world, something not lost on the head of Epic Gas, Charles Maltby who tells Maritime CEO, “Regional differences will blow the dollar variance, so the majority will likely settle for the circa $50-$100 per ton difference.”

A glance too at recent oil price movements over the past decade shows no owner can make any real short- or long-term predictions of where fuel prices are headed.

“Whether it is high or low sulphur the volatility should be the same,” says Ian Claxton, president and CEO of Magsaysay Shipping & Logistics.

Industry commentator Barry

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Parker, a maritime futures pioneer from long ago, tells Maritime CEO that owners will be watching the fuel futures market closer than ever in the coming months.

“The marketplace has in mind that the premium of low sulphur fuel over HSFO is circa $200 – $250 per ton,” New York-based Parker says. “This is a level that prevailed in much of last year. Many of the listed company scrubber investments have been based on this type of number.

The hysteria camp would be saying ‘I told you so’ if the spreads go up to $300 a ton or maybe $400 a ton. The opposite camp, which believes that there will not be market disruptions because of IMO 2020, will be saying ‘Another false alarm’ if the spreads go down, like towards $100 a ton.”

With his glass half full, Khalid Hashim, head of Thailand’s Precious Shipping and a vocal opponent of scrubber technology, says the market could handle, even benefit from a high price differential.

“Ships that are burning compliant low sulphur fuel oil would operate at more economical slower speeds if, indeed, the price differential between HSFO and LSFO is as high as the scaremongers/scrubber pushers have been proclaiming. This would result, combined with inevitable scrapping of older tonnage, in a supply side dividend with supply shrinking enough to cause some sort of a freight rate spike,” says Hashim.

Carl Schou, the CEO of

Wilhelmsen Ship Management, reckons that despite the vast column inches and diverse opinions aired on the impending sulphur cap his clients – shipowners from around the world – are ready and waiting.

“We are not sensing any panic in the air,” Schou says. One concern he has however could be that engine manufactures are sending out guidelines as to which critical spares should be stocked up – as use of LSFO is anticipated to cause some engine issues if not done correctly.

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Scrubber payoff has to be within two years as anything beyond that is hard to justify

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Thomas Reckefuss, a director at Thomas Schulte Ship Management, says it’s vital now that crew are properly trained to use the new fuels.

“There is an uncertainty if the ship receives a straight run or a blended fuel,” he says, noting the recent escalation of contaminated bunker cases seen around the world.

“It is important that all involved parties, from owner, manager, crew and fuel suppliers are working closely together, to ensure that the ships receive good and compliant fuel, to avoid technical and as such safety issues as well as avoiding getting vessels detained by the authorities,” Reckefuss says. ●

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LUBES

Another headache is brewing Fuel choices have obscured the complex issues over lube selection. Here’s a useful guide to the problems coming up and how to handle them

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he vast column inches spent on next year’s fuel conundrum for owners have obscured another mounting headache come the onset of the International Maritime Organization’s (IMO) global sulphur cap.

Shipowners need to be aware today that come January 1, 2020 their bills for lubricants are likely to spike and the availability of the right lube to match the brave new low sulphur world could well be in short supply.

Warns Caroline Huot (pictured), global head of lubricants at Cockett Marine Oil, an affiliate of Vitol and Grindrod, “Cylinder oils availability will be just as much of a risk to slowing global trade when IMO 2020 starts as sourcing suitable compliant ship fuels in the desired location.”

Huot, a 20-year veteran of the lubes business, tells Maritime CEO: “Owners in general, except the very big ones with sufficient in-house lubrication expertise, have understandably

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been obsessed by fuels and have not greatly thought things through regarding lubes and IMO 2020.”

Explaining the situation, Huot starts with two stroke engines for non-scrubber fitted ships, i.e. more than 90% of the global merchant fleet.

Cylinder oil issues for these ships can be divided in two – for vessels built pre-2010 where the impact is lesser and for more modern vessels built after 2010.

All ships without scrubbers will have to change their lubricants.

Typically ships with engines built pre-2010 use today cylinder oil with a base number (BN) of 70 when they burn high sulphur fuel, whereas more modern ships fitted with long strokes and super long stroke engines will use BN 100 cylinder oil as they face the risk of cold corrosion particularly when slow steaming.

“The problem is,” explains Huot, “once you have to adopt burning 0.5% sulphur fuel globally and permanently you will need also to adopt permanently lower BN cylinder oils, BN 40 and BN 25.”

Modern vessels face either a risk of cold corrosion (not enough alkalinity to neutralise the corrosive effect on liners), something Huot describes as a dangerous phenomenon and a silent enemy or these ships risk the fast generation of hard deposits on the piston crown generated by excess or unused BN additive. Ships from next year face damage either to liners (pictured above) or to rings and bearings.

Huot is concerned with the lack

of enough operational experience in using these lower number BN oils.

Shipping has been using lubes with lower BN (BN 40) for more than a decade, but only on niche trades or regions such as South America and West Africa where fuels are naturally low sulphur and require such a product.

However, because of their niche nature, these BN 40 oils have struggled in the past to get easy OEM approval as it was difficult to find vessels staying long enough or burning permanently LSFO to comply with the number of running hours required by the field tests.

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Historically any roll out of a new grade of cylinder oil has been very slow

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More recently with the creation of emission control areas (ECAs) where the use of marine gas oil or ULSFO is mandatory, it has been necessary maritime ceo

LUBES

to use even lower BN cylinder oil (BN 15-25) and again the use of such cylinder oil – except for smaller vessels trading the ECAs permanently – is not extensive when it comes to bigger bore engines and global trading patterns.

There are a few mitigating solutions to fight the oncoming confusion and chaos likely in early 2020, according to Huot.

Owners and managers will need to make the most of used oil analysis to check and anticipate as much as possible cold corrosion (specific drain oil analysis) as well as additives hard deposit traces and get used to trend monitoring as well as be ready to use a way higher number of analyses than ever before, which will have an impact in terms of costs.

People will need to be trained both onboard and on shore to analyse the results of the reports and follow up the trend very carefully to avoid costly maintenance issues and then carry out feed rate adjustments accordingly as well as other mitigating measures.

There’s then the issue of costs.

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Not unlike the low sulphur fuel prices that are so obsessing the minds of the world’s shipowners now, the industry needs to be aware that as this previously niche BN 40 lubrication goes global as it is already priced today higher than usual cylinder oil, it is unlikely to see any adjustment downwards. On the contrary, the price is likely to go up.

Moreover, its availability everywhere is by no means guaranteed with Huot predicting it’ll take anywhere from nine to 18 months after January 1 next year before supply chain disruptions ease and global availability is ensured.

“Historically any roll out of a new grade of cylinder oil has been very slow,” the lube veteran points out. “We expect the start of 2020 to be very hectic in terms of availability and potentially subsequent breakdowns.”

And for those who have bought a scrubber? Can they breathe easy?

To begin with, yes, but like with the fuel scenario, as BN 40 becomes more commonplace, say by 2021, then the

availability and price of today’s traditional cylinder oils, the BN 70 and 100 varieties, may likely change dramatically too.

IMO 2020’s chicken and egg head scratching over fuel prices next year looks like it is very much being replicated in the lubes sector too, something of serious concern for owners given that lubricants today make up 10 to 13% of a typical ship’s daily opex. ●

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SCRUBBERS REGULAR

Debate intensifies With nine months until the sulphur cap starts the battle lines are drawn on shipping’s most contentious technology

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hipping as a sector is conservative, rarely airing its dirty laundry in public. Hence the soul searching and red-hot comments on scrubbers seen over the past couple of years are unparalleled in the recent history of our industry.

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No other marine technology has so divided shipping this century.

Over the past year, attacks on scrubbers have dominated shipping headlines, variously described by leading owners as “towers with showers” and “the industrialisation

of pollution”. The most high profile opponent of the technology has been Paddy Rodgers, the soon to depart head of tanker giant Euronav, who has repeatedly said the solution to pollution is not dilution.

After being on the receiving end maritime ceo

SCRUBBERS REGULAR

of extended criticism for the past year in recent weeks those who have invested in scrubbers are finally fighting back.

The use of open-loop scrubbers has been banned in waters around key shipping destinations such as Singapore, China and Fujairah. These bans have been labelled unjust by the Clean Shipping Alliance 2020 (CSA 2020), the pro-scrubber lobby group formed last September that counts big names such as Cargill and Oldendorff among its founding members.

CSA 2020 issued a 49-slide study in February, which claims the toxic nature of exhaust gas cleaning system washwater is not as severe as has been reported.

A three-year study led by cruise giant Carnival collected 281 washwater samples from 53 scrubber-equipped cruiseships and found that the samples compared favourably to many national and international water quality standards and land-based wastewater discharge limits.

Mike Kaczmarek, Carnival’s senior vice president for marine technology, said the results provide confirmation of the quality of water that operators of this technology are returning to the sea “They provide strong support to the IMO’s decision to approve these systems as acceptable means of compliance throughout the world’s regional and 2020 global emission control areas,” Kaczmarek said.

The CSA 2020 study was backed up by Japanese authorities who have recently declared washwater discharge from open-loop scrubbers to be not harmful to the environment.

Emboldened belatedly by these two new studies, scrubber

Fuels & Lubes Special

supporters have been more willing to speak openly about the controversial technology.

“We have been installing scrubbers on our fleet since 2013 and are very happy with the results so far,” says Michel Fransen, CFO of the Spliethoff Group. “Scrubbers are a very environmentally friendly solution to comply with the 2020 regulations. LNG or hydrogen may have the potential to become even better alternatives in the future, but only in the longer term. The investment in scrubbers also safeguards the interest of our shareholders against uncertainties in fuel availability and pricing.”

ocean and marine life,” insists Basile Aloy, founder of dry bulk concern Ebe and part of the Belgian Saverys clan.

Carl Schou, the CEO of Wilhelmsen Ship Management, describes scrubbers as a “BandAid solution” in conversation with Maritime CEO. Among the most scathing opponents of this abatement technology has been Khalid Hashim, the veteran managing director of Thai bulker owner Precious Shipping, who tells Maritime CEO: “There is nothing ethical about scrubbers – it is purely economics… None of the scrubber-pushers have done the actual

The latest statistics from Clarkson Research show the dramatic build-up in scrubber investments over the past year with 31% of the global orderbook in gt terms now coming with scrubbers.

Nevertheless, the attacks on the technology continue to rain in. More than four in five owners and managers surveyed for this magazine believe scrubbers are not an ethical solution to complying with IMO’s 2020 sulphur cap.

“They are absolutely not an ethical solution as they pollute the

costs to plan, install, fit, maintain and re-weld all the corroded parts in a scrubber due to the high sulphuric toxic mix that will be circulating in such systems.”

The issue of scrubber maintenance has not been properly highlighted to date.

Bjørn Højgaard, CEO of shipmanagement giant Anglo-Eastern, told last year’s Maritime CEO Forum in Hong Kong, that owners should brace for far more maintenance issues and costs. Højgaard recounted how one car carrier owner he knows had budgeted $10,000 a year in scrubber maintenance per ship. In the first year alone that owner had to spend $100,000 in scrubber maintenance per ship.

So many questions remain unanswered to shipping’s most contentious technology and yet there’s just nine months now until the sulphur cap starts. ●

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LNG

LNG war of words heats up Billions of dollars have been poured into new gas-powered ships in the past year. However, some experts argue the money could have been spent better elsewhere

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he latest statistics from Clarkson Research show that 14.2% of the global orderbook is LNG ready, in gt terms, highlighting the massive recent investment by big names in the industry into gas propulsion. The billions of dollars spent on LNG-powered ships come at a time, however, where the fuel has come in for criticism for not realising shipping’s decarbonisation pledges.

Lobbying group the International Chamber of Shipping (ICS) admitted earlier this year that shipping will need to wean itself off fossil fuels in the coming decade to meet ambitious decarbonisation goals set for 2050.

ICS chairman Esben Poulsson said during the chamber’s annual board meeting: “We are rapidly moving into a multi-fuel future to be followed we hope, in the 2030s,

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by the arrival of commercially viable zero CO2 fuels suitable for global application.”

The 2050 decarbonisation pledge has forced proponents of LNG as shipping’s future fuel to amend their pitch – LNG is now described as a “pathway” fuel by SEA\LNG, the shipowner lobbying group. The group’s chairman Peter Keller, vice president at US owner, Tote, says: “In addition to immediate local air quality benefits, LNG offers a commercially viable long-term bridging solution to addressing the IMO GHG targets.”

Keller argues that there are no viable alternatives to LNG in the foreseeable future if the maritime industry is to continue to contribute significantly to air quality while

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moving forward in a positive way on CO2.

There are many famous names in shipping willing to forcefully back LNG as shipping’s future fuel.

Peter Livanos is a good example. The executive chairman of Gaslog told an event at last year’s Posidonia in Athens: “It is inevitable that LNG will be the primary fuel source for marine transport. We need to address the lifecycle of existing assets and bunkering infrastructure which is acting as a brake on adoption, but this should accelerate. The train has left the station and cannot be stopped.”

Around the world LNG bunkering solutions are coming into place with the likes of Singapore, Belgium, France, Sweden, Japan and the US

LNG is another patch. It's still a carbon-based fuel

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LNG

leading the way. After decades of talk, gas-fuelling infrastructure is no longer a pipedream – it is in place.

However, it has arrived a bit late for some who look at the industry’s long-term environmental commitments.

LNG as a ship fuel will not meet shipping’s 2050 pledge to slash emissions in half, a new 126-page white paper from Imperial College London’s Sustainable Gas Institute posits.

The greenhouse gas benefits of natural gas as a transport fuel are useful in the short term, but must be coupled with additional energy efficiency measures and longer term plans, the white paper urges.

“LNG is another ‘patch’, it's still a carbon-based fuel,” observes Chris Kirton, the head of Singapore shipmanager, Norstar.

Vikrant Bhatia, the CEO of dry

Fuels & Lubes Special

bulk owner KC Maritime, argues that LNG’s prominence will be shortlived. “There will be no payoff,” he tells Maritime CEO. Dr Tristan Smith from the Energy Institute at University College London (UCL), meanwhile, has argued that while LNG helps reduce air pollution, it’s potentially worse than heavy fuel oil (HFO) in the context of greenhouse gas (GHG)

emissions. This is because methane is a potent greenhouse gas, and only a very small amount needs to escape to cancel out the combustion CO2 benefits.

“LNG is a fossil fuel that just like oil produces about three tonnes of CO2 for every tonne of fuel consumed. This makes it an impasse in a world committed to decarbonise,” Smith tells Maritime CEO. ●

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BIOFUELS REGULAR

Today’s fry-up, tomorrow’s voyage Biofuels have plenty of champions

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iofuels are gaining traction among forward thinking owners as a way to move along the decarbonisation path.

Used cooking oil was used in a landmark container voyage last September. Organised by sustainable shipping initiative GoodShipping Program, 22,000 litres of hydrotreated vegetable oil was used on a voyage on the 800 teu Samskip Endeavour in a shipment the partners claim cut the boxship voyage’s carbon footprint by 40 tons of carbon dioxide.

“With this first bunkering, GoodShipping shows that it is possible for cargo owners to influence the carbon footprint of the sea freight in their supply chain,” GoodShipping stated in a release.

Danish shipping giant Norden has since trialled the fuel and in March this year, furniture giant Ikea teamed with France’s CMA CGM for a similar pilot, vowing to do

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plenty more biofuelled voyages in the future.

Neverthelesss, the shipping industry still needs plenty of persuading to see the merits of biofuels.

Isabel Welten, head of marine at Dutch firm GoodFuels Marine, who have pioneered the cooking oil alternative, says that biofuels can be a transition fuel for shipping, but much needs to be done to make that a reality.

“GoodFuels sees biofuels as a transition fuel, playing a significant role in the short- to medium-term for the energy transition replacing fossil fuels with renewable alternatives, and specifically focusing on carbon reduction,” Welten says.

“The ease of using a drop-in fuel, which can be used in different blends with fossil fuels, provides both vessel owners and cargo owners flexibility in their sustainable ambitions versus having to pay a premium,” Welten says.

Problems for greater adoption of this fuel type are twofold, according to Welten. First up, they are more expensive.

“That makes sense,” Welten says, “due to the fact that it has not achieved the same economies of scale as the fossil fuel industry yet, and a lot of technologies, feedstocks, and product grades are currently under development.”

The other problem facing a company such as GoodFuels is the shipping industry’s prior distaste for biofuels.

The first-generation FAME type of biodiesels caused a lot of problems in engines, due in large part to

bacteria growth.

The biofuels GoodFuels works with is a hydrotreated vegetable oil, which is allocated under a different EN-norm and since it is a synthetic biofuel containing no oxygen, it cannot cause any bacteria growth.

“Educating the market – both the engine manufacturer and the vessel owners – requires a lot of effort from GoodFuels,” Welten concedes.

A report authored for the charity Sustainable Shipping Initiative (SSI) issued in May last year stated that advanced biofuels may represent the most economically feasible zero-emission alternative for the shipping industry.

Penned by Lloyd’s Register and University Maritime Advisory Services, the study states: “The fact that biofuels can be used in a way that very closely mirrors current technology, i.e. through internal combustion, means that associated additional costs are kept to a minimum of the fuel price itself.”

Under the scenarios projected in the study, the costs involved with switching to biofuels were deemed to be “within the realm of acceptability for many in the industry”.

Stephanie Draper, co-chair of the SSI, commented: “The report makes clear that the technology is with us today, but investment is needed both to bring the technology to scale and to encourage a wider take-up. The shipping industry will need multiple solutions, and investment for different technologies – not just biofuels – to reach beyond fuel efficiency to decarbonisation.”

Chris Chatterton from the Methanol Institute reckons familiarity with existing propulsion makes biofuels an attractive proposition.

“The ability to use biofuels in a similar fashion to conventional fuels in an internal combustion engine means that additional investment costs can be kept low and the cost of running a ship on biofuel will mostly be dictated by the cost of the fuel itself,” Chatterton tells Maritime CEO. ● maritime ceo

HYDROGEN

High time for hydrogen H2 is making a late run to be shipping’s alternative fuel

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f shipping is to meet its decarbonisation pledges by 2050 it’ll need to be ordering some radically different ships by as early as 2025 with hydrogen very much in the mix.

Hydrogen is the most abundant element in the universe and stores more energy than a battery of equivalent weight. It’s a colourless, odourless and non-toxic gas and it can either be stored on ships as a cryogenic liquid, as compressed gas, or chemically bound. It is also an energy carrier and a widely used chemical commodity. It can be produced from various energy sources, such as by electrolysis of renewables, or by reforming natural gas. Today, nearly all hydrogen is produced from natural gas.

For applications in the transport sector, production by reforming from natural gas is currently the most common method. If the resulting CO2 could be captured, this would result in a zero-emission value chain for shipping.

Among shipowners, Antwerpbased Compagnie Maritime Belge (CMB) is a real pioneer in the development of hydrogen as an alternative fuel. Roy Campe, CMB’s R&D manager, reckons to begin with dual fuel hydrogen - diesel combustion engines will be the best transition technology to enable hydrogen to be used on a large scale in shipping.

CMB launched the world’s first accredited passenger shuttle (pictured) to operate under both hydrogen and diesel propulsion at the end of 2017 to primarily test hydrogen technology for future applications in other commercial vessels.

The company plans to introduce the world's first hydrogen-powered bulk carrier as early as 2023. CMB has also revealed plans to equip a

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containership with a hydrogen-powered auxiliary engine.

However, Campe, like many others, believes the major challenge to apply hydrogen into deepsea shipping is the storage issue as storing hydrogen in a compressed state requires very strong tanks which are too heavy and too expensive, while using liquefied hydrogen will also be difficult since liquid hydrogen only weighs 71 kg per cu m at -253°C, resulting in a very large tank with cryogenic requirements for complete installation.

Nevertheless, new technologies are being developed which are very promising to be used in shipping, Campe points out, such as liquid organic hydrogen carriers (LOHCs).

Another exciting hydrogen vessel project called Zero-V is being led by Sandia National Laboratories in the US, with the support from the Scripps Institution of Oceanography at the University of California, naval architecture firm Glosten, and class society DNV GL. The project evolved from earlier Sandia work on the SF-Breeze, a hydrogen-powered passenger ferry designed to operate in San Francisco Bay. The design of the ship is now on the drawing board after it received an approval in principle from DNV GL. Sandia also completed a study of how fuel cells might apply to larger

commercial vessels. In the study, hydrogen and fuel cells were studied as an alternative power plant for maritime vessels by considering 14 case studies of various ship sizes and routes varying from small passenger vessels to the largest cargo ships.

The results show that it is feasible to consider zero-emission hydrogen fuel cell technologies for most vessels in the world’s fleet.

In a landmark development for hydrogen’s path to global adoption among shipowners, MAN Cryo, a wholly owned subsidiary of MAN Energy Solutions, debuted in December a marine, liquid hydrogen fuel-gas system. The system was developed in close cooperation with owner Fjord1 and Multi Maritime in Norway.

The new system has a scalable design that allows adaptation for different shipping types, sizes and conditions. The design is suited for both above- and below-deck applications, offering ship designers the flexibility to optimise their designs in relation to efficiency, and to cargo or passenger space.

Recently Scandinavian carrier Samskip has detailed plans of a new emissions free, autonomous box shipping project called Seashuttle, backed by funding from Norway. The ships will feature hydrogen fuel cells for their propulsion power. ●

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CONCEPT SHIPS

Future solutions Around the world revolutionary vessel designs are surfacing. Maritime CEO picks out a few sensational looking new ships

Kawasaki Heavy Industries has developed plans for what would be the world’s first ship designed to transport liquid hydrogen.

Japan’s Asahi Tanker has developed a new domestic shipping tanker design, which incorporates what it claims is zero emissions electric propulsion.

Maersk unveiled a concept boxship design of the future in December when it announced plans to become carbon neutral by 2050.

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maritime ceo

CONCEPT SHIPS

Nippon Yusen Kaisha’s concept car carrier is an emissions-free vessel — dubbed the NYK Super Eco Ship 2050 – and features hydrogen fuel cells and solar panels.

Eco Marine Power’s Aquarius MRE is a system of rigid sails, solar panels and energy storage modules.

Unlike every other ship on these two pages, the Yara Birkeland is actually taking shape. Norwegian shipbuilder Vard is building the ship, the world’s first autonomous and electric container vessel, for delivery early next year.

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INTERVIEW

‘We’re worried about claims surrounding 0.5% fuel qualities that are actually onboard handling issues’ Cockett Group's CEO Cem Saral discusses key issues owners need to be aware of as the clock ticks down to IMO 2020

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ockett Group's CEO Cem Saral has been busy visiting clients and vendors all over the world over the past 18 months, collaborating with them on what they need to know and do as the global sulphur cap approaches. Saral is ideally placed to provide advice.

An oil trader for the last 23 years, the Turkish national moved from Vitol in 2015 to head up Cockett the following year. Vitol came in for a 50% stake in the marine oil specialist in late 2012. As a reseller, Saral is not swayed one way or the other like many of the majors in the market ahead of the cap, whether it’s on scrubbers or fuel availability – he is, as he says, “agnostic” to the ongoing scrubbers debate and is here to help.

Cockett has been hosting a series of closed seminars with clients over the last 18 months, listening to concerns of clients, their confusion about all the conflicting reports and points of view relating to the sulphur cap, and trying to offer help and commercial and technical solutions.

How IMO 2020 goes will in no small part be dictated by how well crew are prepared for the new fuel and lubes hitting the markets, Saral argues in an interview at his Dubai office with Maritime CEO.

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“As a reseller we are very worried about a high potential of claims surrounding 0.5% fuel qualities that are actually onboard handling issues,” Saral says. “End-users will likely be quick to blame fuel quality rather than onboard handling.” As such it's a marine equivalent of the old adage that a bad workman blames his tools.

Historically marine fuel purchase behaviour and lube purchases have been handled separately, thanks to charter arrangements, with different people involved. However, this is now changing as shipowners realise the operational complexity of the fuel and lube choices ahead of them.

“We’ve been expecting a convergence of marine fuel and lube buying thanks to regulations,” Saral says, adding: “There will be huge differences in quality, viscosity and

density for 0.5% fuel which will require all different types of cylinder oil. This will need segregation onboard, something that is new to maritime ceo

INTERVIEW

most shipowners.”

Saral is predicting what he describes as “controlled chaos” starting to manifest across the global merchant fleet from mid- to late October this year with full reliance on compliant fuel needing to kick in at least globally 60 to 90 days prior to the January 1, 2020 start of the sulphur cap.

Gone will be the days where a simple, single email could fix all your fuel and lube needs for a ship at its next port of call. Saral reckons it will take an enormous amount of back and forth communication between buyers and suppliers for each and every transaction, something likely to last until at least next June as world shipping has to get used to the new fuel types and availability.

“Owners will be demanding detailed fuel quality information over price,” Saral says. “We are saying you need to look at the value of the oil, not the cheapest price as they are not the same. The focus on commercial decisions should be about energy content,

1979

not unit price by weight alone.”

Recent comments from various players including some oil majors saying niche ports will not have compliant fuels adds to market fears and does not necessarily reflect a true picture, Saral claims as there will be marine gasoil available in places where 0.5% fuel is not to be found.

“

We’ve been expecting a convergence of marine fuel and lube buying thanks to regulations

”

Saral will not be drawn into the rights and wrong debate over scrubbers, stressing how as a reseller he is neutral.

“We maintain a neutral approach to the scrubber debate.

We believe scrubbers are a solution, not the solution to the desulphurisation of shipping emissions,” he says, hitting out at the two factions – pro- and anti-scrubber – for trying

to bend other people’s opinion, something he believes is not at all constructive.

“For us, scrubbers are more of a fleet-specific, ship-specific discussion, as a reseller we display a high level of adaptability to changes in supply/demand drivers to geography or product. We predict considerably more visible headwinds and challenges in the adapting to post IMO 2020 dynamics across the physical supply chain,” Saral says.

Nevertheless, the Cockett boss does believe scrubbers have a very finite shelf life or “time stamp” of somewhere between five to 10 years as Saral reckons the pressure to decarbonise quicker and further will manifest in shipping in the coming decade making today’s desulphurisation process look like small change compared to what lies ahead.

“Existing solutions will not work.

Decarbonisation is a far, far bigger challenge than getting 0.5% fuel ready,” Saral says, a challenge that he and his team will also have to face. ●

2019

Established in 1979 Cockett Group has grown to become one of the world’s largest value added resellers of marine and petroleum products and services. Operating from 15 offices in strategic locations world-wide we are available 365 days a year, 7 days a week, 24 hours a day. We are a leading supplier of bunker fuel, providing in excess of 6 million tonnes globally each year.

We assist marine fuel buyers in making fuel purchase decisions, achieving competitive prices and a high-quality product.

Our dedicated team of lubricant experts have access to an unparalleled global supply network, guaranteeing smooth and cost-effective marine lubricants delivery. Our diversity and flexibility allows us to swiftly adapt to meet the needs of our clients and remain profitable while maintaining a healthy balance sheet. Our parent companies Vitol and Grindrod support our position and reputation as a financially stable business partner equipped with relevant infrastructure to fully support our clients.

MARPOLL

Your verdict

We asked 100 leading owners and managers from around the world for their views on topical fuel issues. Results and key comments below How big do you think the price differential will be per ton between high and low sulphur fuel come the end of 2020?

What’s the best fuel/propulsion going forward for shipping to meet its decarbonisation pledge by 2050?

“

“”

If there will be a supply gap, then the price difference will surely be significant

There is no quick fix in this

”

2%

$76 - $100 20%

Hydrogen 38%

LPG 3%

$26 - $50

30%

$101 - $150 11%

Nuclear 19%

Electric 22%

$51 - $75

29%

$150+

LNG 12%

Biofuels 6%

0 - $25

8%

Will scrubbers be around in five years’ time?

What is a realistic portion of the global fleet running on LNG as a fuel in 10 years’ time?

“

“

This old technology should be consigned to the scrap heap of history where it belongs

We don't see LNG as a silver bullet when projecting all the way to 2050

”

”

Yes 54%

0 – 5%

29%

16% - 20%

No 46%

6% - 10%

28%

20+%

9% 12%

11% – 15% 22%

Are scrubbers an ethical solution to complying with IMO 2020?

“

Do you feel shipping has been unfairly targeted for its emissions compared to other industries, such as aviation?

“

It simply transfers the problem from a gaseous one to a solid one

We were an easy target, fragmented and were pushed into the public eye

”

Yes 19%

Yes 68%

No 81%

No 32%

16

”

maritime ceo

Š Asia Shipping Media