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Argus Media: IMO-compliant fuel enquiries arise in Fujairah

08 Feb 2019

Global energy and commodity price reporting agency Argus Media on Thursday (7 February) provided an industry update regarding IMO-compliant fuel enquiries in Fujairah:

Bunker suppliers in Fujairah have been receiving exploratory enquiries from trading firms about the availability of 0.5pc low-sulphur fuel oil (LSFO).

Interest began in January, with potential buyers seeking detail on supplies and potential pricing mechanisms of LSFO, suppliers said.

This week, a number of physical bunker suppliers in Fujairah received an enquiry from a European bunker trading firm for around 2,000t of 0.5pc LSFO for 19-21 February supply in Fujairah.

"For the producers or suppliers to be interested in selling, the demand or the order volume will need to be considerably higher than 2,000t. If there were an enquiry for a 6,000t barge of LSFO, with sufficient time to produce, then producers could be interested," a Fujairah trader said.

LSFO will likely be available from a number of firms in Fujairah, primarily Vitol and German firm Uniper.

The latter can produce up to 300,000t a month of LSFO at full capacity from its simple crude-processing facility at the port. Uniper produces around 50,000t of 0.1pc ultra-low sulphur fuel oil (ULSFO) by processing low sulphur crudes, which it exports for use in Emission Control Areas (ECAs) in Asia-Pacific. It plans to ramp up 0.5pc LSFO production later in 2019 to meet bunker demand for IMO-compliant marine fuels.

Bunker sales at Fujairah have fallen since vessels flying the Qatari flag were banned from UAE ports in 2017. This removed an estimated 150,000-250,000t of demand each month, and sales volumes at Fujairah are now an estimated 8-10mn t/yr. Marine-grade HSFO with maximum sulphur content of 3.5pc constitutes more than 95pc these volumes, and replacing this with compliant marine fuels by 2020 will be challenging given a lack of desulphurisation capacity in the region.

Trading in significant volumes of non-compliant bunker fuel oil in Fujairah is likely to continue post-2020, especially on routes within the Mideast Gulf and from vessels with onboard sulphur scrubbing technology. Saudi Arabia, the UAE, Kuwait, Bahrain, Iraq and Qatar are not members of ship pollution convention MARPOL, and this absence of enforcement and punishment mechanisms, combined with profitable economics, could prompt shipping firms to continue burning non-compliant fuel oil on intra-Gulf routes.

Penalties for infringement of MARPOL regulations range widely from one country to another, even in ECA areas. The penalty in some of the Baltic countries is $5,000; in Belgium violators could pay up to $6mn.

Source: Argus Media
Published: 8 February, 2019


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