Sammy Six of global energy and commodity price reporting agency Argus Media on Wednesday (28 October) published an analysis of the possible bunker market implications due to the narrowing premium between LSMGO and VLSFO at the port of Singapore:
The premium of low-sulphur marine gasoil (LSMGO) over very-low sulphur fuel oil (VLSFO) in Singapore has averaged $6.58/t so far this month, down from as high as $55/t in July this year.
This follows ample middle distillates available in the wake of the Covid-19 pandemic, which has cut demand for travel. Argus yesterday assessed delivered LSMGO and VLSFO bunkers in Singapore at $327.25/t and $323.71/t respectively.
LSMGO usually commands a premium over VLSFO as it has a higher calorific value and a lower maximum sulphur content. But it can also sell at a discount, as it did during the final quarter of 2019 to this year’s first quarter and again in April this year, as shipowners typically prefer the properties of VLSFO as their main engine fuel.
LSMGO has a 0.1% maximum sulphur content and a viscosity of 2-6 centistoke (cst) compared with VLSFO that has a maximum sulphur content of 0.5% and a viscosity of up to 380cst. Although both fuels are compatible with International Maritime Organisation 2020 caps on sulphur and are now almost at price parity, most shipowners prefer the higher viscosity of VLSFO.
The lower gasoil viscosity can lead to stability issues, which can be an issue especially for longer, intercontinental journeys.
“Most diesel engines require fuel with a minimum of 12cst, so substituting fuel oil with gasoil could be an operational concern”, according to one supplier.
“Although it is technically possible to burn gasoil instead of fuel oil, this is largely dependent on the ship’s engine and the chief engineers’ comfort levels, and requires crew training and lots of technical arrangements”, according to a market participant.
Tanker vessels are generally more comfortable with using either fuel and are more price sensitive, while dry bulk vessels are more conservative as they often lack a more sophisticated understanding of fuel management. “Our vessels in the US ECAs have been using gasoil for a long time without issues”, said one buyer.
This contrasts with the dry bulk segment of the market, “where technical teams are much less advanced and the handling of different fuels is less well understood”, according to another buyer.
“We do have some requests from buyers for either gasoil or fuel oil, but that is only a limited fraction of the market and usually results from VLSFO supply issues”, according to a trader.
Some buyers consider opting for gasoil rather than fuel oil especially when it comes to smaller cargoes. “A stem below 500t of VLSFO will incur a barging fee, while that is not the case for gasoil”, said a trader.
Photo credit and source: Argus Media
Published: 29 October, 2020
The 10,300 dwt bunker tanker is now the largest tanker in Monjasa’s Northwest Europe fleet, it highlights.
Rather than focusing on the rise in emissions between 2012 and 2018, we should note the level trade and emissions in shipping have decoupled, said Deputy Secretary General.
‘It is important for our clients to know that our BQS surveyors are impartial and trustworthy so that they can ascertain reliable information on fuel delivery,’ says spokesman.
A levy-based market-based measure, with mandatory climate contributions by ships to an IMO Climate Fund, must be brought into effect quickly, says Chairman.
‘We will continue to contribute actively towards the IMO’s goals,’ says Singapore Minister Khaw Boon Wan.
Companies will collaborate and identify opportunities to help transition from current marine fuels to alternatives such as LNG, biofuels, and methanol.
Program introduces periodic assessments, mass flow metering data analysis, and regular training for relevant key personnel to better handle the MFMS to ensure a high level of continuous operational competency.
U.S. Claims Register Summary recorded a total USD 833 million claim from a total 180 creditors against O.W. Bunker USA, according to the creditor list seen by Singapore bunkering publication Manifold Times.
Glencore purchased fuel through Straits Pinnacle which contracted supply from Unicious Energy. Contaminated HSFO was loaded at Khor Fakkan port and shipped to a FSU in Tanjong Pelepas, Malaysia to be further blended.
Individuals were employees of surveying companies engaged by Shell to inspect the volume of oil loaded onto the vessels which Shell supplied oil to; they allegedly accepted bribes totalling at least USD 213,000.
MPA preliminary investigations revealed that the affected marine fuel was supplied by Glencore Singapore Pte Ltd who later sold part of the same cargo to PetroChina International (Singapore) Pte Ltd.
‘MPA had immediately contacted the relevant bunker suppliers to take necessary steps to ensure that the relevant batch of fuel was no longer supplied. Further investigations are currently on-going,’ it informs.
