MGO

Argus Media: MGO to gain from Med’s tighter sulphur shipping rules

New sulphur shipping rules in the Mediterranean next year will test the region’s ability to supply the necessary bunker fuels, writes Bob Wigin

Published

5 days ago

November 27, 2024

Admin

New sulphur shipping rules in the Mediterranean next year will test the region's ability to supply the necessary bunker fuels, writes Bob Wigin

Marine gasoil (MGO) could be the big winner in demand terms next year when new International Maritime Organization (IMO) rules on the sulphur content of bunker fuels are introduced in the Mediterranean.

From 1 May 2025, the Mediterranean will become a new IMO emissions control area (ECA), where vessels will need to adhere to a 0.1pc sulphur bunker fuel limit, down from 0.5pc at present. That will create new demand for compliant fuels such as MGO and ultra-low sulphur fuel oil (ULSFO), but the relative lack of ULSFO production from Mediterranean refineries and the region's ready spot MGO supply mean that the latter looks set to become the most popular option among shippers, at least to begin with.

Mediterranean refiners as yet produce little ULSFO, but may be motivated to step up output next year if substantial spot demand develops. Vessels making regular journeys along the same route, typically container ships, are likely to set up term ULSFO contracts with suppliers, market sources say, but shippers looking for prompt spot volumes will initially need to look at MGO, which is already consistently available on a spot basis at most Mediterranean ports.

Speaking at this week's Argus European Crude Conference in London, Spanish firm Repsol Trading's head of market intelligence, Carmen Lopez-Contreras, said she has no doubt that sufficient 0.1pc sulphur marine fuels will be available for vessels once the new regulation kicks in. Repsol is already supplying ULSFO to some cruise ship and ferry operators, she said.

But the change will certainly put the region's supply capability to the test. A study carried out in 2021 by the Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea (Rempec) projected that 16.7mn t of MGO would have been burned in the Mediterranean in 2020 had it been an ECA zone then, compared with a 2016 baseline of 542,000t.

Split shift

Some market participants have also suggested that European refiners' crude feedstock mix may not be well suited to ramping up ULSFO output, but trade data show this is less the case than in the past. Europe as a whole now takes a lot less medium sour Russian Urals crude and a lot more US light sweet WTI than it did three years ago, while, even in the Mediterranean, the sweet-sour split this year has been roughly 50:50, Vortexa data indicate, reflecting Opec output cuts and the impact of Red Sea shipping disruptions.

The Rempec study also projected high and low-sulphur fuel oil use in the Mediterranean would shrink from 15mn t in 2016 to 95,000t in 2020 under an ECA scenario. The biggest threat will be to 0.5pc very-low sulphur fuel oil, unwanted volumes of which could end up heading to markets east of Suez, traders suggest, as east-west price spreads widen.

But the outlook is slightly more complex for 3.5pc high-sulphur fuel oil (HSFO), which has been a surprising beneficiary of the IMO's tighter sulphur rules globally, as many vessels, especially container ships, have opted to comply by installing exhaust gas cleaning "scrubbers". This has allowed them to carry on buying HSFO, rather than switching to cleaner — and usually more expensive — alternatives.

In the Mediterranean, market participants note it would not make economic sense for many operators to fit scrubbers, as a large portion of the region's fleet is reaching the end of its life cycle. Scrubbers may struggle to clean exhaust gases from 3.5pc sulphur HSFO to a 0.1pc level. Some Mediterranean bunker suppliers say they are already receiving requests for non-standard 2.5pc sulphur fuel oil, which exerts less wear-and-tear on scrubbers.

Photo credit and source: Argus Media
Published: 27 November, 2024

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Shell MGO bunker heist: Bunker clerk pleads guilty to helping Sentek acquire misappropriated fuel

Wong Wai Meng, who received more than USD 286,000 from Sentek Marine & Trading for his assistance, pleaded guilty to 12 counts of intentionally helping the firm acquire the misappropriated marine gas.

Published

7 hours ago

December 2, 2024

Admin

A bunker clerk, Wong Wai Meng, who received more than USD 286,000 (SGD 384,681) from Singapore-based Sentek Marine & Trading (Sentek) for his assistance, pleaded guilty to 12 counts of intentionally helping the company acquire misappropriated marine gas oil, The Straits Times reported on Friday (29 November).

The 58-year-old Singaporean was employed at the Sentek when he assisted in acquiring more than 28,000 metric tonnes (mt) of the misappropriated fuel worth USD 13.58 million (SGD 18.26 million).

Wong committed the offences over 46 occasions between August 2014 and December 2017.

Wong is among the three bunker clerks previously employed by Sentek, who were charged for offences under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) and the Prevention of Corruption Act (PCA).

Another bunker clerk among the three charged, Wong Kuin Wah, 61, was sentenced to seven years and six months’ jail on 18 November for his role in misappropriating more than 27,000 tonnes of gas oil worth around USD 12.8 million (SGD 17.2 million).

The third individual who was charged, Boo Pu Wen, reportedly passed away in July 2023 and had his charges abated following his death, meaning Boo’s court proceedings over his 19 charges at the time came to an end.

Former Shell employees, who were key members of a group who dishonestly misappropriated fuel from Shell Pulau Bukom, were sentenced to jail in court earlier.

Earlier coverage of developments by Manifold Times regarding the Shell MGO bunker heist can be found below:

Photo credit: Katrin Bolovtsova
Published: 2 December, 2024

Bunker Fuel Availability

ENGINE: Americas Bunker Fuel Availability Outlook (28 Nov 2024)

Strong demand in Houston; availability is tight in West Coast ports; Argentina’s Paraná River draft limits reduced.

Published

3 days ago

November 29, 2024

Admin

The following article regarding bunker fuel availability in the Americas region has been provided by online marine fuel procurement platform ENGINE for post on Singapore bunkering publication Manifold Times:

Strong demand in Houston
Availability is tight in West Coast ports
Argentina's Paraná River draft limits reduced

North America

Bunker fuel demand has been good in Houston this week, but availability for all grades has been tight for prompt delivery dates.

Most suppliers can offer VLSFO and LSMGO stems with a lead time of 7-8 days in Houston. HSFO will require a longer lead time.

VLSFO and LSMGO availability has been good for prompt dates in Bolivar Roads. Deliveries there remain subject to weather conditions and anchorage schedules, a source says.

Securing both prompt and non-prompt stems for all fuel grades is tight at the New Orleans Outer Anchorage (NOLA) and in the Port of Mobile. Some suppliers are unable to provide an exact date for when they will have the supply available to resume offers.

Bunkering was proceeding normally in the Galveston Offshore Lightering Area (GOLA) on Thursday amid pleasant weather conditions. The weather is forecast to remain calm through the weekend and most of next week. Bunker demand has picked up in GOLA this week.

Prompt availability is tight in the West Coast ports of Los Angeles and Long Beach. Lead times of 8-10 days are generally recommended to secure VLSFO and LSMGO in both locations. Securing HSFO can be even more difficult as most suppliers are unable to offer stems for both prompt and non-prompt dates.

VLSFO and LSMGO availability is normal in the East Coast port of New York. Overall, bunker demand has been slow in New York so far this week

Caribbean and Latin America

Bunker fuel demand has been normal in Panama's Balboa and Cristobal. Product availability is also good in both locations, with several suppliers able to supply all fuel grades with a lead time of 5-7 days.

Draft limits on Argentina’s Paraná River have been reduced, impacting shipping operations at key export ports along the river.

According to a draft forecast from Antares Ship Agents, additional restrictions are anticipated in December and January.

Current limits at terminals above Quebracho have already been lowered by 10 centimeters, while draft reductions of up to 15 centimeters are now in place for certain terminals in San Nicolás, the report showed. These measures are expected to tighten further over the coming months, with conservative forecasts estimating draft limits of 9.7 meters in San Lorenzo and Rosario and 9.8 meters outbound from San Nicolás.

Demand has been good in Brazilian ports this week. Availability has been good in most of the ports, and some suppliers are able to offer grades at a lower price than usual, a source says.

By Debarati Bhattacharjee

Photo credit and source: ENGINE
Published: 29 November, 2024

Bunker Fuel Availability

ENGINE: Europe & Africa Bunker Fuel Availability Outlook (27 Nov 2024)

Prompt HSFO is tight in the ARA; bunker supply tightens off Malta; LSMGO supply resumes in Durban.

Published

4 days ago

November 28, 2024

Admin

The following article regarding Europe and Africa bunker fuel availability has been provided by online marine fuel procurement platform ENGINE for post on Singapore bunkering publication Manifold Times:

Prompt HSFO is tight in the ARA
Bunker supply tightens off Malta
LSMGO supply resumes in Durban

Northwestern Europe

Prompt HSFO and VLSFO availability remains tight in Rotterdam and across the wider ARA hub, a trader told ENGINE. Lead times of 7-10 days are advised for HSFO and 5-7 days for VLSFO. LSMGO is available in the ARA hub with a shorter lead time of 3-5 days.

The ARA’s independently held fuel oil stocks have dipped by 2% so far this month compared to October, according to Insights Global data.

The region has imported 237,000 b/d of fuel oil so far this month, down from 262,000 b/d imported in October, according to data from cargo tracker Vortexa. The ARA has imported low-sulphur fuel oil (LSFO) and HSFO in a 27/73 ratio in November so far, compared to a 45/55 ratio in October.

Kuwait (27% of the total) has emerged as the region’s biggest fuel oil import source this month. France (19%) has come in second place, while the UK (18%) has ranked third. Other import sources include Saudi Arabia (13%) and Poland (10%).

The ARA hub’s independent gasoil inventories - which include diesel and heating oil - have decreased by 2% so far this month. The stocks have declined despite higher imports. The region has imported 472,000 b/d of gasoil so far this month, registering a slight increase from 411,000 b/d of gasoil imported in October, according to Vortexa data.

In Germany’s Hamburg port, prompt bunker availability is normal for all three grades, a trader said. Lead times of 3-5 days are recommended for three grades in the port, the trader added.

Mediterranean

HSFO and LSMGO availability in Gibraltar is a bit tight for very prompt delivery dates. Lead times of 5-7 days are recommended for both grades. VLSFO availability is relatively better with most suppliers able to supply within 3-5 days, a trader said.

HSFO tightness persists at the Canary Islands' Port of Las Palmas. Lead times of 7-10 days are recommended for the high-sulphur grade. LSMGO supply is relatively more stable, with shorter lead times of 5-7 days. VLSFO availability is ample, with most suppliers offering delivery within 3-5 days. Adverse weather conditions expected from Wednesday could disrupt bunkering at the port until Saturday, a source said.

Securing very prompt delivery stems in Spain’s Barcelona may be difficult, a trader said. Lead times of 5-7 days are advised for all three grades in the port.

Bunker demand is still subdued in other Mediterranean ports like Piraeus, Malta Offshore and Istanbul, a trader said.

The Greek port of Piraeus has normal availability across all three grades with suppliers able to offer prompt delivery dates, a source said. Lead times of 3-4 days are recommended for all three grades. The weather is expected to be conducive to bunkering for the rest of the week.

Prompt availability has tightened off Malta, a trader told ENGINE. Lead times of 5-7 are recommended for all three grades off Malta. Bunker availability typically tightens towards the end of the year in Malta Offshore, the trader added. Bunkering disruptions are likely to affect bunkering on Friday and Saturday, a source said.

In Turkey’s Istanbul port, availability is normal with lead times of 3-4 days advised for full coverage from suppliers. Weather-induced bunkering disruptions may occur in Istanbul on Saturday, a source said.

Africa

LSMGO availability has resumed in South Africa’s Durban, but prompt availability of the grade is tight, a source told ENGINE. The grade was briefly unavailable last week. Lead times of 7-10 days are recommended for LSMGO in Durban. Rough weather is forecast from Wednesday to Friday, with wind gusts expected—ranging from 21 to 31 knots on Wednesday and Thursday, and 19 to 22 knots on Friday, the source added.

Availability of VLSFO is also tight in South Africa’s Durban and Richards Bay, a trader said. Lead times of 7-10 days are recommended for both grades in both ports.

Prompt availability is good for all three grades in Mauritius' Port Louis. VLSFO and LSMGO are witnessing robust demand, a trader said.

VLSFO and LSMGO are well stocked in Namibia’s Walvis Bay, according to a trader. But HSFO prompt availability is comparatively tighter. Lead times of around five days are recommended for HSFO and VLSFO, while LSMGO is available for lead times of 3 days.

The South African Revenue Service’s (SARS) new bunkering protocols will be implemented from 30 November, a shipping agent told ENGINE.

SARS' latest move paves the way for bunkering to resume off Algoa Bay, which has been shut for more than a year now. Yet, concerns and uncertainty remain in the market over how soon bunkering could restart in Algoa Bay.

"At this stage, there has been no confirmation of re-opening, nor have we witnessed any movements of bunker barges back into Algoa Bay," the shipping agent stated, adding that there are currently no bunker barges present in Algoa Bay.

Bunkering off Algoa Bay has been at a standstill since September 2023, when SARS suspended offshore bunkering after detaining five bunker barges over import duty disputes. The vessels were diverted to other nearby bunker ports, such as Durban and Richards Bay.

By Manjula Nair

Photo credit and source: ENGINE
Published: 28 November, 2024