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Argus Media: Pemex pressed to find home for HSFO glut

‘If for some reason we need to burn more fuel oil […] I would ask myself, “Why does Germany burn 38% coal?'” Morales said. ‘Because that is what they have.’

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Argus Media usandmexicohsfoprices

Sergio Meana, Stefka Wechsler and Rebecca Conan of the global energy and commodity price reporting agency Argus Media on Wednesday (17 June) published a report on Mexican state-owned oil producer Pemex’s possible strategies to cope with over production of HSFO as traditional channels become unavailable due to changes in prices and consumption trends: 

Mexican state-owned Pemex is struggling to find outlets for its growing high-sulphur fuel oil (HSFO) production, an ill-timed side-effect of its drive to increase refining output given tighter marine fuel emissions rules and constrained demand from the Covid-19 pandemic.

Pemex’s HSFO production, with 4% sulphur content, reached 201,000 b/d in the week ended 1 May, its highest level since October, according to the latest data from the Mexican energy ministry (Sener). This is up by 35% from the same week of 2019, and almost flat with the 199,000 b/d produced the prior week.

Fuel oil output is booming as Pemex is on a drive to produce more refined products as part of a policy to reduce fuel imports. About 30% of every barrel that Pemex processes becomes fuel oil. Only three of its refineries — the 275,000 b/d Cadereyta, 285,000 b/d Minatitlan and 190,000 b/d Madero — have cokers that can process heavier feedstocks such as fuel oil.

Pemex exported about 84,000 b/d of HSFO and sold 63,000 b/d domestically in April. For domestic sales, a portion goes to domestic power generation, with fuel oil firing about 3.2% of Mexico’s 70 GW of installed capacity, state power company CFE said. Mexico may be using roughly 30,000 b/d of fuel oil for power generation, according to Argus calculations.

This leaves approximately 54,000 b/d in need of a destination based on April export volumes and early May production levels.

Close to 570,000 bl of fuel oil were in storage on 1 May, according to the energy ministry (Sener).

This comes as general consumption of all fuels has recently hit multi-year lows, and after International Maritime Organization (IMO) regulations banned the use of fuel oil with more than 0.5% sulphur in vessels without special emissions-scrubbing equipment.

Traditional takers pull back

The US is not a promising outlet either. Residual fuel oil consumption in the US reached its lowest point since January 2018 in the week ended 1 May at 35,000 b/d. It has since climbed to 199,000 b/d for the week ended 6 June, but that is still 40% lower than June 2019 levels, according to Energy Information 

Administration (EIA) data. And while HSFO is being used as a substitute for sour crude as a feedstock for crude units, supporting a recent price increase, the US is mostly importing from Russia in addition to using Gulf coast HSFO.

Moreover, even if US demand returns, Mexico’s production would not be the first option. Prices from Mexico’s Lazaro Cardenas and Madero ports are typically higher than those in Houston and New Orleans (see table for detail).

Other traditional buyers of Mexico’s HSFO are also cutting volumes.

Data from oil analytics firm Vortexa showed Panama HSFO imports from Mexico dropped to about 43,960t (2,000 b/d) in the first five months of 2020 compared with about 308,758t (15,000 b/d) during the same period in 2019 consistent with the decline in HSFO bunker demand. Panama total HSFO imports were about 999,000t (49,000 b/d) from January to May, down from 2.08mn t (102,000 b/d) during the same period in 2019 according to Vortexa. Some of the HSFO barrels were sold locally to vessels equipped with scrubbers, some blended to reduce their sulphur content to 0.5% to sell as VLSFO, and others put in storage in Panama before being reexported.

Domestic destinations

One possible new outlet is Mexico’s state-owned power company CFE, which the energy ministry is urging to buy more of Pemex’s fuel oil for use in power generation.

The government’s efforts to support such efforts went as far as trying to close the door on new renewable power generation projects. Mexico’s grid operator Cenace suspended the launch of all new renewable power stations from 3 May, although the decision is under appeal.

Yet CFE would need to adapt generators to burn more fuel oil, CFE’s liaison for legacy contracts Mario Morales said.

“If we did burn more fuel oil we would have to comply with regulations,” Morales said this week. “Fuel oil requires filters, certain infrastructure to comply with regulations and [environmental authorities] Semarnat and Profepa would be the first to insist that CFE does not produce [more] emissions.”

Yet Morales added that using more fuel oil could be a logical step for Mexico.

“If for some reason we need to burn more fuel oil — we do not have a reason at the moment, but if we did — I would ask myself, ‘Why does Germany burn 38% coal?'” Morales said. “Because that is what they have.”


Photo credit and source:
Argus Media
Published: 18 June, 2020

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Alternative Fuels

Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

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Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Taiwanese shipping firm Yang Ming Marine Transport Corporation (Yang Ming) and South Korean shipbuilder Hanwha Ocean on Wednesday (2 September) signed a shipbuilding contract for six 13,000 TEU class LNG dual-fuel container vessels. 

The contract was signed by Dr. Chuck Tsai, Chairman of Yang Ming, and Mr. Charles Kim, CEO of Hanwha Ocean. The vessels are scheduled for delivery between 2028 and 2029. 

They will complement Yang Ming’s existing fleet of 10,000+ TEU vessels and serve as key vessels on East-West services, with deployment flexibility across trade lanes connecting Asia with the East and West Coasts of North America, South America, and the Mediterranean. 

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

“As Yang Ming transitions toward net-zero emissions, LNG provides a relatively mature and economically viable alternative fuel solution, capable of reducing greenhouse gas emissions by approximately 20%,” the company said. 

“At the same time, ammonia can serve as a carbon-free fuel by utilising converted LNG storage facilities, while offering relatively lower conversion costs and comparatively well-developed supply chains and infrastructure. The Ammonia Fuel Ready design will therefore provide Yang Ming with greater flexibility in responding to increasingly stringent international regulations on greenhouse gas emissions.”

In addition, the vessels will be equipped with Type B LNG fuel tanks with a design pressure of 1.0 bar to enhance the safety and efficiency of LNG operations, together with a range of energy-saving technologies, including Wind Shields, Rudder Bulbs, Pre-Swirl Stators, and Shore Power Systems. Smart ship technologies and cybersecurity protection features will also be incorporated to enhance operational efficiency, safety, and reliability while effectively reducing fuel consumption and greenhouse gas emissions.

Deliveries under Yang Ming’s next-generation fleet optimization plan commenced earlier this year. By 2030, a total of 24 new vessels are expected to enter service. 

This includes 18 LNG dual-fuel vessels—comprising five 15,500 TEU, seven 16,000 TEU, and the six 13,000 TEU vessels under this contract—alongside six 8,000 TEU methanol dual-fuel-ready ships. 

 

Photo credit: Yang Ming Marine Transport
Published: 4 September, 2026

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Alternative Fuels

LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Both secured AiP for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

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LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Lloyd’s Register (LR) and the Marine Design and Research Institute of China (MARIC) on Thursday (3 September) have secured Approval in Principle (AiP) for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

Announced at SMM 2026, the concept addresses one of the biggest investment challenges facing shipping today: the need to develop vessels and capabilities that can support a range of alternative fuel options and pathways as technologies, infrastructure and regulations evolve.

While LNG is already a mature fuel pathway, methanol and ammonia remain at an earlier stage of development, with questions around global fuel availability, infrastructure development, economics and long-term adoption.

The 114,000 DWT tanker concept has been designed as a product and crude oil carrier that can accommodate future conversion to LNG, methanol or ammonia as technologies, regulations and fuel supply chains mature. By incorporating conversion readiness at the design stage, the concept aims to reduce future retrofit complexity and provide owners with greater confidence when planning long-term fleet investments.

The design concept was reviewed against LR’s July 2026 class rules and regulations, including requirements relating to ships using gases and other low-flashpoint fuels, alongside relevant IACS Common Structural Rules for oil tankers. Final classification and statutory approval remain subject to full compliance with all applicable rules and regulations.

Theo Kourmpelis, Global Business Director for Tankers, Lloyd’s Register, said: “Shipowners are being asked to make major investment decisions today despite continued uncertainty around which fuels will dominate in the decades ahead. Alternative fuel solutions each offer potential pathways to compliance, but fuel infrastructure, regulation and economics continue to evolve at different speeds around the world.

“Designs that preserve flexibility will be critical in helping owners manage risk while preparing for multiple future scenarios.”

Si Nan, Marine & Offshore Marketing Department Vice Director, MARIC, said: “As the industry explores different decarbonisation pathways, shipowners need vessel designs that can adapt alongside technological and regulatory developments. This concept was developed specifically to provide greater fuel flexibility and long-term resilience, allowing owners to respond to changing market requirements without being locked into a single fuel strategy.

“Receiving Approval in Principle from Lloyd’s Register is an important milestone that validates the design concept and supports its future development.”

 

Photo credit: Lloyd’s Register
Published: 4 September, 2026

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Alternative Fuels

DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

LNG-fuelled vessels accounted for the vast majority of August activity while the strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year.

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DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

Latest data from classification society DNV’s Alternative Fuels Insight (AFI) platform alternative-fuelled vessel ordering was strong in August, with 52 new vessels added to the platform.

This is the highest monthly total since October 2024 and follows another active month in July, when 47 vessels were added to the database.

LNG-fuelled vessels accounted for the vast majority of August activity, with 46 orders recorded. The container segment led the way with 30 orders, while the car carrier segment contributed a further 12 LNG-fuelled vessels. In addition, four ethanol-fuelled bulk carriers and two hydrogen-powered bulk carriers were added during the month, as well as one LNG bunker vessel.

The strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year. In total, 242 alternative-fuelled vessel orders have been placed in the first eight months of 2026, representing a 27% increase compared with the same period in 2025.

LNG remains the dominant fuel choice, accounting for 63% of all alternative-fuelled vessel orders registered so far this year. Container vessels represent the largest share of these LNG orders (59%), followed by car carriers (30%).

Jason Stefanatos, Global Decarbonization Director at DNV Maritime, said: “The past two months have been particularly strong for alternative-fuelled vessel ordering, with August recording the highest monthly total we’ve seen since October 2024. This has helped lift year-to-date orders to a level well above the same period last year.

“LNG remains the leading fuel choice, driven largely by activity in the container and car carrier segments. These sectors have been among the earliest adopters of alternative fuels, supported by predictable liner operations and increasing demand from cargo owners to reduce emissions across supply chains. 

“For many owners, LNG offers a combination of emissions reductions, fuel availability and future flexibility while the longer-term fuel landscape continues to evolve. 

“At the same time, the latest figures include orders for ethanol- and hydrogen-fuelled vessels, highlighting that owners continue to explore a range of decarbonization pathways. Different segments are making different fuel choices, but the overall level of activity demonstrates continued investment in lower-emission shipping.”

Screenshot 2026 09 04 at 12.29.26 PM Screenshot 2026 09 04 at 12.29.36 PM

 

Photo credit: DNV
Published: 4 September, 2026

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