Don’t Listen To The Alarmists - HFSO Will Be In The Mix For Years
Scrubber technology firm Pacific Green Technologies (PGT) on Wednesday (7 August) published an article ‘Don’t Listen To The Alarmists – HFSO Will Be In The Mix For Years’ to assure the shipping industry HSFO will be available for consumption post IMO 2020:
Imminent major changes are often met with panic and scaremongering.
Think back to the panic surrounding the millennium “bug” in late 1999. Not only did people refuse to book flights on December 31, because they feared a computer meltdown that would see aircraft dropping from the skies, many people panic-bought huge stocks of canned goods and bottled water to see out the apocalypse.
Of course, nothing happened. Computers’ clocks ticked over to a new millennium and everything was just dandy (there were a lot of Primus stoves suddenly on sale on eBay in January 2000, though).
IMO 2020 comes into force on January 1, 2020. This new regulations states that ocean-going vessels must reduce their sulphur emissions to 0.5%.
Unlike the millennium bug, there will definitely be some changes. There have to be.
At the very least, according to a recent report by AlixPartners, the container-shipping industry alone could be looking at a US$10 billion increase in its annual fuel bill. This, however, is based on 2018 prices. If prices in 2020 move heavily against low sulphur fuel oils, as many expect them to, this number could be even bigger.
Some shipowners are dealing with this by switching their vessels to run on low sulphur fuel oil (LSFO). But an increasing number of owners are plumping for marine exhaust gas cleaning systems (gas scrubbers) which remove sulphur from high sulphur fuel oil (HSFO), allowing owners to still benefit from the lower price of HSFO.
In Rotterdam, the price spread between 0.5%-sulphur fuel oil and HSFO is forecast to widen to between $200 and $250 per tonne in the fourth quarter, from about $150 per tonne in the second quarter, according to Matt Wright, a consulting manager at Argus Media, which analyses energy and other commodity markets.
The spread is expected to increase to between $300 and $350 per tonne in the first quarter of next year.
So, with a clearer picture emerging of potentially major fuel price differentials next year, the economic appeal of scrubbers is becoming increasingly obvious.
But that hasn’t stopped the prophets of doom from casting their shadow over the debate. Recently some in the refinery industry have claimed that demand created by shipowners who fit scrubbers will not be sufficient reason for a refiner to deliver high-sulphur fuel, because refiners can now extract more profitable products from it.
They point to the refineries now being built in India, the Middle East and Asia. They are not looking to supply the marine market with a high-sulphur bunker fuel. Most, they say, are not producing any bunkers in their economic models.
This is true. Most new refineries will be super-modern and will not produce HSFO in the medium-to-short-term. But there are 700 refineries in the world. And very few are super-modern.
The vast majority of current refineries are not being upgraded to exploit the extra levels of refining. The investment required is huge – around $3bn per refinery – and many refineries simply cannot afford the investment.
Indeed, given that the uptake of scrubber-installed vessels is increasing, most refineries see no immediate need to upgrade. There will be plenty of customers for their HSFO and they can upgrade gradually.
Nobody is saying that HSFO demand will be as strong as it is now – but the more scrubbers are installed the more demand there will be post-IMO 2020. And with the current price differential, a shipowner will make back his investment on a scrubber in less than a year.
The refinery representatives say that people who make the investment in scrubbers in the belief HSFO fuel will be around for 20 years are sorely mistaken.
But HSFO doesn’t need to be around for 20 years. Even if it’s just available for the next five-to-ten years, while refineries slowly upgrade, the installation of a scrubber will pay shipowners huge dividends.
There really is no need to panic – the planes will not fall from the skies.
Source: Pacific Green Technologies
Published: 13 August, 2019
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Milestone reflects an increase in shipowners’ mindset to effectively manage the transition within the marine energy supply chain following IMO 2020, says Auramarine.
Linear calculation of bunker fuel blend component properties ‘is a large mistake’
Refinery Automation Institute Vice President and CFO highlights the majority of blenders and shipowners calculate bunker blend component properties linearly.
Integr8 Fuels: Advance bunker planning needed due to tighter HSFO availability
As scrubber-installed fleets continue to grow, reports of HSFO non-availability have started to appear; shipowners are advised to plan bunkering ops in advance to avoid procurement issues.
Argus Media: Euronav writes down IMO fuel value after price drops
As the value of Euronav’s 0.5% oil stocks fall below cost, the company has been buying 0.5% fuel in the open market to supply its fleet while writing down the value of its stock.
CMA CGM temporarily suspends surcharge on low sulphur bunker fuel
Low Sulphur Surcharge no longer relevant with effect from 1 May, 2020 due to current price of VLSFO, states CMA CGM; however charges may still revert at a later date.
China: Sinopec Guangzhou announces first export of LSFO bunker fuel cargo
713 mt of LSFO produced by Sinopec Guangzhou cleared the export division of Huangpu Customs, and was supplied to international vessels docked at Port of Guangzhou.
Taiwan applies for tougher restrictions on bunker, aviation, and land-based fuels
0.5% sulphur cap will apply for Taiwanese international and domestic vessels by 1 July 2020, even though it is not a member of the IMO, states government.
MSC issues statement on “MSC Joanna” violating fuel oil carriage ban in UAE
MSC Joanna scrubber installation was delayed following the COVID-19 pandemic which forced Chinese shipyards to close for an extended period of time, it explains.
SEA\LNG pushes for non-compliant bunker fuel carriage ban
Ban lessens the chances of investments being undercut by less scrupulous operators looking to burn non-compliant fuels.
BIMCO: Roundtable meeting expects 77% drop in SOx emissions from ships
Months into sulphur cap implementation, all four shipping associations remain cautiously optimistic and urge all stakeholders to uphold their responsibilities.
The Shipowners’ Club: Legal costs cover and IMO 2020
Maritime insurer discusses potential commercial disputes it foresees post IMO 2020, and outlines response parameters for legal costs covers.
FOBAS Alerts: Large Bunker Quantity Shortages Encountered With VLSFO
Shortages due to VLSFO not stabilising in vessel pipes, resulting in inaccurate readings - shipowners are advised to appoint a Bunker Quantity Surveyor.
Gazprom Neft IMO 2020 compliant bunker sales up by 47% in 2019
‘In 2020, we plan to increase the share of ultra- and low-sulphur marine fuels in total sales up to 50%,’ says CEO.
IMO reiterates start of non-compliant fuel oil carriage ban
Reminds shipping industry that carriage ban is meant to support consistent implementation of the sulphur cap.
Gard: China updates regulations on marine pollution from ships
P&I club outlines clarifications on SPRO Agreement and oil booming requirements through China MSA document.
Argus Media: Panama MGO sales up but VLSFO demand dominates
‘High-sulphur resid was replaced by VLSFO sales in Panama, because VLSFO sells at a discount to MGO,’ reports Argus Media.
Sinopec Maoming Company announces first LSFO bunker cargo
Production and export of LSFO aimed at reducing inventory of HFO and increasing profits, reports Sinopec News Network.
Argus Media: LSFO bunker spreads at record lows
Lower demand and improved supply logistics for LSFO main factors behind the narrowing of price premium over HSFO.
Sinopec Qilu Company announces first delivery of LSFO marine fuel product
LSFO production meant to gain greater market share in the international marine fuel market, says the company.
BIMCO, ICS, INTERCARGO, INTERTANKO launch IMO 2020 fuels survey
Survey aims to further understand the quality of new compliant fuel oils and possible safety implications of IMO 2020 fuels.
SAL Heavy Lift adopts ‘Smart Trader’ to weather IMO 2020 uncertainties
Inatech’s ‘Smart Trader’ is a complete end-to-end system for optimising fleet mapping and fuel procurement efficiently.
Stillwater Associates: IMO 2020 - No Large Speed Bump Thus Far
Consulting firm discusses strategies refiners are executing after IMO 2020 implementation, and changes to be expected ahead.
Demand for IMO compliant fuel spikes in Rotterdam
Reports note a remarkable increase in LNG sales that more than tripled alongside the expected surge in VLSFO sales post IMO 2020.
Argus Media: U.S. bunker demand moves towards VLSFO
Reporting agency assesses split in U.S. demand for VSLFO, MGO and HSFO grades since the introduction of IMO 2020.
ECSA publishes position paper in response to EU Green Deal
Welcomes EU climate change ambition by outlining eight points where it can work with the shipping industry.
Think-ING: The surprising move in marine fuel spreads
ING economist outlines factors and implications behind unexpected outcomes in the marine fuel product markets post IMO 2020.
Clean Arctic Alliance welcomes Canada’s backing of heavy fuel oil ban
IMO must ‘not entertain any arguments calling for a delay or exemptions’ in implementation of Arctic HFO ban, says Dr Sian Prior.
The Royal Society policy paper discusses ammonia as marine fuel
Policy briefing Ammonia: zero-carbon fertiliser, fuel and energy store focuses on future use of zero-carbon ammonia and its opportunities.
Stand.earth highlights debate on ship scrubbers in this week’s ‘IMO Arctic Summit’
Papers submitted to PPR7 questioning use of scrubbers as alternative compliance mechanisms for IMO 2020 regulations.
Impending Carriage Ban - “Legitimate” de-bunker/disposal practices
Ince & Co. outline implications of current de-bunkering malpractices that have arisen, and how to safely navigate the upcoming carriage ban.
Argus Media: U.S. refiners turn to marine fuel cast-offs with IMO 2020
Refiners running more intermediate feedstocks as IMO 2020 fuel specs leave ready supply of alternatives to tight sour crude supplies.
Gazprom Neft commences commercial production of VLSFO
Preparations since 2008 pay off and supply of VLSFO to Russian domestic market alone expected to exceed 1.5 million tons.
Integr8 Fuels on VLSFO: Better quality but mind critical parameters
While VLSFO seems to be stabilising, report cautions industry as consequences from off-spec VLSFOs are much more serious than HSFO.
Gard: Beware local restrictions before discharging washwater from scrubbers
Although gas scrubbers are considered acceptable to meet IMO2020’s SOx emission rules, it is not globally accepted in all states.
DNV GL on HSFO carriage ban: Compliance is the only option
HSFO carriage ban effective from 1 March is an attempt to ensure transparency and that ships are not unjustly penalised.
Pacific Green Technologies highlights LSFO as ‘GHG timebomb’
Points to several studies showing producing and burning LSFO increases carbon emissions, whereas gas scrubbers save money and the environment.
Star International releases on-board IMO 2020 fuel testing and treatment products
Range is directed at providing the industry with tools to obtain additional assurance that suppliers are providing compliant, stable fuel.
CRU viewpoint: IMO 2020 regulation likely to raise freight rates by around 10-20%
10%-15% of total ocean-going freight capacity will employ scrubbers in 2020; difference in freight rates will be main variable to determine optimal investment pay-off period.
Planning and preparations to be ‘IMO 2020 ready’ pays off, says IBIA
Several large globally operating shipping and bunkering companies reporting a surprisingly smooth transition to the 0.5%sulphur limit for marine fuels.
BIMCO: Low-sulphur fuel oil prices drop USD 99 per MT in Singapore
Price level of VLSFO declines from the all-time high of USD 740 per mt on 7 January to USD 641 per mt on 22 January, the largest drop seen in Singapore.
Argus Media: Sediment rates high in Americas bunkers, says Lloyd's Register
9% of low sulphur fuel samples in the Americas analysed between 1 December to 13 January found to be off spec for issues, including engine-damaging sediment, says FOBAS.
Clean Arctic Alliance urges IMO to prohibit ‘super pollutant’ VLSFO and LSHFO
VLSFO and LSHFO usage will contribute to a massive increase of Black Carbon emissions which represent 7% to 21% of shipping’s overall GHG equivalent impact on the climate.
IMO 2020 regulation could have negative health and climate impacts, says research author
Dr Daniel Lack says cost-cutting group of oil refiners using residual fuel blends could send ship-source black carbon emissions soaring overnight.
Argus Media: China to apply bunker fuel tax rebates from 1 February 2020
Development is intended to boost country's ambitions to create a bunkering hub to rival Singapore marine refuelling market, says analyst.
The Standard Club: UAE instructions to vessels entering UAE waters to comply with IMO 2020
From 1 January 2020, all UAE flagged and foreign flagged vessels entering UAE waters are to use 0.5% sulphur limit fuel oil; with exemptions for scrubbers and other fuels.
Middle East Bunkering Convention: What are the questions we should be asking post IMO 2020?
MEBC to be held on 5-6 February in Dubai will offer expert assessment on the impact of IMO 2020 sulphur regulation on both Middle East and global markets.
HFW: Briefing of AMSA documents on IMO 2020 compliance and enforcement in Australia
Australia issues regulations for implementation of IMO 2020 premised on a policy of strict compliance.
Pakistan prohibits discharge of wash-water from open-loop scrubbers at Port of Karachi
The Standard Club advises members with ships fitted with scrubbers and calling at the Port of Karachi to take note of the attached circular and comply with local regulations.
IMO Secretary-General evaluates shipping industry’s transition to IMO 2020
Prices for compliant fuels such as very-low sulphur fuel oil and marine gas oil rose quickly initially but now appear to be stabilising.
Malaysia Northport receives first LSFO shipment at Southpoint Terminal
6,190 dwt bunker vessel Straits Energy delivers LSFO shipment to dedicated storage tanks at Southpoint Terminal.
Tokyo and Paris MoUs: Prohibition on the carriage of non compliant fuel
Emphasis placed on requirements entering into force on 1 March 2020, prohibiting the carriage of non-compliant fuel for use on ships not equipped with EGCSs.
China MSA publishes Guidance for Supervision and Management of Air Emissions from Ships
The Standard Club provides a summary of key points for IMO 2020 enforcement in Chinese waters by local port state authorities.
Global Maritime Forum: Approximately USD 1-1.4 trillion needed to achieve IMO 2050
Significant investments needed to decarbonise shipping can only be expected to happen if there is a long term commercially viable business case.
Wanmar to upgrade cargo vessel “mv Donau” with Value Maritime scrubber
8,267 t dwt mv Donau will be equipped with a small prefabricated, pre-installed, ‘plug and play’ EGCS housed in a 20 ft road transportable casing.
Port of Rotterdam: LNG bunkering ops up in 2019, to introduce bunker permit by 2021
Three permanent LNG bunker vessels operating in port to date, with further four LNG bunkering specialists owning LNG bunkering licence.
Argus Media: Singapore 0.5% fuel oil stocks between 7 to 8 million mt, says IEA
Singapore’s swelling inventory has not prevent shortages, but constraints in bunker delivery infrastructure during the transition to low-sulphur fuels remain a concern.
BIMCO: Low-sulphur fuel sale jumps as 2020 sulphur cap kicks in
Sales of low-sulphur fuels, including LSFO and MGO LS, rose by 51% month-on-month in December to 3,127 kilo mt, compared to the 1,271 kilo mt of HSFO sold in the same month.
Iran Ship Owners Union says enough low-sulphur fuel has been supplied for IRISL fleet
The Islamic Republic of Iran Shipping Line and National Iranian Tanker Company are both cooperating to secure avails of low sulphur fuel, says IRSOU spokesman Yahya Ziaei.
DNV GL grants statement of compliance to Rivertrace SMART ESM washwater monitor for scrubbers
SMART ESM monitors regulated water quality parameters PAH, Turbidity, Temperature and pH, on open-loop, closed-loop and hybrid scrubber systems.
Standard Club: Regulation of IMO 2020 compliant fuel availability issue
In the event of unavailability of compliant fuel, members are required to document and evidence all steps taken to achieve compliance (Regulation 184.108.40.206).
Argus Media: More IMO violations emerge in China’s coastal waters
Chinese maritime authorities have caught at least three vessels using marine fuel that exceeds International Maritime Organization (IMO) standards.
Safe Bulkers extends scrubber partnership with Alfa Laval through service agreement
‘The Alfa Laval Service Agreement will help us safeguard long-term performance, for example by using data analysis to keep systems performing at their peak,’ says Dr. Loukas Barmparis.
Vertex and Bunker One enter into 10-year Marine Fuel agreement
Bunker One will have the exclusive rights to purchase 100% of Vertex's Marrero, Louisiana refinery's marine fuel production until December 2029.
Low supply of LSFO for bunkering to halt shipping operations on east coast of India
Monthly estimated demand of 30,000 mt of LSFO for coastal ships plying on India’s eastern coastal route are not met, say local bunker suppliers.
Rosneft begins supplying 0.1% sulphur fuel oil for bunkering at Russian river ports
Company begins refuelling ships with TMS type A eco-friendly fuel (low-viscosity marine fuel) produced by the Novokuybyshevsky Oil Refinery.
GARD: Target for 0.47% in VLSFO test sample to ensure IMO compliance
For bunker producer/supplier to meet 95% confidence limit, blend target should be the limit minus 0.59R.
The IMO 2020 fuel oil spread: China to the rescue?
China’s fuel oil tax rebate may lower bunker prices, especially in Asian shipping hubs, says FIS’ Chris Hudson.
China govt approves national tax rebate for VLSFO production
Initial exports of bunker fuel may be limited due to focus on developing domestic coastal bunker fuel market.
Argus Media Viewpoint: Sulphur cap to support 0.5% fuel oil
Delayed exhaust gas scrubber installations will further boost demand for IMO-compliant products.
North P&I Club shares IMO 2020 impact encountered by members
Sulphur content issues, redelivery, and charterparty disputes among the most common problems encountered.
MOL CEO highlights initial difficulties of IMO 2020 in New Year message
‘We need to pay close attention and maintain our focus on compliance as we move toward a stable path.’
“K” Line CEO says LNG fuel ‘cannot reach IMO’s 2030 targets’
CEO Yukikazu Myochin addresses the need for the company to continue studies on new technologies such as Kite energy.
LSFO prices rise USD 165 pmt through December in Singapore
The price levels for VLSFO and LS MGO have risen respectively by 30% and 24% from start of December.
GSF encourages shippers to challenge the basis of any VLSFO surcharge
Shippers need to make sure they understand exactly what they are being asked to pay extra for by carriers.
News: High sediment reported in test samples of IMO 2020-fuel blends
Test samples of 0.5% sulphur fuel produced from blending process found to have 0.16 to 0.21% m/m.
Argus Media viewpoint: IMO 2020 to have delayed price effect
Full impact of IMO 2020 is likely to be felt in March, once the current global stockpile of LSFO has dwindled.
HPCL launches IMO 2020 compliant 0.5% sulphur marine fuel, says refiner
HPCL has produced the first batch of VLSFO from its Visakh Refinery ahead from IMO 2020 January 1 deadline.
Clyde & Co lawyers discuss legal issues on bunker quality claims in 2020
Enforcement against vessels that narrowly exceed 0.5% VLSFO in test results may lead to legal claims.
IRISL fleet will have IMO 2020 compliant bunkers, says NIOPDC MD
NIOPDC to supply and distribute 0.5% low sulphur fuel oil needed for the country’s maritime IRISL fleet.
Singapore: Earlier court judgement between Hanwa and Harley Marine discharged
Hanwa obtained judgement following an “Emergency Arbitration” application on 18 July 2018 to prevent the risk of dissipation by the former Singapore-based bunkering firms.
BP Singapore bunker trial nears end as legal reps present summary submissions
Lawyers of the ex-Regional Marine Manager of BP Singapore, the Executive Director of Pacific Prime Trading, and Deputy Public Prosecutors were present at the State Courts on Wednesday.
Vitol Group acquires Sinanju Tankers Holdings; gains foothold in Singapore bunker ops
The Singapore Bunkering license holding entity has been renamed Vitol Bunkers (S) Pte Ltd and from 1 April 2020 all bunker deliveries will be carried out by Vitol Bunkers (S) Pte Ltd.
PMI Trading responds to Nustar Energy over alleged off-spec bunker fuel supply at Houston
Seeks to enforce either arbitration clause under contract or to dismiss NuStar and TPP respective liability claims, according to documents obtained by Manifold Times.
‘Minimal disruption’ to Singapore bunkering operations despite COVID-19, confirms MPA
‘We are closely monitoring the rapidly developing COVID-2019 situation while remaining committed to working with the bunkering industry to ensure minimal disruption to bunkering operations and services.’
Photo Essay: “Marine Vicky” in multi-agency emergency preparedness exercise at Singapore port
The emergency preparedness exercise involving SCDF, PCG, MPA, and Sinanju was carried out on the LNG dual-fuel bunker tanker at Raffles Anchorage on 17 March, learned Manifold Times.