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Link between off-spec bunker issues and rising oil prices

20 Jun 2018

Maritime consultancy 20|20 Marine Energy believes that there is a correlation between an increase in contamination issues and rising crude and fuel prices, where prices increase to a point where producers can get a better return from the bunker supply chain, rather than selling into normal outlets.
“2007 and 2013 were eras of peak bunker prices, so it is no surprise that we are now dealing with this problem with fuel oil now rising to $400 per ton, and crude at over $70 per barrel,” says Adrian Tolson, Senior Partner.

“The general consensus is that crude will continue to rise post 2020, and suppliers need to get their houses in order. They can no longer use the excuse that margins are under pressure, and that they are being forced to use the cheapest components.

“In fact, the clever ones will use this situation as an opportunity to build and market their brands around transparency and professionalism, instigating processes, such as warranties that ensures the viability and provenance of their products.

“Not all will be able to achieve this, and if this means the industry loses a few participants as collateral damage, then so be it. Bunkering will be better for it.”

The shipping industry, meanwhile, needs to develop an understanding of marine fuel supply, shun apathy and instigate processes that ensure viable products, or repeat similar mistakes of the past and face unparalleled contamination challenges for vessels post 2020.

20|20 Marine Energy notes of being aware of rumours between February and April 2018 regarding a significant outbreak of fuel quality issues in the US Gulf Coast, with estimations of as many as 100 vessels seeking claims due to fuel quality, which have caused a number of technical problems, including in some cases a complete loss of engine power. It also understands that these claims have extended to the Panama Canal.

“The Gulf Coast last saw a series of contamination claims in 2013. However, in 2007 a myriad of claims with supply origins in the Gulf Coast tore their way through the entire global bunkering industry, impacting almost every major supply port,” says Tolson.

“These problems continue to happen again, and again, the same mistakes continue to be made and it looks like the industry is operating in a state of blissful amnesia. It needs to change.”
“Firstly, the industry needs to see more transparency and clarity around products.  We believe that now is the time for blenders and suppliers to fully warrant the quality of their fuel, even if it is sold within the Platts window. 

“Secondly, suppliers should no longer be able to hide behind the fact that products just ‘meet ISO specifications’, when in reality they are not fit for purpose, and contravene Clause 5 of ISO 8217.

“And finally, there needs to be a universal increase in knowledge of the fuel supply chain by all parties involved, so that history stops repeating itself, and to ensure that positive change can occur. This is particularly important in a post 2020 world, where there is already concern about the quality of blended products that will flood the market to meet the 0.5% Sulphur limit.”

Published: 20 June, 2018

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