Business

Oman Oil Marketing Company: Time to consider the total cost of bunkering

Operators need to consider the total cost of bunkering or risk losing business, says Christophe El. Kati,
Head of Marine and Bunkers at the Oman Oil Marketing Company (OOMCO).

Published

1 year ago

April 11, 2022

Admin

The following article features Christophe El. Kati, Head of Marine and Bunkers at the Oman Oil Marketing Company (OOMCO), who shares his thoughts on how its Duqm bunker terminal can reduce the total cost of bunkering for ship owners.

As fuel prices in regional ports approach USD1000 per tonne, and berth availability and wait times negatively impact sailing timetables, decisions on where and when to bunker can significantly impact efficiency and an operator’s ability to retain business.

Thinking about the total cost of bunkering means that ship operators measure the impact of bunkering decisions on overall operational costs and the wider sustainability of a voyage, rather than just fuel cost. To manage the total cost of bunkering, charter party agreements also need to be scrutinised, with the impact of slow steaming and the number of days of steaming, routes, and arrival times all important factors.

Any gains made in minimising the total cost of bunkering will improve an operator’s performance within the terms of the Sea Cargo Charter. Although the provisions of the Charter only apply to its signatories, those signatories include some of the largest and most influential charterers in the market. The Charter is also an increasingly important mechanism for boosting transparency and cooperation between operator and charterer. It sets performance criteria for operators based on a measurement of climate alignment, defined as the degree to which voyage carbon intensity is in line with the IMO’s ambitions for reducing total annual GHG emissions. It relies specifically on the Energy Efficiency Operational Indicator (EEOI) which involves measurement of fuel consumption, a GHG emission factor for each fuel type, the distance travelled while laden, and the amount of cargo transported. How is all this relevant to the total cost of bunkering? Because it incentivises operators and charterers to look beyond just the price of fuel at competing bunker ports. Commercially and environmentally, this makes sense.

Digital voyage planning tools make it increasingly easy to accurately predict costs and evaluate the potential benefits of new bunkering locations. This should encourage operators to look beyond traditional bunker ports and take a more analytical approach to assessing all the options, including those that may offer a faster transit time and reduced waiting time at port.

OOMCO’s new terminal at the Port of Duqm, located on Oman’s Arabian Sea coast, is an ideal example. The port is in the immediate vicinity of the international trade route between Asia and Europe, without long wait times. In its region, a port call at Duqm for bunkering, resupply and crew changes can remove the need for a detour to nearby regional ports, for example, which could add a minimum of seven days. By eliminating several days of fuel and operational costs, a port call at Duqm can significantly reduce the total cost of bunkering for operators. Duqm also lies outside the high-risk zone that triggers the costly requirement for war risks cover; a significant financial saving.

OOMCO’s terminal offers high-quality HSFO, VLSFO and LSMGO marine fuel specifications in compliance with ISO 8217 and has been designed to meet the increasing demand for all low sulphur fuel-compliant marine fuels in line with IMO2020. The 10,000 metric tonne vessel MT Alpha, capable of delivering fuel at up to 1,000 m3 / hour, facilitates bunker calls for vessels visiting the port.

The Port of Duqm also offers a wide array of services, strengthening Oman’s marine infrastructure and making it one of the most dynamic marine and industrial hubs in the region. Vessels calling at Duqm can take advantage of a range of services, including pilotage, freshwater supply, waste collection, tug services, crew change, de-slopping services, ship handling, and ship spares. The port also hosts Oman Drydock Company, one of the largest ship repair yards in the world. Duqm’s wide range of services make it easier for vessel operators to justify a decision to bunker in the port.

The development of the new OOMCO terminal is underpinned by the $7 billion Duqm refinery which will have a capacity of 230,000 barrels per day, once completed. In addition, the nearby Ras Markaz storage terminal is also currently under construction. It will culminate in six million barrels of storage capacity being available in 2022, with an additional capacity of 19 million barrels earmarked for the site as a future development. In addition, there are plans in place for the supply of other marine fuels, including LNG and methanol, as well as green ammonia and green hydrogen.

The bunker fuel market in the Middle East and Africa region is expected to grow by more than 12% between 2022-2025. By taking a ‘total cost of bunkering’ approach, Duqm can help vessel operators to unlock greater efficiencies within their fuel procurement strategy that will protect their bottom line and optimise their port calls.

Photo credit and source: Oman Oil Marketing Company
Published: 11 April, 2022

Methanol

Kambara Kisen orders methanol dual-fuel bulker from Tsuneishi Shipbuilding

Firm ordered a 65,700-dwt methanol dual-fuel dry bulk carrier with Tsuneishi Shipbuilding; MOL signed a basic agreement on time charter for the newbuilding that is slated to be delivered in 2027.

Published

3 days ago

September 22, 2023

Admin

Kambara Kisen orders methanol dual-fuel bulker from Tsuneishi Shipbuilding

Japanese shipowner Kambara Kisen has ordered a 65,700-dwt methanol dual-fuel dry bulk carrier newbuilding from Tsuneishi Shipbuilding Co., Ltd, according to Mitsui O.S.K. Lines (MOL) on Wednesday (20 September).

MOL said it signed a basic agreement on time charter for the newbuilding that is slated to be delivered in 2027.

The vessel will be designed to use e-methanol produced primarily by synthesising recovered CO2 and hydrogen produced using renewable energy sources, and bio-methanol derived from biogas.

The vessel's design maximises cargo space while ensuring sufficient methanol tank capacity set to allow the required navigational distance assuming various routes, at the same time maximising cargo space.

MOL added the vessel is expected to serve mainly in the transport of biomass fuels from the east coast of North America to Europe and the U.K. and within the Pacific region, as well as grain from the east coast of South America and the U.S. Gulf Coast to Europe and the Far East.

Details on the time-charter contract:

Shipowner: Kambara Kisen wholly owned subsidiary
Charterer: MOL Drybulk Ltd.
Charter period 2027: -

Details on the newbuilding methanol dual fuel bulk carrier:

LOA: About 200 m
Breadth: About 32.25 m
Draft: About 13.80 m
Deadweight: About 65,700 MT
Hold capacity: About 81,500m3
Shipyard: Tsuneishi Shipbuilding Co., Ltd.

Photo credit: Mitsui O.S.K. Lines
Published: 22 September, 2023

Methanol

Argus Media: Alternatives may drive methanol market growth

Driven by low-carbon policies and regulations, the transportation sector — especially the marine fuels industry — could be a source of heightened demand, according to Argus.

Published

3 days ago

September 22, 2023

Admin

The growth of sustainable alternatives to traditional methanol production sources likely will shape the market over the next several years, industry leaders said this week at the Argus Methanol Forum.

20 September

Driven by low-carbon policies and regulations, the transportation sector — especially the marine fuels industry — could be a source of heightened demand.

"The aim is to be net zero by 2050 but [those solutions are] expensive today and one of the main challenges to build e-methanol or bio-methanol plants is a huge queue for these pieces of equipment that aren't available," Anita Gajadhar, executive director for Swiss-based methanol producer Proman, said.

Bio-based and e-methanol plants of commercial scale, like Proman's natural gas-fed 1.9 million metric tonne/yr M5000 plant in Trinidad and Tobago, are not ready today.

"But that's not to say 10 years from now they won't be there," Gajadhar added.

Smaller projects are popping up. Dutch fuels and gas supplier OCI Global announced plans last week to double the green methanol capacity at its Beaumont, Texas, facility to 400,000 t/yr and will add e-methanol to production for the first time. Production will use feedstocks such as renewable natural gas (RNG), green hydrogen and biogas.

The globally oversupplied methanol market will not get any major supply additions starting in 2024 until 2027. But that oversupply will not last long, Gajadhar said.

Global demand has slowed this year, driven by stagnate economic growth and higher interest rates, according to industry observers.

As much as half of methanol demand is tied to GDP growth, with total methanol demand estimates at 88.9mn t globally in 2023. This is essentially flat from 2022, but up from 88.3m t in 2021 and 87.7mn t in 2020, Dave McCaskill, vice-president of methanol and derivatives for Argus Media's consulting service, said.

Demand is not expected to rebound to 2019 levels of 89.6mn t until 2024 or 2025, he added.

The period of oversupply combined with lackluster demand places methanol in a transition period, Gajadhar said, which opens the door for sustainable feedstock alternatives to shape market growth.

Danish container shipping giant Maersk and French marine logistics company CMA-CGM announced earlier this week a partnership to drive decarbonization in shipping. The partnership seeks to develop fuel and operations standards for bunkering with alternative fuels. The companies will develop net-zero solutions, including new technology and alternative fuels.

Maersk has previously ordered dual-fuel methanol-powered vessels and CMA-CGM LNG-propelled vessels.

The demand for alternative feedstock-derived fuels is there, but the ability to scale-up such production lags. Certified lower-carbon methanol produced using carbon capture and sequestration — also known as blue methanol— can ramp up much more quickly, according to Gajadhar.

By Steven McGinn

Photo credit and source: Argus Media
Published: 22 September, 2023

Biofuel

Royal Caribbean completes over 12 weeks of bio bunker fuel testing in Europe

Firm expanded its biofuel testing this summer in Europe to two additional ships — Royal Caribbean International’s “Symphony of the Seas” and Celebrity Cruises’ “Celebrity Apex”.

Published

3 days ago

September 22, 2023

Admin

Royal Caribbean completes over 12 weeks of bio bunker fuel testing in Europe

Royal Caribbean Group on Tuesday (19 September) said it successfully completed over 12 consecutive weeks of biofuel testing in Europe.

Royal Caribbean International’s Symphony of the Seas became the first ship in the maritime industry to successfully test and use a biofuel blend in Barcelona to meet part of her fuel needs.

The company confirmed onboard technical systems met operational standards, without quality or safety concerns, demonstrating the biofuel blend is a reliable “drop in” supply of lower emission energy that ships can use to set sail across Europe and beyond.

The tests across Europe also provided valuable data to understand the availability and scalability of biofuel in the region, the firm added.

Jason Liberty, president and CEO, Royal Caribbean Group, said: “This is a pivotal moment for Royal Caribbean Group’s alternative fuel journey.”

“Following our successful trial of biofuels this summer, we are one step closer to bringing our vision for net-zero cruising to life. As we strive to protect and promote the vibrant oceans we sail, we are determined to accelerate innovation and improve how we deliver vacation experiences responsibly.”

President of the Port of Barcelona, Lluís Salvadó, said: “Royal Caribbean’s success is a clear example of how commitment to innovation makes possible the development of solutions to decarbonise the maritime sector.”

“In this case, it involves the cruise sector and focuses on biofuels, an area in which the Port of Barcelona is already working to become an energy hub, producing and supplying zero carbon fuels, such as green hydrogen and ammonia, and of other almost zero-carbon alternative fuels, such as methanol, biofuels or synthetic fuels. Innovation and collaboration between ports and shipping companies is key to accelerate the decarbonisation of maritime transport.”

The company began testing biofuels last year and expanded the trail this summer in Europe to two additional ships — Royal Caribbean International’s Symphony of the Seas and Celebrity Cruises’ Celebrity Apex.

The sustainable biofuel blends tested were produced by purifying renewable raw materials like waste oils and fats and combining them with fuel oil to create an alternative fuel that is cleaner and more sustainable. The biofuel blends tested are accredited by International Sustainability and Carbon Certification (ISCC), a globally recognized organization that ensures sustainability of biofuels and verifies reductions of related emissions.

With Symphony of the Seas departing from the Port of Barcelona and Celebrity Apex departing from the Port of Rotterdam, both ships accomplished multiple sailings using biofuel and contributed critical data on the fuel’s capabilities.

“These results will help accelerate Royal Caribbean Group’s plans to continue testing the use of different types of biofuels on upcoming European sailings this fall. The company is exploring strategic partnerships with suppliers and ports to ensure the availability of biofuel and infrastructures to advance the maritime energy transition,” the firm said.

Photo credit: Royal Caribbean Group
Published: 22 September, 2023