Connect with us

Business

Waves of change: Assessing the potential impact of a carbon levy on shipping costs

Regardless of the decision related to the carbon levy proposal, history has shown that the maritime industry will face new challenges each year.

Admin

Published

on

Screen Shot 2020 10 30 at 12.18.35 PM

James Morgan and James (Jay) Campbell, both Directors of the Process & Technology practice at global energy business advisory firm Opportune LLP, on Thursday (29 October) shared with Manifold Times an original article on how a proposed carbon levy will affect the global shipping industry:

The year 2020 has been one of unexpected change and it has been no different for the maritime space. On January 1, the International Maritime Organization (IMO) started enforcing a new regulation (IMO 2020) that caps the allowable sulfur content of all global fuel oil used in ships from its former level of 3.5% m/m (mass/mass) to 0.5% m/m. The demand destruction in the oil markets led to a flood of traders chartering vessels for floating storage and high volatility in charter prices. Between March 2020 and May 2020, one-year very large crude carrier (VLCC) rates increased 100%. The spot rate was even more volatile, with the TD1 route (Arabian Gulf to U.S. Gulf Coast) seeing over a 500% increase.

Screen Shot 2020 10 30 at 12.15.34 PM

The most recent wave of change came in the form of a proposal to the IMO from Trafigura introducing a carbon levy of between $250 per metric ton (/mt) and $300/mt of CO2 equivalent on shipping fuels. 

What would the impact of this proposal be to the oil industry if this carbon levy were instituted?  According to Reuters, in 2018, the shipping industry was responsible for over 1 billion tons of CO2 emissions. Based on the United Nations Conference on Trade and Development, crude oil accounts for 17% of maritime cargo. This would imply that crude oil shipping is responsible for roughly 179,520,000 tons of CO2 emissions. In 2018, 1.886 billion tons, or 13,824 million barrels (bbls) of crude oil, were transported via ship. Considering the proposal has an undefined benchmark at which the levy would be applied, it’s not exact math, but even if only 20% were applied, a VLCC voyage would have cost up to $1.5 million more. Given today’s VLCC rates, a 30-day voyage only costs about $900,000 for freight only.

Screen Shot 2020 10 30 at 12.16.01 PM

In 2019, there were about 7,400 crude oil tankers in use globally, of which only about 175 of them are LNG-fueled vessels (just under 2.5%). The Trafigura proposal would impact 97% of the oil tanker fleet and give any owners or charters of LNG-fueled vessels a significant competitive advantage in the market. While these levies will be assessed to the ship owner, it’s all but certain that they will be passed along to any charterers. Ultimately, freight rates will be market driven, so this levy would be an additional hurdle for those owners using fuel with greater emissions. All of this results in increased cost to the end consumer.

Steering Towards Renewables

More energy companies are turning their focus to clean and renewable energy options. Companies like BP, Shell, and Total have invested close to $10 billion in renewable energy projects. While these investments have low initial returns, a proposal of a levy on high-carbon fuels, while providing subsidies for low-carbon fuels, may be a bit like Robin Hood—robbing from the traditional fuel oils to pay for their replacements and ultimate demise. It’s also interesting to note that the company proposing the high-carbon fuel levy recently announced plans to invest $2 billion into renewable energy projects.

What Are The Options For Low-Carbon Fuels?

  • LNG – Liquified natural gas (LNG) is a proven and available commercial solution. In recent years, both Shell and ExxonMobil have invested in projects to provide LNG bunker fuels. There are currently more LNG-fueled ships under construction than there are in production, but it’s still a small percentage of the total shipping capacity. While LNG has been hailed as the best fuel to meet the IMO 2020 regulations, there are concerns of how “green” LNG really is
  • Hydrogen – Shell recently published a report suggesting that liquid hydrogen was advantageous over other potential zero-emission fuels. 
  • Bio Fuel Oil – In September 2020, ExxonMobil completed a successful sea trial using marine bio fuel oil. Both hydrogen and bio fuel oil offer promise, but it hasn’t been as fully developed as LNG, so there’s still research to be done.

Regardless of the decision related to the carbon levy proposal, history has shown that the maritime industry will face new challenges each year. New regulatory changes will come and with those the continued need for companies to be able to timely and accurately track and report their voyages, fuel usage and emissions. What will the next wave be?


Photo credit: Opportune LLP 

Published: 30 October, 2020

Continue Reading

Bunker Fuel

TMD Energy becomes first Malaysian bunker supplier to list on NYSE American

Straits Energy Resources’ subsidiary announces that its shares have been listed on 21 April, becoming the first Malaysian marine bunker supplier to achieve a listing on a major US exchange.

Admin

Published

on

By

TMD Energy logo

TMD Energy Limited (TMD Energy), a Malaysia and Singapore-based provider of integrated marine bunkering services and a Straits Energy Resources Berhad (SER) subsidiary, on Tuesday (22 April) announced that its shares have been listed on 21 April and began trading on the NYSE American under the ticker symbol “TMDE”.

Dato’ Sri Ron Ho Kam Choy, Chairman, Executive Director, and Chief Executive Officer of TMD Energy, said: “We are proud to become the first Malaysian marine bunker supplier to achieve a listing on a major US exchange, reinforcing our position as one of the industry’s leading players.

“Leveraging Malaysia’s strategic location along major shipping routes including the Straits of Malacca and the South China Sea, as well as resilient demand for bunker fuel in the region and globally, we are well positioned for further expansion. On top of that, TMD Energy is also the first Malaysian company to list on the NYSE American.

“Our listing in NYSE American will help us to enhance our international profile, expand our reach, capture new markets, and deliver sustainable, higher returns to our shareholders.”

TMD Energy’s share price opened at USD 3.26 on Monday, rising to an all-time high of USD 4.12 on its market debut before closing at USD 3.63, which was 11.69% higher than its initial public offering (IPO) price of USD 3.25 per share. This gave the company a market capitalisation of USD 83.85 million (equivalent to approximately MYR 367.2 million) on its first day as a publicly listed company.

TMD Energy’s IPO was priced at USD 3.25 per share, and total gross proceeds (excluding the over-allotments) before deducting underwriting discounts and other related expenses were approximately USD 10.08 million (equivalent to approximately MYR 44.13 million). 

Proceeds from the IPO will be used for the purchase of cargo oil; defraying listing expenses; and working capital and other general corporate purposes.

The company has granted the underwriter a 45-day option to purchase up to an aggregate of 465,000 additional shares to cover over-allotments at the IPO price, If the underwriter exercises their option to purchase the additional shares in full, the total gross proceeds before deducting underwriting discounts and other related expenses from the offering are expected to be approximately USD 11.59 million.

Dato’ David Yoong Leong Yan, Executive Director of TMD Energy, said: “Our debut on the NYSE American is a key milestone in our journey of growth. While continuing to drive strong organic growth, as part of our strategic growth initiatives, we remain focused on identifying and pursuing strategic mergers and acquisition opportunities that align with our long- term vision and strengthen our regional presence.”

Manifold Times previously reported SER announcing its proposal to list its oil bunkering segment via the listing and quotation of the ordinary shares in its 76.68%-owned subsidiary, TMD Energy, on the New York Stock Exchange American (NYSE American).

TMD Energy and its subsidiaries (TMD Energy Group) are mainly involved in marine fuel bunkering services specialising in the supply and marketing of marine gas oil and marine fuel oil to various types of ships and vessels at sea. In addition, the company provides vessel chartering services and vessel management services.

TMD Energy Group operates in 19 ports across Malaysia, with a fleet of 15 well-maintained bunkering vessels with capacities ranging from 540 dwt to 7,820 dwt, of which nine are double-bottom and double-hull vessels with an average cargo-carrying capacity of 4,200 dwt each. Its customers include ship owners and operators, shipping lines, logistics and freight companies, as well as oil and gas traders or brokers. 

TMD Energy’s growth strategy includes expanding its market presence across Southeast Asia, growing its bunkering fleet, providing ship management services to external customers and diversifying its fuel offering to include eco-friendly alternative fuels such as biodiesel.

TMD Energy is part of SER, a Fortune Southeast Asia 500 company listed on the ACE Market of Bursa Malaysia Securities. 

Related: Malaysia: Straits Energy plans to list subsidiary TMD Energy on NYSE American

 

Photo credit: TMD Energy
Published: 22 April, 2025

Continue Reading

LNG Bunkering

New MOL vessel to be supplied LNG bunker fuel in Japan before voyage to Australia

After departing from Saijo Shipyard, LNG fuel will be supplied directly to “Verde Heraldo” through shore-to-ship bunkering at Senboku Terminal of Osaka Gas, and is then scheduled to sail for Australia.

Admin

Published

on

By

New MOL vessel to be supplied LNG bunker fuel in Japan before voyage to Australia

Mitsui OSK Lines (MOL) on Friday (18 April) said the naming and delivery ceremony for the LNG-fuelled Capesize bulker, which MOL ordered for JFE Steel Corporation, was held at the Saijo Shipyard of Imabari Shipbuilding. 

The vessel was named the Verde Heraldo, which means “Green Pioneer” in Spanish, by JFE Steel President and CEO Masayuki Hirose. MOL executives including President & CEO Hashimoto were also on hand for the ceremony.

After departing from Saijo Shipyard, LNG fuel will be supplied directly to the vessel through shore-to-ship bunkering at the Senboku Terminal of Osaka Gas, and is then scheduled to sail for Australia.

The Verde Heraldo will sail under long-term transport contracts to supply raw materials for JFE Steel's mills, providing both reduced environmental impact and safe and reliable marine transport services.

About Verde Heraldo

LOA: 299.99 m
Breadth: 50.00 m
Draft: 18.436 m
Deadweight tonnage: 210,321 tonnes
Shipyards: Imabari Shipbuilding and Nihon Shipyard 

 

Photo credit: Mitsui OSK Lines
Published: 22 April, 2025

Continue Reading

Business

ENGINE: Adverse weather keeps bunker operations suspended in Zhoushan’s OPL area

Bunker deliveries at Zhoushan’s Tiaozhoumen and Xiazhimen outer anchorages have been suspended due to rough weather; some suppliers expect to fully resume operations in OPL area by 22 April.

Admin

Published

on

By

Zhoushan Port Anchorage

Bunker deliveries at Zhoushan’s Tiaozhoumen and Xiazhimen outer anchorages have been suspended since Saturday due to rough weather, according to a source on Monday (21 April). 

However, bunker operations have resumed this morning at Zhoushan’s more sheltered Xiushandong anchorage and the inner anchorage of Mazhi.

The port is currently experiencing strong wind gusts of 24–27 knots and swells approaching one meter.

Several suppliers expect to fully resume bunkering operations in the OPL area by tomorrow (22 April), the source said.

By Tuhin Roy

 

Photo credit: Manifold Times
Published: 22 April, 2025

Continue Reading
Advertisement
  • Aderco Manifold Website Advert EN
  • Consort advertisement v2
  • EMF banner 400x330 slogan
  • v4Helmsman Gif Banner 01
  • RE 05 Lighthouse GIF
  • SBF2
  • Sea Trader & Sea Splendor
  • Zhoushan Bunker

OUR INDUSTRY PARTNERS

  • HL 2022 adv v1
  • Singfar advertisement final
  • Triton Bunkering advertisement v2
  • MFT 25 01 E Marine Logo Animation
  • SEAOIL 3+5 GIF


  • 300 300
  • Uni Fuels oct 2024 ad
  • NW Logo advertisement
  • Auramarine 01
  • Synergy Asia Bunkering logo MT
  • metcore
  • Innospec logo v6
  • PSP Marine logo
  • Golden Island logo square
  • Mokara Final
  • Advert Shipping Manifold resized1
  • VPS 2021 advertisement
  • LabTechnic

Trending