As the 2020 sulphur cap approaches, the correct choice of fuels and lubricants may spell the difference between success and failure
Earlier this year, Danish shipping giant A.P. Moller – Maersk announced that it would introduce a fuel surcharge 12 months prior to the introduction of the global sulphur cap, on 1 January 2020. The news caused outrage among shippers who would have to pay the surcharge, but the episode masked the fact that A.P. Moller – Maersk was cooperating with Dutch refiner Royal Vopak to develop its own compliant fuel.
A facility at the Vopak Terminal in Europoort will allow A.P. Moller – Maersk to blend, store and handle different fuel types to ensure full compliance with the sulphur cap.
“We are very proud to serve A.P. Moller - Maersk with this dedicated low-sulphur bunkering point in the heart of Rotterdam,” said Royal Vopak global oil director Hari Dattatreya.
A.P. Moller - Maersk head of Maersk Oil Trading Niels Henrik Lindegaard added: “We trust this initiative will put to rest some of the concerns the industry has on fuel availability, as well as secure our continued competitiveness in the market.”
The key phrase here is “continued competitiveness in the market”; only a company the size of A.P. Moller – Maersk can afford to insulate itself from the potential chaos that will stem from a lack of available compliant fuel in 2020.
But having access to the necessary volume of compliant fuel is only part of the equation. Lower sulphur fuel will impact the efficiency of lubricants in the main engine. A.P. Moller – Maersk believes it has already covered the issue of having lubricants of the correct specification through its SEA-Mate Maersk Fluid Technology, which is already fitted to Maersk Tankers’ vessels.
But what of those tanker companies that do not have the resources of A.P. Moller – Maersk? How will they protect themselves in 2020?
The first step is to seek advice. Oil major ExxonMobil has launched a series of 'Journey to 2020' symposiums around the world to help marine operators optimise vessel performance in readiness for the sulphur cap. According to ExxonMobil aviation and marine lubricants global field engineering manager Iain White, these events will provide insights and help on fuel options and how to choose appropriate cylinder oils for safe and efficient vessel operation.
Iain White (ExxonMobil): The 2020 sulphur cap will fundamentally change how the marine industry operates
ExxonMobil has already introduced Mobil ServSM Cylinder Condition Monitoring which can measure fuel sulphur content. This service is said to deliver significant cost savings for operators, manage and improve engine protection and optimise performance.
ExxonMobil announced that Premium HDME 50 marine fuel is now available via an independently accredited mass flow metering system (MFMS) in the Amsterdam-Rotterdam-Antwerp (ARA) region. Measuring bunker delivery via MFMS removes the need to dip tanks. The service has received third-party accreditation from Lloyd’s Register.
Shell is also advising customers on lubricants. Speaking to Tanker Shipping and Trade at SMM 2018, Shell Marine's new chief executive and general manager Joris Van Brussel said the 'insecurity and uncertainty' about the fuels market meant his division of the oil major had to cater for all of its customers' potential decisions.
“It's really not an easy time,” he said.
“Recent months have seen some movement by mainstream shipowners towards exhaust gas scrubbing to meet the 2020 marine fuel sulphur cap,” said Mr Van Brussel. “However, with just over a year to go before the new restrictions enter into force, a significant part of the market will shift to fuels with less than 0.5% sulphur.”
Fellow oil major Chevron has also developed a range of 2020-friendly lubricants. Chevron Marine Lubricants has launched a range of cylinder lubricants called Taro Ultra, compatible with a majority of the engine types, marine bunker fuels and abatement technologies that will be used to comply with the new regulations from 2020 onwards.
In a statement Chevron said lubricant selection must be matched to fuel sulphur content, to ensure compatibility with fuels bunkered across a fleet. Taro Ultra 25 is compatible with low sulphur fuel, distillates and many alternative fuels, according to the company, and Taro Ultra 140 is better for high sulphur bunker fuels that require scrubber emission abatement technology.
Chevron Marine Lubricants general manager Chia Yoo Soon said a key reason for launching the new product range was to recognise "the need for more diverse fuel options [that] we expect to be available both now and post-2020 ... ensuring the right products are available in the right places".
Another approach is to use a bunker supply management tool. Hafnia Group, a shipowner and operator of tankers, has mandated Inatech, a unit of Glencore, to implement its Shiptech platform for optimising part of the fuel procurement process.
By digitalising the bunker management process, Hafnia’s bunker buyers can focus on market analysis and managing suppliers.
Inatech suggested that an operator with just one ship could have annual fuel costs of around US$2.4M. This is based on a ship using 40 tonnes of fuel a day, being at sea for an average of 200 days and fuel costing US$300 a tonne. Expand that example to 20 ships and annual fuel costs rise to US$48M.
“We fear that this will become a global epidemic, with the possibility of disastrous events”
A global epidemic
However, there are already serious concerns over the quality of the compliant fuels that will be offered to owners. Independent tanker owners’ organisation Intertanko has criticised governments for what it called a ‘lack of interest’ and ‘lack of initiative’ in response to reports of contaminated bunkers that are suspected of having fouled ship engines and caused mechanical failures over recent months.
Intertanko said there was ‘no sign of any coordinated effort to control and remove’ the contaminated fuels from the market and called for further investigation into the incidents by governments, in addition to ‘serious fines’ for any parties found liable for the contamination and ‘restitution for the ships impacted’.
“The contaminated fuels were initially supplied in the Houston (USA) area,” the report began. “Following this, the same contaminated fuels were supplied in some Caribbean ports such as Panama and then (so far) ‘exported’ and supplied to Singapore and Malaysia. We fear that this will become a global epidemic with the possibility of disastrous events.”
The Intertanko report mentioned the US Coast Guard (USCG), saying a solitary USCG safety alert from June was not enough assurance, given the potential for severe consequences.
Intertanko cited laboratory reports showing statistically significant quantities of the phenolic compound 4-cumylphenol – an assertion backed up by a Veritas Petroleum Services fuel analysis ,first reported by Platts in May. The 4-cumylphenol compound can cause engine issues such as sticking fuel plungers and fuel pump failure, and the VPS report cited its use in industrial resins due to its adhesive qualities.
The presence of the 4-cumylphenol compound has prompted speculation, including from Intertanko, that the source of the contamination is petrochemical streams used as ‘cutter stock’ to lower viscosity in high sulphur fuel oils (HSFO) when light cycle oils, or distillates, are in short supply.
But if there are doubts over the quality of blended low sulphur fuel, there are also doubts in some quarters that it is even necessary or realistic.
FuelSave chief executive Marc Sima said: “I really can’t see the global fleet switching across to low sulphur fuel in little under two years’ time. Not only would shipowners have to make sure their engines are compatible with the fuel in time, but assuming they are, they would have to revise their supply chains, evaluate compatible lubricating oils, and then sit back and watch their operating costs increase.
Marc Sima (FuelSave): “What are the refiners going to do, reduce the cost? I doubt it”
“It just won’t happen. Low sulphur fuels may be today marginally more expensive than LNG, but should the industry make the switch en masse, what are the refiners going to do, reduce the cost? I doubt it.”
To meet the 2020 global sulphur cap, Mr Sima advocates the continued use of HFO/MDO/MGO, with the appropriate emissions abatement technology – a scrubber – as the only cost-effective and proven solution for emissions reduction.
“Intertanko has criticised governments for what it called a ‘lack of interest’ and ‘lack of initiative’ in response to reports of contaminated bunkers”
Bunker supplier World Fuel Services is preparing for the historic fuel changeover in 2020 with additional facilities and vessels.
The latest to join the fleet is Whitstar, which will serve World Fuel Services clients around the south coast of the UK.
The 75 m-long, 3,100 dwt product tanker was deployed in early September 2018 to operate along the east and south coast, to service UK terminals
Owned by Whitaker Tankers of Hull, Whitstar was built in 2004 and is fitted with versatile deep-well pumps capable of delivering fuel in volumes of up to 450 m3 per hour.
The vessel has epoxy-coated cargo tanks, closed loading systems and has tank-level radars fitted.
The hull is also strengthened to enable access to NAABSA berths.
This latest addition to the WFS-operated tanker fleet is large enough to keep storage terminals topped up, but small enough to deliver bunkers to vessels.
In chartering the vessel, WFS now feels it has greater control of the supply chain to help it achieve the flexibility required as the sulphur cap approaches.
IMO has reiterated that its 0.5% limit on sulphur in ships’ fuel oil will be in force from 1 January 2020, under the UN body's Marpol treaty.
But while the timeline is fixed, the penalty for non-compliance is less certain. As Niels Bjørn Mortensen noted in sister publication Marine Propulsion & Auxiliary Machinery, with a current price gap between compliant and non-compliant fuel of some US$225, bunkering 1,000 tonnes of non-compliant fuel could release a “cheating bonus” of US$225,000. And while it is unlikely that an owner would be able to avoid an inspection of the fuel or emissions in ECAs with long-established Port State Control regimes like Europe, elsewhere it is a different matter.
He notes that the main problem regarding enforcement is that at present, it is impossible to monitor which fuel oil is being used and the consequent emissions on the open sea.
Although the United Nations’ Convention on the Law Of the Sea (UNCLOS) does grant littoral states some rights to intervene on ships in international waters, few coastguards would actually consider boarding a ship in open sea to check for compliance with Marpol Annex VI. The jurisdiction of the ships lies basically with the flag state, most of which have no capacity, or interest in, performing such checks.
From a shipowner perspective, especially an owner like A.P. Moller – Maersk that has taken steps to secure a supply of compliant fuel, the main concern would be competitors gaining an unfair advantage by deliberately violating the rules. Some non-compliance might be initiated and executed by the ship’s crew without the consent of the owner and that will not disturb the competition. If, however, a vessel is caught burning non-compliant fuel and it proves to be company policy instigated from top management, the impact on the shipping fraternity would be significant. According to the Trident Alliance (whose members includes Maersk Line and Maersk Tankers) and it is hoped that the most rigorous response would be forthcoming from the authorities to crack down on such practices.
As Per Funch-Nielsen, senior associate at 20|20 Marine Energy argues in the Viewpoint article in this issue, there are few more written about subjects in the world of shipping than the global sulphur cap and advice is available on both fuels and lubes. Now is the time to take that advice, or face the consequences.