A common and more detailed understanding of the industry’s fuel testing regime is needed, argues Timothy Cosulich
To avoid taking on ‘bad bunkers’ operators need to sign their counterparties up to an agreed testing methodology, be more selective on where they source their fuel and deepen their understanding of differing fuel quality standards, according to CEO of bunker supplier Fratelli Cosulich, speaking at this year’s Asian Tanker Conference in Singapore.
Timothy Cosulich told an audience of tanker owners and operators that three high profile fuel quality cases in Singapore last year – part of a wave of fuel quality issues experienced last year in Singapore, Houston and Panama – and the industry’s inability to achieve consensus on the root causes, left him wanting to better understand “the quality aspects of what we do, even though as a physical supplier the fuel quality is not part of our business.”
While the company did not experience any fuel quality issues itself, something Mr Cosulich attributes to dealing with reputable oil majors, he wanted to determine whether “it was a matter of luck [that] we were not involved in these issues.” Fratelli Cosulich delivers approximately 6M tons of bunker annually in Singapore via a fleet of seven bunker tankers.
The company tested every single fuel supply that it made in August 2018. “Basically, all the tests showed that there were traces of chemicals, although the concentration of some of these chemicals, including phenols [which have acidic content and can damage lubrication surfaces and reduce fuel stability] was quite low, but we had chemicals in every single supply.”
Fratelli Cosulich adopted the ASTM standard for fuel testing, advocating its uniformed approach and standards
Mr Cosulich said these findings highlighted “the inability of basically anyone in the industry to point to one single source of the problem. While phenols were a common component in the reported incidences of bad fuel, there wasn’t a testing laboratory that could identify in what concentrations phenols might be a problem, or whether issues arose when phenols combined with another component in the fuel.”
“The supplier will challenge the buyer to prove the chemicals exist in a concentration that will damage the engine. The only way for a buyer to prove it is to use it!”
Another concern involves the time it takes to get test results on fuel samples. Mr Cosulich said it takes about 12 hours to get a preliminary trace test: “If you want to have a more in-depth test, it can take up to a week or 10 days.” This, he argued was too long to wait “to know if the fuel you're loading is good quality or not.”
A third concern focussed on the industry’s testing methodologies.
“Each testing company has their own testing methodology,” said Mr Cosulich. “I'm not here to say that their methodologies are not good. The problem is that sometimes this generates conflicting results. So, of course, as a buyer and as a seller, one of the issues that we face is how to handle these different results, especially if faced with a claim or challenge from a counterparty.”
Fratelli Cosulich is now following the fuel testing guidelines set by international standards organisation ASTM International (formerly known as American Society for Testing and Materials). “This will really help address at least part of the problem and we feel it is a step in the right direction,” said Mr Cosulich.
He conceded that the notion of all testing companies adopting the same testing methodologies is unrealistic but stressed that “agreement on certain standards so that we have some consistency in the way that we deal with quality problems” was desirable.
Another aspect of the quality issue, he argued, was the industry’s regulatory framework. “There are quite a few specifications currently being used on the market. Surprisingly, ISO 2010 specifications are still the most commonly used, and we are in 2019. There is some uptake of ISO 2017 but the problem, again, from a quality perspective, is that neither ISO 2010 nor ISO 2017 are particularly helpful.”
An all-embracing working group could work through perceived flaws in the current ISO fuel testing regimes
In both specifications Clause 5 addresses quality issues. “Clause 5 in the ISO 2010 specification says that, basically, there shouldn't be any chemical in the fuel you buy. A strict interpretation of that standard would stop every single fuel supply contract in Singapore, because [as the August tests carried out by Fratelli Cosulich on its own fuel supply showed] there's no fuel that complies with the standard.
“Clause 5 in the ISO 2017 specification says that fuels should not contain chemicals in a concentration that causes issues. Of course, this is very good, except that nobody is able to quantify that concentration. What we have seen happening is that the buyer takes on the fuel, tests it, finds chemicals, returns to the supplier and reports chemicals in the fuel. If the parties have signed up to ISO 2017 specifications the supplier will challenge the buyer to prove the chemicals exist in a concentration that will damage the engine. The only way for a buyer to prove it is to use it!”
“From a quality perspective, neither ISO 2010 nor ISO 2017 are particularly helpful”
Referring back to the spate of contaminate fuel cases reported at the end of last year, Mr Cosulich highlighted a fourth flaw in the current testing regime: traceability.
“There were quite a few market rumours around where responsibility for these issues lay, with a lot of fingers pointed at cargo traders and refineries. But no one has been able to substantiate these claims. Once we are able to really trace the fuel and the quality issues back to the origin, then, of course, that's going to give a lot more trust to the whole supply chain.” Mr Cosulich added that it was known that Iranian fuel was being traded on the market in contravention of sanctions, but this was being concealed.
Mr Cosulich concluded by calling for a new working group, that includes buyers, sellers and testing labs. “With 2020 coming up, there are going to be a lot more fuels available on the market,” he said. “The tests we have done so far with the new fuels have been good, I have to say, but again, with more types of fuels being available, there's also a higher chance of issues happening.”