World Bunkering Summer 2017

Summer 2017

GETTING THE MEASURES RIGHT

SULPHUR COMPLIANCE SOLUTIONS, SULPHUR TESTING AND QUANTITY CONTROL ALL RELY ON IT

inside this issue: Embracing MFMs? What should we do about CO2?

ISO 8217 responds to industry trends

THE ONLY OFFICIAL MAGAZINE OF

editor’s letter

Looking ahead This Summer 2017 issue of World Bunkering is packed with insights into what will happen after 2020, and some of them are unsettling

T

hese past three months have been busy ones for both IBIA and the industry generally. So this issue probably contains more new information than most.

One of the changes that has taken place is of course is that a new CEO has taken over at IBIA. We have said ‘Goodbye’ to Peter Hall and this issue features an introduction by the new man at the helm, Justin Murphy.

Out in the industry thoughts are increasingly turning to what will happen in 2020 when the 0.50% sulphur in fuel limit comes into effect. References to this topic abound in our pages this time – and will no doubt this will be the case for the next three years. It is after all a huge change. Our deputy editor Unni Einemo looks at the complex compliance issues that could arise.

On the same subject, Don Gregory, director of the Exhaust Gas Cleaning Systems Association (EGCSA), makes the case for scrubbers. He argues that HSFO “is the obvious energy source of choice for merchant ships”. Of course using that obvious source of energy will mean using scrubbers.

However for most owners, those who have not fitted scrubbers or switched to LNG, the issue come 2020 will be ‘Can I obtain 0.50% fuel and how much will it cost?’ How much compliant fuel will cost is anybody’s guess at this stage but Vladimir Mikhailovich of Russian engineering firm General of VNIPIneft,

which is very involved in the refinery business, asserts that there will plenty of compliant fuel at Russia’s ports. If so, that would be an important consideration when the deadline comes.

LNG is very much the solution being pushed by parts of the environmental lobby and, significantly, by the EU. So the initials LNG can be found on very many of the pages of this issue.

On almost every page, in fact - but not in our look at how law and legal process affect bunkering. And this issue’s subject is a sobering one for any shipowner.

The owner of the then brand new bulk carrier Marathassa could end up being fined several million dollars for the accidental discharge of less than three tonnes of fuel oil two years ago in Canadian waters. That case is ongoing so we will have to wait and see what the court decides.

Not everything in this issue is a about high-level strategic decision making.

There is lot to report on technical developments – do take a look at our Fuel Management, Innovation and Equipment & Services pages.

And really getting down to the nitty gritty, Unni casts her eyes over the new, sixth edition of ISO 8217. There is a lot to take in, which why this issue of World Bunkering devotes three pages to it.

Incidentally, reader feedback on this topic, and anything else in this issue, would be very welcome. Just send us an email to myself on anderimar.news@googlemail. com or to Unni on unni@ibia.net.

I seemed to have covered quite a lot of ground but in reality have only scratched the surface of what is in this issue. Happy reading.

While the bunker and shipping industries are increasingly focusing on what will happen in 2020, our interview takes us beyond the sulphur crunch.

In a thought-provoking and probably controversial piece, UCL Energy Institute’s Dr Tristan Smith asserts that shipping must decarbonise. Interestingly he gives shipping’s use of LNG 10-years before it starts to be “competed out of the fuel mix”. That is something to ponder given the investment currently going into the dash for gas.

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David Hughes Editor 3

Publisher & Designer: Constructive Media studio@constructivemedia.co.uk Editor: David Hughes anderimar.news@googlemail.com Deputy Editor: Unni Einemo unni@ibia.net Project Manager: Alex Corboude alex.corboude@mar-media.com On behalf of: IBIA Ltd 4th Floor 50 Liverpool Street London EC2M 4PR, UK Tel: +44 (0) 20 3397 3850 Fax: +44 (0) 20 3397 3865 Email: ibia@ibia.net Website: www.ibia.net

The views expressed in World Bunkering are not necessarily those of IBIA, or the publishers unless expressly stated to be such. IBIA disclaims any responsibility for advertisements contained in this magazine and has no legal responsibility to deal with them.

The responsibility for advertisements rests solely with the publisher. World Bunkering is published by Constructive Media on behalf of IBIA and is supplied to members as part of their annual membership package.

Constructive Media 50 George Street, Pontypool NP4 6BY Tel: 01495 740050 Email: ibia@constructivemedia.co.uk www.worldbunkering.com

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37 - 41

Chairman’s Letter The future has never been so uncertain and combining knowledge and thinking has never been more valuable

Port Focus The forces behind one of the world’s fastest growing ports

9 Chief Executive’s Report What an exciting introduction to the world of IBIA!

10 IBIA Asia The IBIA Asia office had a very busy year in 2016, and 2017 is shaping up to be another very active year, Regional Manager Simon Neo reports

12 - 15 IBIA Events IBIA has been extraordinarily active at events during the first quarter of 2017

16 - 17 IBIA Africa Regional Manager Tahra Sergeant reports from the recent AGM

18 - 20

43 Mauritius Since Mauritius opened up its bunker market to the private sector business has boomed

45 Pakistan Times are difficult for Pakistan’s bunker suppliers but the 2020 global sulphur limit may prove a boon to the country’s marine fuel sector

46 Sri Lanka The future of Sri Lanka’s newest port still needs to be settled but elsewhere the story is of steady progress

47 - 49 Fujcon Nigel Draffin reports from the bi-annual conference in one of the world’s main bunkering hubs

Interview Dr Tristan Smith has a message: shipping must decarbonise

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50 - 52 Russia Olga Bogacheva reports on the Russian bunkering scene

New Members

22 - 23 Industry News Aim is to meet demand for compliant fuels in 2020

24 - 31 Turkey

53 - 56 Environment Pressure has been mounting to control emissions of black carbon in the high north. An HFO ban may come sooner, reports Unni Einemo

57 - 58

Arkas Interview,, the Turkish government is mandating the use of mass flow meters but not all suppliers welcome the move and CYE Interview

Innovation Chemical tanker’s hybrid propulsions system will “improve efficiency, reduce exhaust emissions and lower noise levels”

32 - 36

59 - 60

Mediterranean Algeciras develops ‘one-stop-shop’, Greece demand has ebbed in recent months and Cyprus’s bunker sales

Equipment & Services Chemical tanker’s hybrid propulsions system will “improve efficiency, reduce exhaust emissions and lower noise levels”

content 61 Legal The owner of a brand new bulker that accidentally spilt fuel oil in Canadian waters faces prosecution

62 - 64 Fuel Quality Unni Einemo looks at what’s new in ISO 8217:2017, the rationale behind it, and what to expect for the next revision

65 Fuel Management Intertek ShipCare’s Global Technical Manager Michael Green puts the latest changes to ISO 8217

66 Oil Majors Sovcomflot ships will be first gas-fuelled Aframax tankers

67 Lubricants Total Lubmarine is developing new solutions to meet changing demand

68 LNG Classification society ABS has approved in principle a dual-fuel project

69 Scrubbers HSFO is the obvious energy source of choice for merchant ships

70 - 71 Company News

72 Next Issue

73 Diary

74 Notice Board

The future has never been so uncertain and combining knowledge and thinking has never been more valuable

T

he past three months have provided a challenge for the board of IBIA. Changing Chief Executives while ensuring the association continues to provide support to its membership has stretched our resources. With a new management and with further talent to be added soon to IBIA’s staff, we will be even better placed. Justin has set out some of the initiatives that he will usher in over the coming months in his introduction.

One area where IBIA is already at the forefront of providing guidance and information is the most important issue of 2020. Our close contact with IMO and other regulators, both international and national, as well as access to insights as to how the industry will accommodate the changes provides a wealth of knowledge for members. This is accessible through the website but also by contacting us with your specific questions.

He is well supported by a very active board which has been further augmented by the arrival of Martin Brodersen, Head of Bunkers at Torm and also strengthened by the extension of Lim Tech Cheng’s term as a board member until 2020, in time to see in the tumultuous changes coming to our sector. Tech Cheng is Chief Executive of Hong Lam Marine Pte Ltd, a very successful barge and tanker owner at the heart of the Singapore bunker business.

We also welcome Dilip Mody, Managing Director at Global Fuels & Lubricants who has returned to serve again on the IBIA board giving greater insight into the Middle East and Indian sub-continent.

We cannot thank John Stirling and Steve Simms, who have both stepped down, enough for their fantastic contribution to the IBIA board. They have assured us that they will remain stalwart supporters.

For example we have recently set out scenarios on the uptake of scrubbers, the future use of LNG as bunkers and how the refinery industry may react to servicing a global change to lower sulphur fuels in 2020. The issues of compliance and prices have also been addressed. It is realised that these are ongoing debates with greater certainty emerging as we move nearer to 2020. We hope that this information will assist our members with advantageous insights but also that they will also respond with contributions to the debate. The future has never been so uncertain and combining knowledge and thinking has never been more valuable.

Members often do not realise the time and effort put into the association on a pro bono basis by board members.

There is also a great deal of input from other members in contributing to the Working Groups which monitor and advise the membership on commercial, technical, operations, legal and education issues. These groups will be even more focused under the new Chief Executive, supported by a strong board and providing better value to all of us.

As we move forward IBIA will need greater input from the membership, increasing the value of the association to a greater number of people.

The spread of our membership through bunker buyers, suppliers, barge operators, port authorities as well refiners and the myriad of industry support functions means that we can develop a very comprehensive picture of the future.

This will assist us all in our planning.

This process of sharing knowledge will be more diligently pursued in the coming months under the stewardship of our new chief executive not only with respect to 2020 but in the generation of best practices and higher ethical standards as well focusing on improving education within bunkering. These are all steps that will go some way to enhancing the status of bunkering within the marine transport milieu. This is a process that has been set back over the recent past with the identification of fraudulent and unprofessional management.

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However, the identification of such practices, particularly when whistle blowers are involved, demonstrates that self-policing may well be increasing.

The rapid acceptance of mass flow meter by an increasing number of professionally managed ports is another indication that our industry is cleaning up its act.

With IBIA’s support it is envisaged that this process will accelerate to the benefit of the membership as well as bunkering as a whole.

Introducing these improvements is not helped by the dire state of the business, with most shipping sectors hoping for recovery this year or next. At the same time bunker margins have never been so tight which can encourage less than professional practices. Moreover low margins are expected by many to result in consolidation within the supply side.

This in turn may well improve standards as the larger suppliers have established codes of practice and have monitoring processes in place.

Many of us expect fewer participants in bunkering in the future with a smaller number of companies and fewer employees. However, these will need to be even more productive and receptive to greater use of innovative systems and processes. There is little doubt that we will all need to sharpen up. This will require greater training as well as adopting established practices and standards – issues on which IBIA is leading the way.

Robin Meech Chairman 7

chairman’s letter

Imminent changes for the better

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The only official magazine of IBIA, World Bunkering sUMMER 2017

chief executive’s report

GETTING TO KNOW YOU What an exciting introduction to the world of IBIA!

In my first ten days on the job I experienced my first IBIA Board Meeting, the Annual General Meeting and attended our Annual Dinner in London at the Grosvenor Hotel.

It was great to meet so many of our members, some old friends and plenty of new ones.

S

ince then the pace has continued unabated which is a reflection of the dynamic environment that we live in today and the central role that IBIA plays in bunker industry. With the uncertainty that surrounds how to meet the 1st January 2020 deadline for sulphur emission reductions, the industry faces many challenges and unanswered questions. What has become clear to me is that IBIA is ideally positioned to manage the industry’s concerns.

IBIA’s representative status at IMO affords us a first-hand insight into how these key issues can be managed and also allows us to lobby for the very wide constituency of our members. Historically, IBIA has been perceived by many to be the Association for bunker suppliers, traders and brokers.

Of course, these business areas remain very well represented in our membership today. However, IBIA has grown significantly in recent years and we have extended our reach across the industry so that today we can legitimately claim to represent every part of the bunker industry from the wellhead to the engine room. What is equally clear is that there is room for improvement in the level of service and coverage that we provide.

As a membership association, IBIA needs to look to the future and anticipate trends, create new relationships, and engage in a meaningful way both with existing and potential members by making a meaningful contribution to our members. Our aspiration is for IBIA to become the voice of the global bunker industry; fuelled by the talent, the passion and the pride of our Board, the Secretariat and our Membership, I have no doubt that this vision will become a reality.

Over the next few months, IBIA members will witness some changes in the way that we engage with them and the industry. The IBIA website will undergo a complete transformation, we will also invest in a membership driven Customer Relationship Management (CRM) system and enhance the quality and level of our communication via Social Media channels.

These changes will enable us to serve you more effectively and to improve the range of our services.

We will also invite members to participate in the development of four key initiatives that will be delivered in 2017. Four distinct Working Groups will develop: The IBIA Suppliers’ Guide to Best Practice; The IBIA Guide to Best Ethical Practice; The IBIA Port Charter Accreditation; and the IBIA 2020 Working Group. If you would like to learn more about the opportunity to participate in any one of these initiatives then please get in touch with us.

Over the course of April and May I’m attending industry events in London, Singapore, Turkey and Rotterdam.

This is a wonderful opportunity to connect face to face with members and to learn more about their particular challenges and to understand how we can serve them more effectively in the future.

If you have any questions or suggestions on any of the issues above please do let me know.

Justin Murphy Email: justin.murphy@ibia.net Tel +44 20 3397 3850

Education and training should play a key role in an industry association.

This is an area where I feel that we should be doing more for our membership. Therefore, we have begun to develop a longer term strategic plan which will address the role that IBIA can play in improving industry standards and which will consider how IBIA can offer our members a more structured approach to their learning and development needs. We will be partnering with specialists in this field and will also call upon the significant expertise within our membership.

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ibia asia

Following a successful event in 2016, the IBIA Asia Gala Dinner returns at the end of April

First quarter flies by at IBIA Asia The IBIA Asia office had a very busy year in 2016, and 2017 is shaping up to be another very active year, Regional Manager Simon Neo reports

F

irst and foremost, we welcome our new colleague, Miss Nur Atikah, who joined us in December 2016.

After undergoing training by Miss Nadiah Binte Zulkifle, she will now be handling all matters pertaining to our training courses.

For 2017, we have started up a new one-day course aimed at the busy executives who want to know more about mass flow meter systems, how it works and its procedures plus processes. We are also continuing our two-day Enhanced Bunkering Course which provides advanced knowledge and skills in the application of Singapore Standard SS600:2014 and TR48:2015, the technical standard to ensure that the correct quality and quantity of bunkers are being delivered safely and efficiently.

Details are available on our website (http://ibia.net/training/) We kicked off 2017 with some training courses and meetings with members to understand their needs, before we closed the office for the Chinese New Year Celebration from 27 to 30 January.

In the first half of February, there were lots of CNY lunches, and not forgetting our training courses. This was followed by our quarterly dialogue session between the IBIA Asia Executive Committee and the Marine and Port Authority of Singapore.

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Lots of issues were discussed, including matters like the operational cost of bunker tankers, manning issues, problems faced by the bunkering industry and host of other issues.

IBIA’s new Chief Executive, Justin Murphy, will be in attendance. Together with him, we look forward to welcoming guests to share a night of toasts, good cheer and gourmet delights.

On 17 March 2017, we held an event in Singapore together with the Methanol Institute and Lloyd’s Register: “The 2020 Challenge: Where Fuels and Technology Meet Logistics.” This marine industry forum addressed options available to ship owners in efforts to comply with International Maritime Organization regulations to reduce emissions, with a focus on alternative fuels and technology.

Simon Neo, IBIA Regional Manager +65 6472 0916 regionalmanagerasia@ibia.net

IBIA Asia Chairman, Rahul Choudhuri, welcomed delegates, while the forum speakers: Tony Regan from DataFusion spoke about LNG; Bengt Ramne from ScandiNAOS spoke about methanol; and Dr. Prapisala Thepsithar from Energy Research Institute, NTU spoke about scrubbers.

The forum was very well attended with around 120 participants, many of whom stayed behind to ask questions after the panel session.

As we go to press, IBIA Asia is preparing to host its Asia Gala Dinner, taking place on 27 April 2017 during the Singapore Maritime Week.

Simon Neo

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ibia Asia

APRIL 12th 19th 26th 27th MAY 16th 22nd - 26th 22nd - 26th SEPTEMBER 11th - 15th 11th - 15th 25th 26th - 27th OCTOBER 3rd - 6th 17th - 18th NOVEMBER 6th - 10th DECEMBER

FEBRUARY 19th

London

IBIA in Africa AGM and Exco Meeting IBIA Board Meeting IBIA Forum with UK Chamber of Shipping IBIA Asia Forum (Sea Asia) IBIA Asia Gala Dinner

Cape Town, South Africa London, UK London, UK Singapore Singapore

IBIA MFM workshop with Port of Rotterdam Maritime Week Americas (Petrospot) IBIA Training (Basic Bunker Course English & Spanish)

Rotterdam Miami Miami/Panama

IBIA Regional Forum: LISW IBIA Training MFM and Bunkering Courses IBIA Training: Jamaica, Caribbean IBIA Regional Forum: Jamaica, Caribbean

London, UK London, UK

Jamaica, Caribbean Jamaica, Caribbean

IBIA Bunker Training IBIA Regional Forum Canaries African Ports Evolution

Tenerife

IBIA Convention

Singapore

Social Event: Singapore, Asia Social Event: London, UK Social Event: Africa

Singapore, Asia London, UK Cape Town

IBIA Annual Gala Dinner

London, UK

Rotterdam

Durban, South Africa

Singapore

Cape Town

ibia EVENTS

Eventful period IBIA has been extraordinarily active at events during the first quarter of 2017 and there is no slowing down as we move into the second quarter

W

e are still in early spring as the summer edition of World Bunkering goes to print, so let’s start with the first big event of the year: Around 1,000 marine industry professionals joined us for IBIA’s annual dinner on February 20 at the Grosvenor Hotel in London. What an enjoyable evening that was! Please turn over the page to see a selection of pictures from this memorable evening.

During March, IBIA’s secretariat and IBIA board members took part as speakers at a number of events. Our IMO Representative and Communication manager, Unni Einemo, presented at the 9th Chemical & Product Tanker Conference in London. IBIA’s chairman Robin Meech and board member Eugenia Benavides spoke at the Panama Maritime XIII World Conference & Exhibition, which included a bunker session organised by IBIA. Our Singapore office, meanwhile, held a joint event with the Methanol Institute and Lloyd’s Register, and board member Nigel Draffin presented on behalf of IBIA at FUJCON 2017.

Come April, a forum co-hosted by IBIA and the UK Chamber of Shipping was on our schedule in London with the theme “2020: Getting down to business”. At the time of going to press, the programme sees our Chief Executive, Justin Murphy, set the scene; Unni will provide an update on IMO’s activities; IBIA board member Michael Green will talk about fuel quality and John Stirling, who has just stepped down from the board,

will provide the supplier’s perspective.

Not long after, Unni, Robin and John will participate as speakers at the 38th International Bunker Conference taking place on the 5 star cruise ferry Color Fantasy on a two days roundtrip voyage between Oslo, Norway and Kiel in Germany. Around the same time, Justin will fly to Singapore to participate in the IBIA Asia Gala dinner that takes place during Singapore Maritime Week.

Springing into May, Justin and Unni plus IBIA’s company secretary Trevor Harrison look forward to taking part in the 8th International Istanbul Bunker Conference, alongside Robin and board member Nigel, speaking on a variety of subjects at the conference in this beautiful city located on a major waterway.

Mid-May we are excited to co-host a one day forum with the Port of Rotterdam on May 16, in conjunction with the Platts European Bunker Fuel conference in Rotterdam (17-18 May). This will provide delegates with first-hand information on how to improve efficiency and transparency in bunkering with the application of technology, including the use of mass flow meters, digitalisation of the bunker delivery note and more.

We will be book-ending the Platts conference with an IBIA Port Forum in the afternoon of 18 May, an invitation-only event for ports to exchange ideas and provide feedback on the development of IBIA’s Port Charter.

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As May draws to a close, Unni will have the honour of participating in a high-level strategic panel at the DNV GL conference on 29 May, a day ahead of the bi-annual Nor-Shipping shipping trade fair.

The theme will be “2020 and beyond – Playing your cards right”.

A month later, on 29 June, Simon Neo, Regional Manager Asia, will give a keynote speech at Platts’ inaugural Bunkering & Storage Asia Conference, talking about the challenges of bunkering in Singapore and the region. We round off the spring and summer season at IBC’s 8th Bunkering in Asia conference on 26 to 27 in Singapore, where Justin has been invited to speak.

There will be time for a breather during August before we launch into the final leg of the year with plans taking shape for events during September, October and November. Check our website (http://ibia.net/events/) for announcements and updates.

Mark your calendars now for the IBIA Annual Convention! Our flagship event, aimed at all our members globally, will take place from 6 to 10 November in Singapore. We hope to see as many of you as possible there as this will be a great opportunity for you to participate in shaping IBIA’s agenda and direction.

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ibia events 14

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ibia EVENTS

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ibia Africa

Jonathan Daniels (Webber Wentzel) Nomfundo Molefe (Kinsey Resources) and Douglas Xhallie (Kinsey Resources)

IBIA Africa: Our regional strategy Regional Manager Tahra Sergeant reports from the recent AGM

A

s the year steamrolled into the second quarter of 2017, the IBIA Africa branch recently hosted our annual general meeting at Webber Wentzel’s offices in Cape Town, South Africa. Whilst a small representation of the membership attended, it is always beneficial to get the feedback from our members and associate partners.

Patrick Holloway, Partner at Webber Wentzel and IBIA Board member took the members through the top line initiatives for the region as well as where IBIA Africa is heading. The region has gone from strength to strength over the past three years with the introduction of a dedicated Regional Manager and the appointment Patrick to the IBIA Board.

Top line strategy builds on the aspirations first set out by the Board for the branch three years ago: • To develop effective and transparent communication with our members In establishing a local office, members have access to information and support where and when required.

• To be a conduit in addressing technical questions - Access given to the members via our Working Groups, and again we encouraged the local members to become active members of these initiatives.

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Patrick Holloway (Webber Wentzel Partner, IBIA Africa Exco and IBIA Board) Paul Maclons (Amsol Managing Director and IBIA Africa EXCO Member)

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• To ensure that we establish key networking opportunities for the industry.

• Offer topical forums to address immediate areas of concern for the region - With the establishment of the IBIA Regional Forum programmes, regions have had platforms by which to engage both with many at once and one-on-one with the members.

With a strategy for hosting forums in East, South and West Africa, IBIA Africa is able to engage more directly with its members in the various regions.

We also presented the plan for the next 12 – 18 months, which includes training in Southern, East and West Africa and a number of co-located events which will be announced on the IBIA website.

This brings us to our next Regional Forum.

We had planned a forum in Sri Lanka in June; this is most likely moving into 2018.

We are pleased to announce that IBIA Africa’s next Regional Forum will be in Tenerife the first week of October 2017.

Tenerife enjoys a strategic location for many trade routes and has strong ties to West and North Africa. This forum, to be jointly organised by the Ports of Tenerife and IBIA, will focus on: • Tenerife’s potential as a bunkering port and marine services hub • Regional supply trends • Open forum for industry to engage with Port Authority and Government

ibia Africa

• Establish the Africa branch as a financially sustainable branch Year-on-year the branch has financially supported itself, and increased membership via providing Forums and Training.

Further information on this forum will be available on the IBIA website, but please feel free to contact the local office for information.

IBIA Africa strives for open engagement with its members, and over the period of the next few months we have asked members to give constructive feedback as to industry developments and potential membership growth in the region.

We are a community working together and look forward to a successful future.

Should you require any further information regarding the Africa events contact:

Tahra Sergeant, IBIA Regional Manager Tel: +27 21 412 1593 Email: tahra.sergeant@ibia.net

Thulani Dubeko, (TNPA), Wilhelm Wasserman (FFS Refiners) and Ntokozo Hlatshwayo (TNPA)

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interview

What should we do about CO2?

Dr Tristan Smith has a message: shipping must decarbonise. He talks to Unni Einemo about why he is so adamant, and what would it take?

D

r Tristan Smith, who works for the UCL Energy Institute, has become well known in shipping circles for his studies into shipping and energy efficiency, in particular among those engaged in International Maritime Organization (IMO) meetings. He was one of the lead authors of the IMO’s third greenhouse gas (GHG) study and regularly engages with the IMO on the issue of shipping’s carbon dioxide (CO2) emissions.

UE: You have been speaking recently about shipping’s obligations under the Paris Agreement. Shipping is not specifically covered, and it is a global industry serving the needs of both developing and developed countries, hence the activity level is intrinsically linked with world trade. So why should it be bound by the same CO2 reduction targets as, say, Germany, a country its current CO2 emissions is comparable with?

TS: This is a common misunderstanding.

Shipping is specifically covered – the Paris Agreement goal of maintaining temperature increases to well below 2 is inclusive of all anthropogenic (manmade) GHG emissions. Shipping is unquestionably a source of anthropogenic GHG – it’s covered.

There is no explicit regulation of shipping but there is also no explicit regulation on any individual countries –

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Paris works by setting a high level goal and objective, and then creating an expectation of action. That expectation has been responded to by impressive commitments and contributions made across the vast majority of developed and developing countries. So far shipping has made no such commitment.

But fundamentally, keeping temperature rises to well below 2 degrees means globally we can emit a finite amount of GHGs. If shipping’s GHGs are not controlled, then much greater reductions than have already been committed to will be needed elsewhere – in agriculture, in industry and manufacturing, in energy generation. The scale of the challenge ahead is phenomenal and all sectors will need to transition. Of course there’s a discussion about whether shipping should need to undertake a commitment exactly equivalent to Germany, but this is not a justification to make no commitment: why should a developing country have to revise its current commitments and further increase the speed of decarbonisation of its energy or food production – just because international shipping refuses to do its part?

UE: What level of CO2 reductions would be required for shipping to meet the objectives of the Paris Agreement to limit the global temperature increase?

TS: In simple terms, aiming to limit the increase to 1.5 degrees means no fossil-fuel use anywhere after about 2035. So shipping would have to 100% decarbonise in 15-20 years. To maintain a consistent share of a 2 degree budget requires approximately a 50% reduction in 2010 total CO2 emissions by 2050 and full decarbonisation soon afterwards.

Therefore the Paris Agreement goal of “well below 2 degrees, aiming for 1.5 degrees” means full decarbonisation in the next 15-50 years with the timing dependent on shipping’s respective contribution and the political will to maintain the Paris ambition for limiting the temperature rise to 1.5 degrees.

This is made more challenging because it’s reasonable to expect further increases in trade and transport demand. Taking this into account with a 2 degree trajectory means that the average carbon intensity of shipping (e.g. the average EEOI) needs to reduce from its 2010 average by 60-90% by 2050. Whilst the concept of offsetting needs to be explored further, it cannot provide anything more than a way to help manage shipping’s transition – the sooner any fossil-fuel consuming sector engages with its genuine longterm decarbonisation, the clearer and less painful and disruptive its transition will be.

UE: Those are big reductions. How far can we get with existing technologies and energy efficiency measures?

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UE: Proponents of LNG say it can reduce ship CO2 emissions by as much as 20%. Should LNG play a role?

TS: Yes and no. It can play a role, but it cannot be more than a shortterm solution because 20% even in combination with other technologies will clearly not achieve 100% decarbonisation.

Furthermore, LNG requires significant investment in bunkering and ship hardware/technology that so far we have not found any role for besides use of LNG (other than biogas, but as a biofuel we cannot see evidence that this would be cost-competitive to alternative liquid biofuel). This means that widespread adoption of LNG risks creating technology ‘lock-in’ delaying the adoption of the necessary longer-term low carbon fuels and technology. Furthermore with very low carbon fuels looking likely in many scenarios to start entering shipping from 2030,

LNG has a window of maybe 10 years before it would start to be competed out of the fuel mix, which risks making a large amount of investments associated with LNG stranded assets. Gas has a much more obvious role on land, where it can substitute for coal (50% lower carbon intensity) and potentially ultimately be connected into Carbon Capture and Storage networks.

UE: If we are going to achieve this enormous cut in CO2 emission from shipping, we need to decarbonise the fuel. If LNG is not the answer, how about bio-fuels or maybe bio-derived methanol? Or should we put our faith in technology like the Ecospec scrubber that says it can deal with CO2 as well as SOx and NOx emissions?

What are our options?

UE: The trouble with taking life-cycle emissions into account is that the global regulator, IMO, can only deal with what is emitted by ships. How can we achieve a more holistic policy view that considers ‘well to wake’ emissions?

TS: Bio and synthetic fuels, batteries and renewables (wind and solar assistance).

By biofuels, this would be inclusive of methanol, if that is the ‘right’ solution, but it may be that there are cheaper biofuel alternatives, depending on the feedstock and production. By synthetic fuels, we mean those ‘manufactured’ for example the use of low carbon electricity to convert water into hydrogen and oxygen through electrolysis. Synthetic fuels are often referred to as ‘power to liquid’ fuels whereby electricity is used to manufacture liquid fuels. One of the positives about the future is that there is a very good likelihood of widespread low-cost very low carbon electricity (from solar, wind for example).

Currently it is difficult and expensive to store this energy, and manufacturing liquid fuels can be a cost-effective way to absorb short-run oversupply whilst simultaneously addressing the challenge of mobile energy consumers like ships.

The Ecospec scrubber is interesting but is not quite convincing, so until we can obtain greater clarity of the underlying technology and its life cycle impacts, we have not included it in our analysis.

TS: The reason why LNG is not a viable long-term solution is not to do with life-cycle emissions, it’s to do with the fact that it is a high-carbon fuel (burning 1 tonne of LNG releases ~ 2.75 tonnes of CO2). The upstream and non-CO2 GHG emissions of LNG, which diminish the argument that it can reduce by even 20% GHG emissions relative to HFO, only make its justification for use as a transition fuel harder.

That said, the issue of how IMO handles the issue of upstream emissions is important and non-trivial.

It emphasises how important it will be to consider shipping’s low carbon transition within the context of the rapidly evolving and decarbonising global energy system, and that we will need to be identifying and mitigating risks of unintended consequences of any developing regulation.

The only official magazine of IBIA, World Bunkering sUMMER 2017

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interview

TS: Using current fuels and at current speeds, it varies depending on the ship, but a further 10-40% seems possible.

Up to 40% may be possible for a ship that could adopt all available energy efficiency technologies and fit significant wind-assistance (e.g. Flettner rotors).

Existing technology could achieve 90% reduction – but it would require ships to be operated at significantly lower speeds (e.g. around 5 knots). So there is no ‘excuse’ that technology is not in existence. But in our analysis so far, lower speeds are rarely an economically preferable solution to the decarbonisation of fuel, so we see that as a more likely pathway for the industry.

interview

UE: We will need innovation and environmentally effective regulation.

Short term, we are looking at the EU MRV and the IMO’s fuel consumption data collection system. What’s your view on those?

TS: Shipping has a well-documented issue of a lack of trusted data on the fuel consumption of ships. This creates failures and barriers in shipping markets, preventing investment in energy efficiency technologies. Addressing this is probably one of the most important and least costly ways for the industry to assist its transition. The EU MRV as currently formed should help in this respect, but the IMO DCS could have done so much more. Instead it is a very poor relation and has justified the retention of the EU MRV, making it very likely shipowners will have to meet the requirements of two systems rather than one. The IMO has therefore scored a massive own-goal with the Data Collection System.

UE: We’ve had signals that the EU Parliament wants to include shipping in the EU ETS, while shipping organisations prefer a global system.

They also tend to prefer a bunker levy over an emission trading scheme.

Which do you think would be easier to implement, and which would be most effective at reducing CO2?

TS: In theory, IMO regulation should be easier to implement and more effective at reducing CO2. But current evidence suggests that the jury is still out on whether it will be ‘easier’ or even feasible politically for IMO to make the required regulation. This may yet make EU action a necessary and important first step for avoiding the much worse consequences of dangerous climate change. But it is odd that this is always seen as a confrontation and a binary choice. There are plenty of other examples in shipping where regional regulatory action has helped to pilot regulations and develop solutions, prior to them becoming adopted globally. Why not also on GHG? On the merits of levies and ETS, we do not see big differences but think it will depend on their specifics and details. The levy seems simpler, but to ensure that it is environmentally effective,

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it should be set according to the price signal needed to achieve a given target/ objective on CO2. This makes the levy a sort of manual equivalent to the ETS – an ETS which would have the market setting the price, and the levy requiring some oversight body periodically reviewing/adjusting levy price. Designing, defining and operating a levy may therefore not be as simple as it appears on the surface, and it would be good to keep the discussion of the two concepts’ relative merits alive to ensure the most cost-effective solution is chosen.

UE: Decarbonising shipping would have a radical impact on the bunker supply industry; some might say it is like asking turkeys to vote for Christmas. Do you have any thoughts on how the supply side can deal with this future?

TS: This concern makes a lot of sense, change is often disruptive and uncertainty is difficult to manage. But I think the message for bunker suppliers is the same as to other stakeholders.

The decarbonisation of shipping is inevitable and a question of ‘when’ and not ‘if’. But unless there’s some extraordinary progress on batteries, it is very likely that the bio/synthetic fuels that are used in the future will still require bunkering – that’s as much of an opportunity as a risk. So it makes sense to try and think ahead and anticipate how for your organisation you can maximise opportunities and minimise risks - explore whether LNG would work for you as an interim option if it only has a very short ‘life’ in shipping, and how to remain versatile and flexible given uncertainty in details of the future fuel mix and the timing at which certain steps in the transition will occur.

And don’t just watch the IMO - change on the fuels/GHG topic could well come from disruptive private sector action as well as regulation, especially if the IMO fails to show signs of meaningful progress.

Our research group is interested in making sure good quality evidence is available in the commercial and political spaces, and hopefully made as accessible and clear as possible. We try to be as transparent and rigorous as possible, we publish our assumptions and regularly test these with stakeholder groups, and always welcome inputs and corrections if we have got something wrong. On the topic of climate change, all that evidence comes back to some very simple scientific relationships related to concentrations of CO2 in the atmosphere, which in turn place a very finite further role for fossil fuels in the global energy system. We interpret that science in the context of the temperature goals and political commitment of the Paris Agreement, and try to identify what this might mean under different scenarios for the shipping industry – unsurprisingly it often means change. If that interpretation sometimes aligns with messaging from environment NGOs, it is because sometimes they can be right about things, not because we’ve become lobbyists, but I can understand the confusion.

UE: Some call you an “environmental scientist”. Do you think that’s fair?

TS: This is interesting, and I think it’s very understandable given the nature of the messages that we often present.

Tristan Smith

The only official magazine of IBIA, World Bunkering sUMMER 2017

Corporate Service Zan Chen Chimbusco Europe BV Europe chenz@chimbusco.nl Buyer | Shipowner Jim Gilligan Eagle Shipping International (USA) LLC USA jgilligan@eagleships.com Supplier (Physical) Emmanuel Barat Atlantic Energy Europe bunkers@oil-atlantic.energy

Supplier (Physical) | Trader Sven Poelmans Transcor Energy N.V. Europe poelmans@transcor.be Service Hussain Al Mulla Gulf Environment & Waste FZE Middle East hussain@gulfenviro.ae

Supplier (Physical) Pablo Sanso Minerva Bunkers Las Palmas S.L.U Europe spernot@mercuria.com Surveyor Binu Nair MAS Marine Services Asia info@mas-world.com

Service Mohamed Aboeldahab Suez Canal Economic Zone Middle East mohamed.dahab@sczone.eg

Service Jasen Butler Intrepid Oceans Marine USA iomarine@att.net

Buyer | Shipowner Jon Millatt Scot Line Ltd Europe chenz@chimbusco.nl

Fianancial Ali Ersen Vercer Capital Markets Trading Europe aersen@vercer.co.uk

Buyer | Shipowner Jakob Fabricus Klaveness AS Europe chenz@chimbusco.nl Supplier (Physical) | Shipowner Sheen Mao Choong Equatorail Marine Fuel Management Services Pte Ltd Asia bunkers@emf.com.sg

Individual Service Yukari Kawahori Sinanen Co Ltd Asia yukari-kawahori@sinanengroup.co.jp Service Adrian Tolsen 20/20 Marine Energy USA adrian.tolson@2020marineenergy.com

new members

new members

Service Darren Middleton Simplex Turbulo cl Ltd Europe DMiddleton@simplexturbulo.com Service Jonathan Robins Argus Media Europe Jonathan.Robins@argusmedia.com Service Tammi Ingannamorte ClearLynx LLC USA tingannamorte@clearlynx.com

Storage | Supplier Murthad Al Kharusi Oman Oil Marketing Company Middle East kharusmr@oomco.com

Service Fjavier Brito Unity Bunkering Inc USA fjb@unitybunkering.com

The only official magazine of IBIA, World Bunkering sUMMER 2017

21

INDustry news

K Lines LNG carrier Bishu Maru

Genoil links with Bomin for low sulphur projects Aim is to meet demand for compliant fuels in 2020

G

enoil Inc, a publicly traded clean technology engineering company for the petroleum industries, has announced the signing of a Memorandum of Understanding (MOU) with the Bomin Group, a leading global physical supplier and trader of marine fuel, for a potential collaboration to develop low sulphur fuel products compliant with the International Maritime Organization’s (IMO) 0.50% global low sulphur fuel limit.

The MOU sees the two companies confirm their mutual intent to provide a framework aiming to develop a co-operation agreement to supply the market with compliant low sulphur products, utilising Genoil’s technology, in conjunction with Bomin’s global physical supply and storage infrastructure.

Genoil’s proprietary technology, the Hydroconversion Upgrader (GHU), converts heavy crude oils and refinery residual products into cleaner, lower emission energy. The GHU is said to remove sulphur from heavy fuel oil (HFO), without altering the quality, turning it into more cost-effective low sulphur fuel oil that will comply with the 2020 global sulphur cap of 0.50% under MARPOL Annex VI regulations.

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Genoil’s innovation improves upon the existing data-verified Fixed Bed Reactor technology, which is currently used in nearly 85% of the world’s reactors.

A Genoil GHU unit can be placed in locations including receiving terminals, pipelines and ports.

Bruce Abbott, President and Chief Operating Officer, Genoil Inc, commented: “With the 2020 global sulphur cap now confirmed, we are delighted to explore this potential partnership with Bomin Group, and test the market opportunity for 0.5% low sulphur fuel oil. We believe that our technology can provide the market with cheaper, compatible and compliant fuel products, at a time when there are real concerns within the industry over the supply and cost of distillates, and other solutions. Bomin’s global infrastructure and network, and their expertise in physical supply and storage makes them an ideal partner to explore this opportunity.”

“K”Line’s CO2 target “science based“ Japanese shipping group “K” Line CO2 reduction targets have been certified by the Science Based Target Initiative (SBTi) to be scientifically consistent with achieving the Paris Agreement goal of keeping global temperature increases below 2deg C.

The Science Based Targets initiative is a collaboration between CDP, World Resources Institute, the World Wide Fund for Nature, and the United Nations Global Compact. As of February this year, 211 major companies worldwide had announced CO2 reduction targets and 35, including ”K” Line, have now been certified by SBTi. First LNG bunkering in Australia The first commercial LNG bunkering operation in Australia has been undertaken by Wesfarmers’ EVOL LNG in the north-west of the country.

Under an agreement with Woodside, EVOL LNG successfully refuelled the platform supply vessel, Siem Thiima, on 23 January at King Bay Supply Base near Dampier.

Business Manager, Nick Rea said: “Our decision to enter the LNG bunkering market is part of a long-term strategy that recognises environmental and economic sustainability of LNG as a transport fuel.

It also recognises that the LNG marine fuel market is still in development so the fact EVOL has over 15 years’ experience in distributing LNG means we saw an opportunity to provide a suite of services that perhaps others can’t.”

The only official magazine of IBIA, World Bunkering sUMMER 2017

e added: “With growing demand for lower emission fuels over the past decade, we’ve seen the number of LNG-fuelled ships in operation worldwide increase steadily from a handful to more than 75, with an additional 80 expected to be built in the next three years.”

Rea said EVOL LNG would be able to supply Fremantle customers with LNG at a price competitive with low-sulphur marine diesel and would be able to refuel ships at up to 45 tonnes per hour, which is comparable to the refuelling of traditional bunker fuels.

EVOL LNG secured its second major Australian port bunkering licence from Pilbara Ports Authority, permitting LNG bunkering at King Bay Supply Base and transport through the Port of Dampier.

This followed its first licence from Fremantle Ports in July last year.

Start-up firm We4Sea aims to boost fuel efficiency Netherlands-based Mainport Innovation Fund II, comprising KLM, Schiphol Group, Delft University of Technology, Port of Amsterdam and NS Dutch Railways, is investing €400,000 in We4Sea, a maritime technology start-up focused on increasing the fuel efficiency of seagoing ships. With the investment, We4Sea wants to accelerate its growth in the maritime transport sector.

We4Sea has developed a cloud platform that offers advanced solutions to optimize the performance and reduce fuel consumption and emissions of seagoing ships. We4Sea collects vast amounts of a ship’s operational data, such as position, speed, heading and engine data.

This data is sent to shore, where it is enriched with other data sources, such as weather conditions, wave heights, currents and wind. The proprietary algorithms and energy models of We4Sea transform this big data pool into actionable management information on how to optimize the use and configuration of a ship. In pilot projects, We4Sea says it has proven that using data analysis can substantially cut fuel costs,

up to 20%. Using the technology is easy, as it requires no additional hardware on board of the ship.

Michiel Katgert, CTO of We4Sea: “We offer the shipowner tools to cut his fuel bill substantially. This will not only have a direct impact on their financial results, but it will also improve the sustainability of their operations and lead to a reduction of CO2.”

Alfa Laval expands gas testing facility In March 2017 Alfa Laval opened an extension to its Test & Training Centre in Aalborg, Denmark for the opening of the expansion into gas testing.

The company says that the expansion, which extends the testing space to five times its original size, makes this the world’s most advanced test centre for environmental and combustion technology – regardless of fuel type.

Since its inauguration in 2014, the Alfa Laval Test & Training Centre has been a hub of Alfa Laval research and development in exhaust gas cleaning, ballast water treatment, steam production, fuel cleaning and other key areas. Its original 250 m3 testing space is essentially a full-size machine room on land, equipped with Alfa Laval products that are installed and integrated into major process lines around a 2 MW marine engine.

Now a further 1,100 m3 have been added to focus on combustion technologies for gas and other fuel alternatives.

Among the new equipment are burner systems, inert gas systems and also the Alfa Laval Gas Combustion Unit (GCU), which is installed at the centre in full scale.

“Our investment in the Alfa Laval Test & Training Centre reflects the extraordinary changes we see in the marine industry,” says Peter Leifland, President of Alfa Laval’s Marine Division. “Tightening emissions legislation is driving many customers from residual fuels towards LNG and other alternatives. As a comprehensive marine supplier, we must be at the cutting edge in supporting our customers, no matter what fuel they choose.”

The only official magazine of IBIA, World Bunkering sUMMER 2017

New MSAR fuel’s performance “positive” Progress on the new MSAR fuel is continuing. In the UK company’s interim result to December 2016 the Executive Chairman of Quadrise Fuels International (QFI), Mike Kirk, says: “The performance of MSAR® on the marine trial vessel has been positive and we expect the recent interim inspection to confirm this.

We are now closely engaged with our partners to expedite the interim LONO. This should put us in a good position to progress discussions on commercialisation of MSAR® within the shipping industry. At the same time, we are defining the scope and plans for the resumption of the trial to achieve a full letter of Non-Objection (LONO) and exploring options to accelerate the timetable for commencement of the combustion trial in Saudi Arabia.”

He added: “Whilst there remain challenges ahead, we strongly believe that MSAR® continues to provide a compelling economic and environmental case for adoption by both producers and consumers and continue our efforts with existing clients and the wider target markets in order to migrate to commercial operations at the earliest opportunity.”

Prior to the results annuncement Maersk suspended its MSAR trials with one its fleet in March. Mr Kirk commented: “We are clearly disappointed that Maersk will have to suspend the trial for operational reasons that are unrelated to the MSAR operational trial.

However, we are pleased that Maersk has reconfirmed that the trial to date has been successful and that an interim inspection will be completed in the spring, as originally scheduled.”

Calpam delivers in France Bolloré group’s German subsidiary Calpam is to use Bolloré’s terminals and oil logistics network to supply ships in French ports to serve all international customers.

The company says independent local truck companies will make the deliveries.

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INDustry news

H

arkas Interview

Adding value

Ufuk Erinç General Manager Arkas Bunkering and Trading explains to David Hughes how his company is investing to keep pace with a changing bunker market

DH: Arkas has been growing its fleet recently. What is the thinking behind this policy and do you intend expanding further?

However, our investments and expertise have enabled us to provide a comprehensive range of services under a single name.

UF: When making all of our investments, we believe that Istanbul will become a critical point for bunkering.

From our customers’ perspective this is perceived as a sense of trust at the highest level which leads to a confident growth for us.

Within the changing bunker trade, our strategy also seems to be backed by ship-owners and operators who are now more willing to collaborate with suppliers directly.

Bunkering is being regulated and driven by a number of authorities in Turkey (EMRA, Undersecretariat for Maritime Affairs, Customs). Hence, we provide services for our customers with the advantage offered by high quality and competitive pricing and fast operations.

In line with our customers’ interest in and collaboration with our company, we make our investments whenever deemed necessary.

We see from the feedback we observe and directly receive in various platforms that we are on the right track and every step we take, along with each of our investments, makes the Turkish bunker market grow as much as 100% does Arkas Bunkering.

DH: Why has the company been successful in growing its sales in recent years?

UF: We are rapidly growing, particularly thanks to the support of our Chairman, Mr. Lucien Arkas, and to our professional staff and strong strategies.

We have never compromised on our quality and trustworthiness. Simply put, when you do things right, the market will support you.

Another consideration is that we are following closely the maritime industry and global trade.

These are all bolstered by our exploratory and passionate structure open to innovations, arising from our maritime background.

It may not be well known; however; despite the obligation to use 0.1% sulphur fuel oil in ECA regions, which was put in effected in 2015, we provided our customers with our own blend of ultra-low sulphur fuel oil just before the date of its effect.

When looking back, either a new product or a new investment, or the innovation I introduced as a new approach was the thing that always placed us in the top spots.

I believe that we will increase our sales and market share this year.

DH: What are the main characteristics of the Turkish bunker market and how do you see it developing?

The most important characteristic of the Turkish bunker market is that the bunker supplies are problem-free in terms of quality and quantity.

It is a well-known fact that companies purchasing fuel from Turkey do not experience any problems.

If we manage to contribute value added to such an extent, then we are delighted with it.

We also intend to expand the Turkish bunker market, specifically Istanbul, with a tank of about 100.000 CBM capacity and a fleet of tankers to support it.

As is known, Arkas culture compels us to invest in the maritime industry and to distinguish ourselves with such investments at all times.

Numerous companies offer bunker services with tankers they do not themselves own and seem on the verge of exiting this market at any moment.

Ufuk Erinc

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The only official magazine of IBIA, World Bunkering sUMMER 2017

In addition to innovations introduced over time, the competitive image of Istanbul attracted more interest to it.

The wide range of resources, increasing storage capacities, which has become possible when terminals started to receive cargos from huge tankers, starting with our company, and services offered with larger and new double hull barges are indicative of development, and transformation of standards.

Henceforth, we need to tell the world more about the Turkish bunker market.

To this end, we have important peoples representing our country, either in IBIA or on many other platforms such as Turkish Bunker Association.

However, I think that we need to work harder to gain wider recognition.

This is because we are situated on an important gateway and several ship-owners and operators cannot give up their habits in certain points of fuel supply.

We accomplished the first stage of development by modernizing our barges, and continually operating with ready inventory.

From now on, we should be entitled to certain aid from EMRA and the under secretariat for customs and maritime affairs.

DH: What will be the effect of the 2020 sulphur limit? Could the Turkish market respond to demand for hybrid fuels?

UF: There will be an increasing demand for distillate fuels all around the world as the utilisation of 0.5% sulphur fuels will be initiated across the world in 2020.

It is currently not easy to answer whether refineries will manage to meet this demand.

There are 3 products that have the potential to meet this demand: distillate fuels, hybrid (blended) fuels and LNG. Since the use of LNG is very limited for the time being, we expect that ship-owners will incur extra charges.

Apart from this, there are no circumstances whereby the rings of chain are controlled by individual companies and suppliers are incapable of becoming more than a coordinator, as is the case elsewhere.

In the light of present information, the most economical way seems to be lowering sulphur to this level by blending.

The adverse impact of distillate fuels on price and ship cruising speed raises concerns and doubts in our minds.

However, a ship-owner’s decision on what kind of fuel to use will also be influenced by factors such as the ship’s tank capacity and its ports of destination.

To give an example from Arkas Bunkering, every aspect, from the receipt of any cargo to its storage, blending and supply to barges are performed through our own resources and with the help of our own staff and, similarly, our own tankers.

It is never a question that there are problems with such controlled work in terms of quality and quantity.

The impression I have got from my conversations with many parties is that there is uncertainty on whether several refineries will manage to supply this product.

Another uncertainty is the lack of know-how on how to perform checks.

Needless to say, we, as one of the largest suppliers in our region, are conducting necessary studies. Thanks to our innovative understanding, we blended 0.1% ultra low sulphur fuel oil in 2014 December. We intend to maintain our activities in this field and be prepared for when 0.5% sulphur fuels come into play.

In addition, the substantial part of our activities focus on LNG bunkering.

We intend to be a pioneer in ship to ship LNG bunkering.

We ensure our activities are focused on the most economical solution for ship-owners.

DH: Is Quantity an issue in the Turkish market? Are mass flow meters the way forward?

UF: The Turkish bunker market has never faced a problem in terms of quantity.

We have been doing this business for around 10 years now and never received any complaints on this matter.

It is compulsory to use MFM at terminals where we load cargos onto barges and barge loading is performed using MFM. We think that there is no need to use MFM on barges since we have operated on a zero defect basis until now and the process from barge loading to bunkering within the Turkish system is already under the supervision of both independent survey company officers and customs officers. Nevertheless, we are closely following up on and evaluating technical advancements in the MFM system applied to barges.

DH: Are there any other points you wish to make?

UF: I believe that the most important matter of potential gain is recognising the risks overseen by ship-owners in order to get cheap fuel.

Accessibility to such high quality and problem-free bunkering amenities at usually the most competitive price in the Mediterranean, Middle East and Asia is an opportunity not to be missed.

I believe that the engagement of a greater number of people from the maritime industry in these businesses will create an image of higher quality.

It is my wish that those investing in the maritime industry will eventually get to where they deserve to be.

I believe that our greatest advantage is that we act in line with guidelines set by EMRA and the customs administration.

The only official magazine of IBIA, World Bunkering sUMMER 2017

25

arkas Interview

W

hile it is a luxury for many ports to continue operating with no consideration for qualitative and quantative problems after fuel connection, this is a standard in Turkey.

TURKEY

New rules The Turkish government is mandating the use of mass flow meters but not all suppliers welcome the move

T

urkey’s market continues to be dominated by Istanbul and the 45,000 ships passing through the straits every year. A third of vessels stop for bunkers, and the five main physical suppliers shift around 2.5m tons per year, with three of the five controlling the majority of the market. One of them, Arkas Bunkering, announced just before World Bunkering went to press that it had added two new tankers to its fleet, bringing it to seven vessels totalling 18,888 dwt.

That market has seen a couple of regulatory shifts in recent months, with the Turkish government instituting new asset thresholds for all bunker licensees, and mandating the use of MFMs across the country in a bid to improve service provision and reliability of deliveries.Energy Petrol chief executive Mustafa Muhtaroglu has come out strongly against the need for the MFM rule, saying that while it improves efficiency and reliability of deliveries, that reliability should already come from suppliers. He told World Bunkering: “Turkey has been a very reliable safe and quality bunkering port in the area, there are almost no shortage cases; for example, my company has made over 50,000 bunker supplies without a single significant quantity or quality claim.”

“In general there are no such cases for any supplier; some 15,000 ships take bunkers every year here in Turkey without any problems. This is very much due to very strict custom rules and suppliers supporting such high controls.

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All barges are loaded for each order and checked by custom before loading and sealed by them at loading terminals, custom break seals and allow barges to supply ships under their supervision.

Moreover barges can only load for ordered ship and ordered quantity only, you cannot load and distribute, and barges cannot go to loading terminals and load again without supplying all the quantity onboard for specific ships. So it’s a very safe, very controlled system which has already resulted in very reliable and safe bunkering in Turkey for many years.”

Therefore, using MFM in Turkey is only advertising.”

He expects the Turkish market to remain relatively buoyant over the short term so long as traffic levels remain steady.

“You always have ships around that can bunker,” he said. “Low prices of course increase demand, however what I know is that shipowners are rather concerned about freight rates. Almost all of them say they are ready to pay bunker prices of 600 for IFO and 1,000 for MGO like in 2008 as long as freight rates are as high as they were in 2007/2008!”

“It is also much to my surprise that the industry relies on 1970s technology.

What a shame; we need a 2020s mentality, well-educated, high quality reliable people in the market. As you can see, one meter wrong pipe can finish you in the industry, but one reliable man can save it for ages.

We have to believe this and invest for that.”

The other issue, he feels, is the profile of the Turkish bunker sector, where most deliveries are of relatively low volume.

“Just calculate: a total 2.5m tons supplied to about 15,000 ships, an average for each bunkering of about 166 tons,” Muhtaroglu said. “It is not like Singapore or ARA where stems are very large volume; here it’s mostly small volumes supplied without any shortage claims, so MFMs do not add any value to the Turkish bunker market, which is already very reliable and high quality. Only 5 barges out of 55 active bunker barges use MFM and 85 per cent of delivered quantity is being done by barges without MFM with no shortage cases.

Energy Petrol chief executive Mustafa Muhtaroglu expects a “relatively buoyant” market in the short term.

The only official magazine of IBIA, World Bunkering sUMMER 2017

cye Interview

Embracing MFMs The CEO of physical supplier CYE Petrol, A. Deniz Eraydin, tells David Hughes why his company is in the vanguard when it comes to fitting mass flow meters

C

YE Petrol was established in 1988, making it the oldest physical bunker supplier in Turkey that is only involved in the bunker business.

DH: What is your company’s ethos?

ADE: We are a quality oriented bunker company. We do not focus on high volume or lowest price. We provide shipowners with the specified bunker quality, in the right quantity and at the market price. We think this approach offers the most economical deal to shipowners.

CYE Petrol is the first and only company who is using Coriolis Mass Flow Meters (MFMs) for bunker supplies in Turkey.

We have been using MFMs voluntarily since 2014. So far we managed more than 6,000 supplies with MFMs in Istanbul.

We are one of the very few physical bunker suppliers in the world who are using this technology voluntarily. MFMs are not mandatory in Turkey for bunker supplies and, it seems, it will not be mandatory for another two to three years.

Quality, quantity and price have always been the main issues causing disputes between physical bunker suppliers and ship owners. Concerns about quality and quantity cost a lot of time and money to both suppliers and shipowners.

In 2013 we decided to eliminate shipowners’ worries about quality, quantity and pricing. And MFMs were an innovative way of doing that.

30

DH: Why 2013?

ADE: Because that was the year we were about to renew our bunker barge fleet. We had already been using MFMs for loading of our bunker barges in our terminal since 2006. But we had some doubts about using them on bunker barges. We had some doubts about the performance of MFMs on board.

Also Istanbul is one of the world’s trouble free ports for bunker supplies.

DH: If you do not have much trouble about bunker supplies, why spend so much money on MFMs? ADE: Actually the more we investigated, we realised that was not the case. During an ordinary bunker supply without MFMs what do we do? We need: a quality report of the product; calibration table of bunker barge loading documents, mechanical meter (optional) and a sampler (dripping method). A surveyor, or surveyors, the barge representative and a vessel representative all take measurements according to the bunker barge calibration table, which is binding and which we suppose to be correct. Density and temperature measurements are done from three or four different levels and locations. A water test is done manually.

After a simple calibration calculation, we start pumping at an agreed rate.

When the bunker barge tanks are empty that means the measured quantity, of a supposed quality, has been delivered.

Usually the receiving vessel takes measurements from her own bunker tanks. If the difference from the supplier’s figures is not great, we can consider the supply is done.

We still need to wait for a detailed analysis report before the receiving vessel can start using the product.

The possible troubles we may face are: the quality report may not belong to the product on board the bunker barge, the calibration table of the bunker barge may not be up to date or correct, loading documents’ measurements can be faulty because of wrong quality report.

A mechanical meter may include water and air in the final figure. The bunker barge crew or receiving vessel crew may try to cheat.

None or some or all of these may happen during a single bunker delivery.

The presence of an international independent surveyor can always be useful to make things easier. It is better that the surveyor is present from the start. If a surveyor is called in after a disagreement has occurred, they can only confirm the differences between the bunker barge and the receiving vessel’s bunker figures. Since bunker the barge figures are binding, at this stage the surveyor’s involvement carries the supply into another legal dimension.

During a bunker supply with MFMs what do we do?

The only official magazine of IBIA, World Bunkering sUMMER 2017

cye Interview

F

irst of all the MFM we are using should be an acceptable brand recognised by local authorities.

In addition to that the MFM must have been built for this specific bunker barge (located properly nearby manifold area) and must have a ship specific certification. Also the MFM must be sealed by the maker. Now we can proceed with the supply.

You still have: a quality report, the calibration table of the bunker barge, loading documents and a sampler (dripping method). Surveyors and barge and vessel representatives still take their measurements. Density and temperature measurements are taken and a water test done as usual.

After simple calibration calculations, we make sure MFM is on and start pumping with agreed rate. After 10 seconds we start delivery and we can follow pumping rate, temperature, density and the amounts of water and air passing from the manifold of the bunker barge to the manifold of the receiving vessel every 2-3 seconds. All these main parameters are plotted on a simple chart.

During the delivery you have a chance to follow temperature and density changes instantly. An ordinary MFM delivery will provide 1,000 lines per hour full of these data. When the requested amount appears at the screen of MFM you stop pumping. A print-out will then provide: supply time, pumping rate, average density, volume, mass, average temperature.

MFMs are not magic. They do not make your bunker barge or your product look better. But, if the quality report does not belong to the bunker product on board,

the calibration table of a bunker barge is either not up to date or inaccurate or your loading documents are incorrect, the MFM will tell you instantly.

So any physical bunker supplier who decides to use MFM should make sure they supply the requested quantity and quality; a bunker barge with updated calibration table is used and they make sure the quality report belongs to the product on board.

If you don’t have proper bunker barges, crew, supply infrastructure and product, don’t use MFM because MFM will give you away at the first bunker supply.

DH: So why use MFMs? ADE: We are in 2017. MFM technology has been on the market more than 10 years. Quality and quantity have been the biggest issues between bunker suppliers and ship owners for years. MFMs are giving exact quantity and main quality parameters instantly during bunker supplies. This technology can solve many discussions. The bunker industry is making many excuses for not using this technology. By doing that we do not look good. Some bunker suppliers say: “We do not cheat. We do not receive any claims.

Why should we invest in this expensive technology?” They should not worry.

Those who cheat do not say “we are cheating” either. But if we all start using this technology, they cannot cheat, and they will be forced to leave the market.

At that time those who are providing proper bunker supplies will no longer have to compete with those who cheat.

From this point of view, those who claim they do not cheat and they do not find it necessary to use MFM are indirectly supporting those who do cheat.

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If we need to sum this up in one sentence, it would be: MFMs will provide necessary discipline to the bunker industry.

DH: So will MFM end quantity disputes?

ADE: Emphatically yes.

DH: Do we need international independent bunker surveyors anymore?

ADE: Another definite yes. Independent surveyors will have a new role – to ensure the correct quality fuel is being delivered. This will be especially important once the new global sulphur in fuel cap comes into force. Getting the quantity right affects the economics of vessel operation. Getting the right quality fuel could, in the future, determine whether a ship is allowed to sail. If you receive non-compliant fuel, you may be forced to de-bunker and re-bunker compliant fuel.

This will take a lot of time and cost a lot of money. With introduction of MFMs the role of surveyors is not finishing, but in my opinion it is changing and becoming more and more important.

Deniz Eraydin

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Algeciras

Busy port, stable bunker market Algeciras develops ‘one-stop-shop’ concept and gets ready for new mega container ships

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he port of Algeciras has weathered the industry’s issues with weak oil prices and uncertain trading conditions reasonably well. Last year the port broke the 100 million tonne cargo throughput mark, making it the busiest port in the Mediterranean and the fourth busiest in Europe, and the port authority told World Bunkering that its bunker sector remained stable, delivering 3.1 million tonnes of fuel across 2016.

World Bunkering spoke to the port authority’s commercial manager Javier López Martínez about the ongoing drive for alternative fuel offerings and the future of the local sector.

“Thanks to EU backing, several operators are currently positioning themselves in this developing market,” López said.

“This has led to increased interest in the Port of Algeciras as a Mediterranean bunker hub, which makes us optimistic about the potential of LNG as marine fuel in the mid-term. In this sense, the Port of Algeciras is analysing its options and positioning itself within the LNG sector in order to be ready to attend future demand.

“We are now taking part as stakeholders in the CORE LNGas Hive Project, an initiative co-financed by the European Commission through the 2014 Connecting Europe Facility (CEF) Transport Call. This project involves 42 partners and aims to develop a safe, efficient and integrated logistics chain for the supply of LNG as a fuel for the maritime sector in the Iberian Peninsula.

Algeciras is in the process of expanding, with Phase B of its Isla Verde container terminal still out for operating tender as we go to press, following the decision to extend the deadline for bids.

“From a port’s perspective, we are currently strengthening our presence as a one-stop-shop port, by developing its strategy as a global maritime and logistics hub.

“Phase B will have an impact on the local bunker market, as the future container terminal will attract more container business to the Bay of Algeciras,” López said. “This deadline extension aims to facilitate stakeholders a clear vision about the Phase-A final shareholder structure. Above all, our main interest is to facilitate the best possible ways of investing and operating for potential investors and customers.”

“The new trend in the container industry with more concentration as a result of the new alliances lines is paving the way to the next deployment of a new generation of 20,000+ teu ships. These mega vessels require specific infrastructure - which we already have - and also the development of new technologies. That is the reason why the Port of Algeciras is going a step forward into the digitalization process, in order to gain more operational efficiency across the whole port community.”

The local sector hasn’t been entirely plain sailing, though. Last year Aegean Marine Petroleum ceased operations in Algeciras, leaving Peninsula Petroleum as the only supplier working both sides of the Bay, while Gibraltar continues to fight for as much of the Straits’ passing bunker trade as it can get. López has confidence in Algeciras’ own efforts, though.

“Competition is currently fierce in the bunker sector, and, subsequently in the Bay of Algeciras as an international bunker spot,” he told World Bunkering.

He added: “The challenge of ensuring a high level of competitiveness is set to increase for European ports in the Med, which have to face strong competition from other non-EU ports that have different social and environmental legislative standards. The Port of Algeciras is among those ports.”

He didn’t expand which non-EU competing ports he was referring to.

“The Port of Algeciras’ interest is not only focused on LNG as a marine fuel, but also on LNG for land uses which would contribute to the development of a stable demand at the port, as well as to a significant improvement in associated port and logistics operations.”

Xiquinho Silva Continued investment gives Algeciras reason to be optimistic

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Greece

Challenging market continues Demand has ebbed in recent months but cruising is helping to sustain the Greek bunker market

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he Greek bunker sector often serves as a bellwether market for the wider eastern Mediterranean across multiple facets of the industry, from direct physical supply on major trades, to local sales to island ferry and cargo operators, to international fuel brokering and emerging fuel markets like LNG. The country’s fuel market has high exposure to the cruise business, and in this respect the recovery in Greek cruising of the past few years has served it reasonably well. Piraeus saw the opening of a new cruise berth last October, just a couple of months after the first meeting of the government’s National Coordinating Committee for Cruise Affairs.

This first committee, intended to drive better service to the cruise sector, was joined by another joint committee in February this year, this time for the coordination of air and sea transport, to oversee policy affecting the country’s island shipping and the way it links with local air transport.

Such moves, if successful, are likely to be welcomed by many in the industry.

The complexity of the country’s shipping sector, Greece’s ongoing economic troubles and the global industry’s own struggles with poor fuel prices and oversupply, make the market a particularly challenging one.

Programs like Poseidon Med II to bring LNG bunkering infrastructure to Greece may offer bigger players and gas majors a degree of future-proofing, but it’s in present conventional fuel demand that the market will have its feet for the foreseeable future.

While very much a Greece-based, bunker Aegean Marine Petroleum Network Inc. is also a global player that has a global presence in over 30 markets. Its Q4 2016 results showed total revenue of US$1.2 billion, an increase of 29.0% compared to the same period in 2015, primarily due to the increase in oil prices. Voyage and other revenues were $20.6 million, approximately $4.4 million more than the same period in 2015. In Greece the company uses a barge, the Mediterranean, as a floating storage facility.

Aegean says that the ownership of storage facilities allows it to mitigate its risk of supply shortages.

To get a clear view of operating conditions in Greece, World Bunkering spoke to Irene Notias, the managing director of Greece-based international fuel broker Prime Petroleum Services (PPS), and the company’s fuel purchasing agent Helen Economopoulou.

WB: What’s the current state of the market in Greece?

PPS: From our experience, bunker requirements at Greek ports (Piraeus mainly) have been considerably lower.

A better picture though could be derived from actual physical suppliers here.

With reference to worldwide inquiries and stems, tonnage is also decreased significantly compared to previous years.

Nevertheless, our business remains solid and steady, even though there’s an extended shipping market crisis.

Dimitris Kamaras. Greece’s complex ferry network could see tighter multimodal coordination.

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PPS: We have been constantly adapting to the ever-changing needs of the market, with flexibility and good understanding of relevant counterparties (clients and vendors). Our main core is our longsteady, highly-valued client base, as well as the excellent relationships we have with reputable and reliable vendors worldwide. The fact that we are a small, sophisticated pure bunker broker house, with in-depth knowledge of the bunker market and good reputation in the industry, allows for quick response to changes and new demands.

In the near term we hope for a more stabilised world economy environment that will positively affect the shipping and bunker industries, where a new way of thinking could prevail, for all parties involved, that will allow reestablishment of the lost trust: further transparency, accurate information and no circumvention [of regulations/ standards] are some of the elements which could lead in that direction.

WB: There continues to be strong Greek interest in LNG and the future direction of the industry as a whole. How wellequipped do you think both PPS and the Greek bunker industry are?

PPS: Indeed, there’s a big discussion of how the fuel market will be shaped in the next years. Certainly, there is a significant progress with reference to the LNG stations here in Greece.

This development by itself proves the readiness of the Greek bunker market to be part of the new conditions.

Prime’s long history and effectiveness make it ready and always aligned with the non-stop transformations of the bunker industry.

Prime Petroleum boss Irene Notias

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Greece

WB: Given that extended crisis, does the structure of the company and its size and spread give you an advantage?

Cyprus

The future of Limassol could be in LNG. ©Patrick Denker

Still growing Cyprus’s bunker sales have continued to increase while there is growing interest in LING

W

hile plenty of larger nations have endured weakening bunker markets and sales volumes that are stable at best, Cyprus has continued to build on the gains of previous years. Last year, the country saw 288,220 tonnes of bunkers sold, split roughly two to one between HFO and MGO. This was nearly 20% up on 2015’s 244,036 tonnes, with the proportion of MGO increasing slightly, though this is likely incidental rather than the result of tighter emissions standards in neighbouring regions.

The Cypriot government has also continued to take a keen interest in alternative fuels, taking an active role in the EU’s €53.3m Poseidon Med II project to accelerate the adoption of LNG in the industry. As well as four ports in Greece, Limassol is earmarked for investment in LNG infrastructure under the scheme so long as financing can be secured.

The country has its own significant offshore gas reserves, much of it untouched, with production of its own LNG reportedly planned to commence in 2020. Exploratory drilling by Total, ENI and Noble is due to begin next year and the government has had interest from other majors. While much of Cyprus’ gas is likely to be used for domestic power generation, allowing the country to switch from oil-fired to gas-fired electricity, there is considerable governmental interest in establishing LNG bunkering using domestic gas production or liquefaction of gas imported from new finds in Lebanese waters.

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Speaking in the autumn at an LNG conference in Limassol, Cyprus’ Minister of Transport Marios Demetriades said: “Up to recently, reference to LNG for shipping was only viewed as cargo on ships intended for shore use. Now we can confidently speak about LNG as the fuel of the future for ships as well.

LNG is a potential solution for meeting the environmental requirement as its cleaner burning meets all current and future emission standards.”

Demetriades is keen to see further developments in the near term, and expects LNG bunker demand in the region to grow strongly.

Outside the realm of future fuel developments, things have been relatively quiet in the Cypriot market. Limassolbased supplier Bunkernet celebrated its ten-year anniversary this spring by embarking on a rebranding exercise and declaring itself poised to enter “a new era of growth and great achievements”.

Similarly rebranded has been Limassol’s port itself. A concession agreement was signed last year with DP World for the running of Limassol’s multi-purpose terminal and marine services, and this spring saw both the formal rebranding and the switch from government to private operation of the terminal.

“DP World Limassol’s team has been working alongside the Cyprus Port Authority to prepare for the transition from a government managed terminal into the new DP World business model.

The team is now putting months of planning into action to make the terminal more reliable, safer, and productive for customers,” the company said in a statement.

Any improvement to the running of the port, and the consequent drawing of further traffic, can only be a benefit to Limassol’s bunker suppliers after months of uncertainty over the port’s operational systems.

The rebranding has seen the company overhaul its website and customer presentations to make them cleaner, more modern, and more accessible.

“Clearly, the purpose of the new website is to bring Bunkernet closer to its customers and partners,” the company said.

“By presenting you its philosophy and vision or inviting you to meet its people in their workplace Bunkernet, demonstrates that the essence of trading is openness and solid relationships, built in an environment of trust and transparency.”

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PORT FOCUS - SOHAR

port OF sohar The forces behind one of the world’s fastest growing ports

I

nnovation is in the DNA of SOHAR Port and Freezone. The mega-development has been pushing the boundaries of maritime logistics since it was first established and has found new ways of doing business, making its tenants’ operations more efficient and convenient along the way. SOHAR boasts a newly expanded anchorage of over 80 square kilometres, divided into vessel waiting and servicing areas, and dedicated areas for bunker and ship-to-ship operations.

All the necessary marine services are in place to support the Port, including tug towage; linesmen services; pilotage; crew change services; change of armed guards; remote hull cleaning; and marine supply of fresh water, spares, stores, provisions and lubricants.

“Today, SOHAR is one of the world’s fastest growing port and free zone developments and is really establishing itself as the region’s challenger brand,” says Mark Geilenkirchen, CEO at SOHAR. “All over the world, people in our industry are sitting up and taking notice of what we’re doing here. Investments at SOHAR reached a staggering US$26 billion last year, which is more than the GDP of some smaller European countries.” With this kind of clout, SOHAR is able to use its position to enhance innovation in Oman and the wider region. As well as continued organic growth, SOHAR will be focusing on two main areas moving forward: food and logistics.

Mark Geilenkirchen explains: “The port was originally based around three industrial clusters: logistics, metals and petrochemicals. We recently added food as our fourth pillar with the launch of SOHAR Food Zone, the region’s first dedicated agro terminal.”

Built on the site of the old container terminal B at SOHAR, the new Food Zone includes plans for a flourmill, now under construction, a sugar mill and the infrastructure for downstream food processing, packaging and logistics industries. This new expansion phase at SOHAR is expected to generate a further US$8 billion worth of investment over the next five years.

At the end of 2016, as part of on-going expansion amid strong growth in throughput for the second half of the year, SOHAR Port and Freezone closed contracts with some significant new tenants, who have agreed to lease a substantial new area as an integral part of a land reclamation project at the Port.

The reclamation project is part of the SOHAR 2040 Masterplan, currently under finalisation, and will give a substantial boost to the port’s ability to support the Sultanate’s aims to increase its diversification efforts. ‘SOHAR Port South’, as the newly reclaimed area will officially be called once completed, will allow the port to expand its portfolio of companies and add more business to drive growth within the Omani economy.

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Ports don’t look very smart seen from outside the fence, but over the past ten years there has been a revolution in the way that they work. Behind the scenes, there has been huge investment and innovation. Dutch-born, but with broad global business experience, the SOHAR CEO knows that the focus of port operators is changing across the globe. Instead of being really good at doing just one particular thing,

today it’s more important that they become really good at learning how to do new things - and doing that faster and better than ever before. “Right now, that’s our focus at SOHAR, and ensuring that we have the management structures in place to deliver against that,” explains Geilenkirchen.SOHAR Innovation Zone is central to this effort. The Port and Freezone wants to operate the Innovation Zone as an ideas factory. Working in close cooperation with the Port of Rotterdam, it will try to find new and innovative ways to solve tomorrow’s logistical problems.

“Together with private sector companies, international research institutes and some of the world’s top universities, we are seeking solutions across a broad range of issues that affect our shipping, logistics and industrial hub at SOHAR Port and Freezone,” says Geilenkirchen.

“From innovative ways to track containers and their loads moving between our Port and Freezone; through the use of 3D metal printing to create high quality industrial parts onsite;

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to the world’s first self-sustaining Freezone logistics cluster, at SOHAR we firmly believe that everything is possible.”

SOHAR Innovation Zone will focus on sustainability, and will operate as the world’s first self-sustaining Freezone cluster. It will not be connected to the national power grid, instead getting all its electricity needs from renewable sources, while all waste will be recycled.

The Innovation Zone is not a hypothetical, futuristic concept, however. It will use proven and trustworthy techniques brought together in one integrated system for the first time, to demonstrate the full potential of Oman’s technology sector. All of these efforts are helping to increase efficiency, making the port smarter through innovation.

Mark Geilenkirchen summed up the sentiment as the Omani hub settles down to another year of continued growth: “In SOHAR we always say ‘It all starts here’ and that has never been more true than now: 2017 promises to be our most exciting year ever.”

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PORT FOCUS - SOHAR

“T

here are certainly some external factors that are currently influencing growth: the general level of global economic uncertainty and historically low oil prices that are affecting all the GCC economies. However, those same low oil prices are acting as a catalyst to spur on economic diversification across the region,” says Mark Geilenkirchen.

“The whole Middle East is moving from an economic base powered by oil and gas exports to one that is fuelled by knowledge, and this diversification is driving investment with an upside for our business in SOHAR,” he says.

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Mauritius

On course for a healthy future Since Mauritius opened up its bunker market to the private sector business has boomed

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he government of Mauritius has spent the past few years strongly pushing to see the country take advantage of its location on the major west-east Indian Ocean trades to become a major bunkering hub, offering fuel calls with almost no route deviation at all. Mauritius isn’t an oil producer itself, and up until 2014 it was the State Trading Corporation that handled all products imports. Changed regulations at the start of 2014 opened up the import market, paving the way for greater private involvement in the country’s nascent bunker scene.

Four oil companies are involved in the bunker trade on the islands - Shell through its licensee Vivo Energy, Total, Engen Petroleum and Indian Oil. These were joined in mid–2016 by Bomin through its Mauritian subsidiary, becoming the first non-oil major physical supplier in this market.

“Since January 2014, the government has amended local regulations with a view to allowing private firms to import on their own FO [fuel oil] and MGO for bunkering purposes, thereby liberalizing the importation of bunker fuels,” STC’s commercial bunker analyst Vikash Sooreea told World Bunkering.

“The vision is to develop the island nation as a petroleum and bunkering port which will be a pillar of the economy.

Port Louis is a top-up bunkering port which has achieved a volume of some 340,000 tonnes in 2016. The target is to increase the volume to 1 million tonnes per annum within the next few years.”

STC says it has a number of initiatives designed to boost Mauritius’ bunker sector. The corporation applies a breakeven price on bunker fuels which it sells to the four oil companies for onward supply to their clients. Bunkers are exempt from excise duty, VAT, but there is an environmental levy of US$11 per tonne, and pipeline dues of US$1.15 per tonne.

Bunkers consumed by delivery barges and tankers are themselves exempt from excise duty and VAT; there’s a 50% rebate on port and vessel fees for ships taking bunkers only, while tonnage calculations for port dues are capped at 35,000 gt and bunker-calling ships are allowed to carry out ancillary services at the same time such as crew changes, taking on stores, and transferring arms and maritime security personnel.

Finally, much of the paperwork has been shifted to an electronic platform which STC says has made bunkering requests and deliveries more efficient.

The corporation has been working to a distinct roadmap for building up the nation’s status as a bunker port since last year.

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One new project that could boost bunkering in Mauritius is the building of a tank farm at Mer Rouge to the north of Port Louis. The proposed facility would comprise seven fuel tanks and have a total capacity of 49,000 cu m.

The project would cost Rs 834 million (US$24 million). The prime mover in the project, International Marine Services (Mauritius) Pty (IMSP), has submitted a request for an Environmental Impact Assessment (EIA) certificate to the Ministry of Environment. The EIA application and detailed design are being conducted by engineering firm Consultec.

IMSP says international companies have expressed an interest in establishing a joint venture to sell oil products stored in the tanks.

According to STC, there are currently three barges and one tanker operating at Port Louis, all supplying both HFO and MGO ranging between 8,000 and 2,000 tonnes, down to 800 and 50 tonnes.

The port has storage for 46,000 tonnes of HFO and 23,000 tonnes of MGO.

According to STC, the overall annual volume delivered to ships has increased from 290,000 tonnes in 2014 to 340,000 tonnes in 2016, a rise of 16%. “Port Louis has become an attractive port of call for larger vessels, such as LNG/LPG carriers, crude and product tankers, bulk carriers, container ships and cruise vessels amongst others, which take typically from 500 to above 1,000 tonnes of bunker fuels per call,” the corporation said.

“Mauritius is firmly set on its course to strive and achieve its objective in developing itself as a renowned bunkering port in the Indian Ocean region,” STC concluded.

To protect the environment the company will build a bund around the tanks to safeguard against spills or leakages.

The tank farm will comply with the Port-Louis Harbour Oil Spill Plan and the National Oil Spill Contingency Plan.

Building the tanks would create about 150 jobs during the construction phase. In the long term the facility would employ about 30 people.

The government is keen for Port Louis to become a major regional bunkering hub ©Gary Bembridge

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Pakistan pakistan ©hammad-khan

A Challenging market Times are difficult for Pakistan’s bunker suppliers but the 2020 global sulphur limit may prove a boon to the country’s marine fuel sector

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akistan has always been a challenging market, but as a nation fighting to establish itself as a viable bunkering location in a fiercely competitive part of the world with major bunkering hubs at either end of the principal trade routes serving its ports, the energy sector struggles of recent times have made the country a particularly difficult place to do business.

Orion Bunkers’ Zeeshan Arshad told World Bunkering: “The market as a whole is not doing well. Volumes are extremely low and it is a threat. We are going with the flow [when it comes to coping with depressed prices]. Therefore, we haven’t been affected much when crude went bananas. But of course low oil prices put stress on margins. Therefore, we are working calmly to survive in the down era of oil.”

Pakistan’s government has been pinning its hopes on inward investment from China under the China-Pakistan Economic Corridor, with funds earmarked for all three of the country’s main ports.

Orion itself, which Arshad said continues to hold 75% of the country’s bunker market, has been watching developments in Gwadar with an eye to launching operations there.

The port isn’t ready yet, though. “We have done our research on Gwadar Project, however the export/import trade has not started properly yet, only 1–2 vessels calling a month, so we still have to wait for the port to become fully operational, when heavy vessel traffic will allow us to start bunkering in Gwadar,” Arshad said.

“380 cSt has remained an issue with suppliers in Pakistan, as refineries are not upgraded to produce 380 cSt within Pakistan,” Arshad said. “However, Orion has raised the issue with government and private refineries to produce or import 380 cSt. Hopefully we will have positive feedback.”

“Of course, it’s not only Gwadar [getting Chinese investment], but also the construction of berths is underway at Port Karachi and Bin Qasim. So yes, we are definitely witnessing movement in all three ports. Vessels would not have to wait as much in queues due to the increased number of berths therefore it would be another point of interest for vessel owners to set these three ports as favorite for fast cargo work to save time, and enjoy low port tariffs and cheap bunkers.”

“We already have started offering 0.1 % MGO DMA as per our clients’ requirements. Moreover, we will be offering all low-sulphur products to facilitate our clients’ needs.

Ultimately Pakistan’s suppliers will get their reward as vessel owners will be able to get the same product not only in Fujairah or Singapore but in Pakistan too, with competitive prices and exceptional services.”

For a long time, though, the main impediment to Pakistan’s bunker market growing significantly has been the local availability of higher viscosity fuel grades.

Pakistan lacks a refinery producing 380 cSt HFO, and this automatically drives operators running on heavier fuel elsewhere. However, with the global sulphur cap coming in a couple of years, not to mention other putative environmental measures, the playing field could potentially level somewhat as demand shifts to lighter grades.

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It’s this lack of 380 cSt that’s driven volumes down in recent months, he said. “With our instinctive research, we came to know that most of our volume has been taken by Fujairah, Colombo and a few Indian ports due to the availability of 380 cSt there.

But we are doing our best to compete on following product with other ports.

So since last summer we have faced the issue of low market volumes.

However, we can overcome this very soon if we remain competitive and sell bunkers as cheaply as our neighbours’ ports do.“

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Sri Lanka

Hambantota haggling

The future of Sri Lanka’s newest port still needs to be settled but elsewhere the story is of steady progress

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t’s largely been business as usual at Sri Lanka’s current major bunkering ports of Colombo and Trincomalee, where Lanka IOC reported volume sales growth of 20% last year. However, it’s the Sri Lankan government’s ongoing attempts to revitalise Hambantota that represent the biggest potential shifts in the country’s bunker scene.

Bunkering at the port was finally put out to open tender last summer following the failure of the Sri Lankan Ports Authority’s own attempted bunker offering.

This was followed by discussions between the Sri Lankan government and Chinese investors, who had already propped up the vast port development following construction delays, cost overruns and dismal early traffic to the reported tune of US$1.5 billion.

The negotiations with China involved not only the port but also the planned economic zone around it in the form of a US$1.4 billion joint venture, specifically including bunkering, which led to violent protests at the end of last year from locals afraid of the area due to be acquired for the zone becoming “a Chinese colony”.

In local press, Sri Lankan prime minister Ranil Wickremesinghe said the deal was necessary to clear the debt incurred in building the port, debt he blamed on former president Mahinda Rajapaksa, but also said that the port would be leased to investors rather than sold to a foreign power.

The framework agreement between the Sri Lankan government and China Merchants Port Holdings (CMPort) was signed in December last year, with CMPort having an 80% stake in the joint venture and the SLPA the remaining 20% on a 99-year lease. The joint venture would control lube supply, bunkering, pilotage and navigation, storage, power and other services. It also included a ban on further port developments within 100 km of Hambantota for fifteen years or until the port achieved 50% utilisation.

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According to a cabinet memo released this spring, the second draft of the concession agreement “… contains more unfavourable conditions than that of the first document – e.g. including the condition that that the public-private partnership operator or any of their nominees shall be permitted to exclusively carry out Port/terminal development activity within 50 kilometres from the centre of the Hambantota Port during the entire lease period.”

But then the government announced it would renegotiate at least some of the deal a month later in the teeth of mounting objections and an eight-day port strike. A few days later, local press reported that prime minister Wickremesinghe told the Sri Lankan parliament that the first new investment in the new Hambantota economic zone would be Sri Lankan in the form of a new cement plant, but that China had pledged to build an oil refinery,

LNG plant, dockyard and another cement plant in the port, and that the government was in discussions with companies from the US and Middle East to build another oil refinery.

According to a new draft of the agreement revealed by Reuters in March, CMPort would agree to divest up to 20% of its stake to a Sri Lankan company after ten years. Ranga Kalansooriya, head of the government’s Information Department, was quoted in the India Times as saying: “There were some concerns about ownership. We were able to negotiate with the Chinese company successfully.

The Chinese firm said they want the controlling share…even if it was 51%.”

If Hambantota can be made to work, and if the vast investment there can finally bring in enough traffic and enough of a bunker market, the benefits could be huge. The path to getting there, though, has been less than smooth.

Prime Minister Wickremesinghe’s negotiations with China over Hambantota have sparked huge controversy

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FUJCON FUJCON 2017 opening ceremony. ©Conference Connections/Port of Fujairah

FUJCON 2017 pulls in the crowds Nigel Draffin reports from the bi-annual conference in one of the world’s main bunkering hubs

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he 10th international Fujairah bunkering & fuel oil forum (FUJCON 2017), organised by Conference Connection and hosted by the Fujairah Government and Port of Fujairah at the end of March, was attended by more than 250 delegates from over 50 countries.

IBIA was well represented by many of our members with Board member Nigel Draffin and Board member elect Martin Laue Brodersen present as speakers in two of the panel sessions, and a number of IBIA members participated on panels.

Fujairah is an important venue for the bunker industry. In 2016 there were 14,900 vessel calls in Fujairah anchorage of which 81% were oil related. In 1994 the local storage was only 550,000 m3; it has now reached 900,000 m3 with another 1 million m3 to come on stream by 2019.

Dr Mohammed Al Kindi, in the opening address, told us that Fujairah’s strategy is to attract inward investment to grow the provision of services in the port with relation to oil processing storage and trading. He also said they are seeking to create a price index for oil products at Fujairah.

Dr Fareidun Fesharaki gave the first Keynote address. He covered the state of the oil market, the state of the LNG market and the prospects for the future.

On the oil market he said the inventory is increasing, which analysts expected but speculators did not, hence prices are soft. Demand growth is double that of 2013, driven by gasoline and low prices.

He expects a $50 – $60 per barrel crude market, predicting prices will recover to $60+ in the second half of the year.

Refinery capacity is slipping towards deficit, meaning good margins for refiners.

When it comes to LNG as a fuel for ships, buyers and sellers have a mismatch on their view on contract length.

Although LNG moves towards commoditisation, the LNG bunker market is in chaos. It will continue until we see balance in 2023, according to Fesharaki. He sees the LNG market pricing changing considerably as 2020 approaches. Toyota says by 2020 they want cars shipped in LNG fuelled ships.

Ship owners don’t like scrubbers as they see more regulation coming on CO2.

No one has a clear plan. There is no way to make an instant transition to the global cap, we will need a variety of solutions.

Fesharaki believes LNG has the real prospect of fitting the bill.

Christopher Bake of Vitol gave an address on the state of the fuel oil industry.

He told us the market rallied because they expected a stock draw but demand is lacklustre.

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The demand growth is in the Middle East, while the Atlantic basin has shrunk.

Bunker growth is concentrated in the Middle East and Asia, whilst in Europe and North America the bunker demand has shrunk. India is still burning more and more coal for power.

Globally, there is 600,000 bbl/day of additional hydrocracking capacity planned to be installed by 2020 that will convert fuel oil into cleaner fuels.

Michael Cleveland, Honeywell UOP gave an address on the state of refining technology. Honeywell sees the 0.50% sulphur product price range as the important decision point for refiners.

Why not convert residue to gasoline/ diesel and use what’s left as the marine fuel, he said. Citing the US example, where heavy refinery conversion is the norm, he pointed out that 80% of residual fuel oil demand is for bunkers.

That said, he suggested that there is no single right answer.

The keynote speeches were followed by the seven subject panel sessions where discussions ranged freely across a number of topics, but there were some threads which ran through all of them.

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FUJCON

The fuel session panellists, from left to right: John Gilligan, Nigel Draffin, Dr Salem Khali, Siavash Alishahpour, Usman Muhammad, Vivek Vijayaraghavan and Ara Barsamian. ŠConference Connections/Port of Fujairah

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he question of 2020 and the global cap was almost immediately confronted.

Discussion on this topic ranged from the philosophical (Why did they choose 2020?) to the straight forward financial (What fuel price differential will prompt you to install scrubbers?) calling off at various points on the way (Will there be enough fuel – really? How many will choose LNG? Will all ports have the full range of products? How will the cap be enforced and by whom? Will we see more quality problems?). All of the questions were real and the answers given were considered and debated. In summary, the dominant opinion was that although the 2020 decision was driven by political rather than practical considerations, we have to deal with what we have.

We were told there will be a range of solutions including traditional distillates, scrubbing of high sulphur fuel, new blends of residue and cutter stocks to produce 0.50% sulphur products, but that some owners may choose to carry on as they are now (in other words, not comply).

The scrubber choice and the LNG choice have the heaviest financial burden and unfortunately the financial circumstances for much of the ship owning sectors are not conducive to consider the investment of $2.5 to $5 million for a scrubber retrofit or the additional capital cost of building LNG-fuelled new ships. We did get to hear from owners who had followed both routes with comments from Red Sea, Torm, UASC and Pacific Basin.

On the scrubber decision, Pacific Basin said that it was heavily influenced by ship age. For their fleet, vessels below 10 years were candidates for retrofit whilst those over 10 years would use conventional 0.50% fuels. The company needs a price differential of more than $175 per tonne and will not delay decisions beyond 2018.

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Torm has concerns about committing to the expenditure (their pay back point is a $200 per tonne differential) only to find that in 2020 the rules change and there are exemptions or approved ways to delay installation without penalty.

Torm was ready to change but did not want to be put in an uncompetitive position and had picked up rumours of delayed introduction of the cap.

Red Sea Marine said their trigger was a two year payback for scrubbing.

UASC explained their rationale behind the decision to build the gas-ready large new containerships.

The ship operators generally felt that the IMO decision had not been thought though and should have been deferred to 2025. Several panel sessions looked at this issue and whilst it was explained and qualified by the IBIA presentation it was William Tan from Myabi Industries who pressed home the point that ship owners and suppliers had known about the 0.50% cap since the 2008 revision of MARPOL Annex VI, so to claim that there was not enough time to prepare seemed unreasonable. The only thing on which all contributors agreed was that the prolonged shipping downturn across many sectors has made investment in new technology very difficult to achieve.

A second topic which aroused the interest of delegates was the discussion of legal issues, especially with regard to failures like that of OW and Hanjin. This has been discussed before at many venues but the market still seeks clarity and solutions.

The panellists covered the need for agreement prior to establishing the contract on the methods available to resolve disputes.

The BIMCO contract clause allows complete freedom for the contracting parties to agree law and jurisdiction and to state their choices for arbitration but the BIMCO clause gives a fall-back position of English law and LMAA arbitration unless an alternative has been selected. There was some discussion over the position of ship owners and suppliers with regard to a fuel sale via a trader who does not pay his physical.

It seems that the situation in UAE law is out of step with the solutions found in other jurisdictions and may expose the buyer to claims from the physical supplier because of provisions in UAE law with regard to the master signing the BDN. Delegates from the floor suggested that even when there was a BIMCO Bunker Non-lien clause, suppliers were not willing to surrender their right to a maritime lien causing many difficulties for time charterers. Grant Hunter of BIMCO indicated that the problem was known and understood but that the purpose of the clause had been to show due diligence by the vessel owner at the time of entering a time charter contract. Richard Briggs of Hadef & Partners suggested firstly that disputing parties should consider the use of the Emirates Arbitration Centre, especially for claims up to $270,000 and then proposed that there needs to be a convention on Bunker Contracts.

The session on the local trading infrastructure produced a lot of information on the further development of Fujairah as an oil trading hub and emphasised that there is more to this than just the steel and concrete.

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FUJCON

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he initiative to make public the stock levels in the terminal and the collaborative work with S&P Global Platts to generate a fuel price index for Fujairah is creating opportunities to use an index linked to what is happening in Fujairah rather than using MOPAG, which is largely based on the levels in Singapore. There was a note of caution from Dubai Mercantile Exchange that clients still want to use MOPAG and it will take years to build the confidence for them to transition to using the Fujairah barge quote.

The session on LNG together with comments on LNG from other sessions showed the strong feelings that exist.

Ara Barsamian said “LNG – It is dead, dead, dead”. No one else was quite so negative and the comments from UASC and the pitch from Shell showed that LNG is serious stuff with every chance of reaching a potential of 30% of the marine fuel demand. UASC explained that for the company’s 2015 container ship order, the decision taken before building was to incorporate a heavy technical investment to minimise the eventual cost of conversion from LNG-ready to actually burning gas.

The fuel tank size is from 6,500 to 8,000 cubic metre for LNG storage. The final decision will be economic but UASC are already in detailed discussions on tank design and looking at the likely LNG supply hubs.

The source of supply will be based on close cooperation with a seller in a partnership rather than the current “spot” model. The Shell representative, Lauran Wetemans, said there will be six LNG barges in service world-wide by the end of 2017.

The port of Fujairah intends to support LNG bunkering using a similar concept to Jebel Ali: floating storage and regasification from a vessel moored in the port that can also provide STS services to smaller LNG carriers and LNG barges. The port expects that some remote thermal power plant will opt for LNG and that they will be a customer for small scale LNG transfer by sea. Having worked with LNG since 1974 and been on ships that started burning it in 1964, I am not sure why so many people find it so frightening.

It is there if the economics make sense.

There was a welcome reception in the conference venue, the Al Diar Siji hotel and the next evening we went to the dinner by the pool at the Fujairah Hilton.

The visit to the Hilton was bittersweet as it was its last major function before the hotel will close and be demolished.

We looked around for souvenirs of so many happy visits to Fujairah from the days when it was the only hotel in town.

The dinner was a jolly affair with local dancing, followed by a move ‘en mass’ to the “Fez” bar next door.

The overall event was interesting, informative and gave plenty of opportunity for networking. IBIA was there both on the podium and in the auditorium, our voice was heard.

Nigel Draffin represented IBIA as a speaker at FUJCON 2017. ©Conference Connections/Port of Fujairah

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Russia

Bunker sector slump worsens Olga Bogacheva reports on the Russian bunkering scene

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he Russian bunkering sector saw sales drop at faster rate last year, by 24%, than in 2015 when volumes slumped by 12.5%. In total, Russian suppliers delivered 10.4 million tonnes of bunker fuel in 2016, which is about 3% of the world market.

In 2016 the number of ships calling at Russian ports fell slightly, to 81,400.

That was down 2.3% on 2015 but the Russian bunker industry’s woes are much more than a reflection of reduced ship call numbers. There are three main reasons for the downturn: The Federal Customs Service has until recently been enforcing limits on the amount of bunkers that can be supplied to foreign vessels; competition from nearby foreign ports has been intense; and excise duty has been introduced on light oil products.

Bunker companies in all of Russia’s regions have seen their sales drop. The steepest decline, with a 45% reduction last year, was in the Far East. Black Sea suppliers reported a 19% decline and those in the North West a 7% year-on-year decline.

At the same time the number of bunkering companies has dropped dramatically. For example there were 30 bunkering and 13 barging companies in St Petersburg port in 2010. According to Portnews, only 14 of them were still operating last year.

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Sovcomflot backs LNG Sergey Frank, president and CEO of major St Petersburg-based international shipowner Sovcomflot told delegates to the Gastech 2017 Conference and Exhibition in Tokyo in April that the future of the tanker industry belongs to LNGfuelled vessels.

As the world’s leader in the Aframax tanker segment, Sovcomflot says that it is pioneering the conversion of this class of vessel to use LNG as fuel. A key news event in the run-up to the opening of Gastech was the signing of a bunkering agreement between SCF Group and Shell for the supply of gas as fuel for SCF’s Aframax tankers that are specially designed to run on LNG. These tankers will join the Sovcomflot Group fleet at the beginning of June 2018. The new tankers will each have a deadweight of 114,000 tonnes and certified as ice class 1A. The use of LNG as a fuel for tankers meets the expectations of both shipowners and charterers seeking to improve the environmental footprint of cargo transport. An LNG-fuelled engine typically emits 90% less sulphur oxides (SOx), 80% less nitrogen oxides (NOx) and 15% less carbon dioxide (CO2) than an engine running on common heavy fuel.

“Aframax is one of the key size categories for tankers employed in transportation of liquid hydrocarbons. These are ships that are most in demand to cater for Russian oil exports. Sovcomflot and Shell are initiating the conversion of this segment of large-capacity tankers to gas engine fuel. Sovcomflot aspires to become a leader in the global transformation of maritime transport towards more efficient and environmentally friendly systems and technologies. The market is set a new standard of navigation safety and quality, which is especially important for the operation of ships in environmentally vulnerable areas of the world ocean,” Sergey Frank said.

Another innovative project implemented

by Sovcomflot, which was highlighted

by Sergey Frank in his report at Gastech 2017, aroused great interest from the conference participants. On 26 March the SCF fleet gained the world’s first ice-breaking LNG tanker, Christophe de Margerie, and on 29 March this unique vessel successfully berthed at the gas terminal in the Port of Sabetta (YNAD), becoming the first vessel to do so. The tanker is intended to serve the Yamal LNG project, transporting LNG all year round in the difficult ice conditions of the Kara Sea and Gulf of Ob.

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rank emphasised that the creation of this unique gas carrier had been preceded by years of work by a large team of specialists from Sovcomflot, Daewoo Shipbuilding & Marine Engineering, ABB, Wärtsilä, Aker Arctic, Yamal LNG, the Central Research Institute of Marine Fleet (CRIMF) and the Russian Registry of Shipping (RS). The tanker was built with the latest and safe technologies.

Total project cost will be RUB420 million with the company investing RUB350 million. The complex will be built on the existing berths in Petropavlovsk-Kamchatsky.

It will consist of 18,000 tonne capacity tanks and two pumping stations with daily capacity of 35,000 tonnes of fuel oil. The new complex is expected to be completed in 2019.

In his report Sergey Frank noted that during ice trials, which had taken place from 19 February to 8 March in the Kara and Laptev Seas, the ice-breaking LNG carrier had surpassed many design targets. The Christophe de Margerie proved her capability to move stern-first in 1.5 metre thick ice at a speed of 7.2 knots (the target figure was 5 knots) and head-on at a speed of 2.5 knots (the target figure was 2 knots). In the coastal area to the west of the Nordenskiöld Archipelago, Christophe de Margerie successfully broke through an ice ridge with a height of 2 4.5 m above the ice, a keel depth of 12-15 m and a cross-sectional area of 650 m2, moving stern first.

LNG-fuelled fishing vessel project United Shipbuilding Corporation subsidiary Sredne-Nevsky Shipyard is hoping to receive an order to build three LNG-powered fishing vessels.

The company will use unfinished hulls built in another shipyard in the Kirov area which has gone bankrupt.

These are small refrigerated vessels designed for operating in the Baltic.

All three hulls are currently owned by the Federal Agency for Fisheries (Rosrybolovstvo).

The Russian Ministry of Trade and Industry initiated the project and has specified that the vessels need to be completed and equipped with hybrid engines that can operate on both diesel and LNG. Rosrybolovstvo, which allots fishing quotas to the fishing companies, has put together an incentive package to attract potential buyers of the vessels.

Estonian ferry using Russian LNG Estonian shipping company Tallink’s fast ro-ro/passenger ferry, built at the Meyer Turku shipyard in Turku, Finland is using LNG supplied by Russian company Cryogas as fuel. Gazprombank subsidiary Cryogas owns two small production plants at Kingisepp and Pskov.

Cryogas has plans to expand its Pskov plant if demand grows while, in the near future, it will launch two more plants in North West Russia.

The Kaliningrad plant will have an annual capacity of 150,000 tonnes and should be in operation this year. Like Cryogas Pskov, the new plant’s production will be aimed at the European market.

Meanwhile another St Petersburg-based company, Transport Integration, has submitted a proposal to the Federal Ministry of Transport for design and construction of LNG-powered ships which would be synchronised with development of small-scale LNG production and bunkering infrastructure.

The draft programme includes initiatives aimed at promoting LNG as a marine fuel.

It includes subsidies for investors to buy LNG-vessels, construction of appropriate infrastructure, particularly in the Baltic region, and allocation of funds for financing of LNG-fuelled vessels, including icebreakers, tugs, bunkering tankers, sea-river vessels and ferries.

Marine Standard Bunker wins infrastructure funding Bank VTB is lending Marine Standard Bunker RUB115 million (US$2m) to build storage and transshipment facilities in the Kamchatka priority development area.

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Russia

Modernisation of Russian refineries and bunker availability Olga Bogacheva asks VNIPIneft’s Vladimir Mikhailovich what impact the upgrading of refineries is having on marine fuel oil production

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peaking to Olga Bogacheva recently, Vladimir Mikhailovich, director general of engineering company VNIPIneft (Moscow), provided an insight into Russia’s ongoing refinery modernisation programme. VNIPIneft is deeply involved in upgrading the refineries.

OB: When did refinery modernisation begin? What were the goals?

VM: Extensive modernisation of the Russian oil processing industry has been underway since 2011, following an agreement signed by the oil companies, Federal Anti-Monopoly Service, Ministry of Energy and Russian Technical Supervision Service. The agreement has substantially changed the technical structure of the industry and the range of production.

In particular 133 refineries are planned to be built or reconstructed by 2020.

The first phase of this extensive modernisation, which ended in 2015, was aimed at implementing the Euro-5 motor fuel programme. In the first half of 2016 all vertically integrated companies of Russia started producing motor fuel to the Euro-5 specification. In fact, by early 2016 the Russian refining industry had carried out modernisation at an unprecedented scale and speed 58 plants had been built or renovated by that date.

The second phase began in 2016 and is aimed at development of deep conversion of oil and residue destruction.

These technologies allow obtaining additional valuable products and increasing the profitability of production.

According to the Russian Energy Strategy - 2030 and the oil industry development programme for the next 15 years -

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the depth of hydrocarbon processing is expected to reach 85%. This is particularly important in view of deteriorating economic situation in Russia as it improves efficiency of the industry.

OB: Much has changed over the years, particularly in respect of market demand for motor fuels. Were there necessary adjustments made in the refinery upgrade program? Were the needs of the shipping industry taken into account in the light of the tightening of MARPOL requirements?

VM: The quantity of bunkering fuel and its components produced at refineries is steadily increasing. However, a lot of bunkering fuel is produced by blending directly at the place of consumption rather than at refineries. The output of the fuel oil at refineries was 187,200 tonnes in 2012 and in 2016 it dropped to only 70,500 tonnes.

The production of low-sulphur marine fuel is possible with the equipment available at many refineries. Currently low sulphur oil fuel is being produced at Achinsk, Volgograd, Afipsky, Novoshahtinskiy, Omsk and at other refineries. The sulphur content is 1.0% in heavy fuel and 0.1% in distillates.

Low sulphur fuel will be available from the production of fuel from products and residues of the catalytic and hydrocracking processes and the use of the hydro-treatment process of gas fractions at high pressure installations.

Diesel fuel will also be available as an alternative to fuel oil and low sulphur diesel fuel can be used in the production of bunker fuels.

So shipowners need not worry. We do not expect bunker fuel availability problems.

OB: What products will be produced by the Russian refineries in 2020, and how much? And in 2030? Will there be enough fuel for all bunkering companies?

VM: According to the Industry Strategy 2035, annual production of oil industry is expected to grow as follows: gasoline up to 47 million tonnes in 2020; 51 million tonnes in 2035; diesel fuel - up to 91 million tons in 2020; 99 million tonnes in 2035; aviation kerosene - up to 15.0 million tonnes in 2020; 16.0 million tons in 2035. During this period output of fuel oil will drop. However, hydrocracking technology will enable the production of feedstock for bunker fuel with a low sulphur content.

VKapustin

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Environment

Arctic HFO ban may precede black carbon control measures Pressure has been mounting to control emissions of black carbon in the high north. An HFO ban may come sooner, reports Unni Einemo

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ban on the use and carriage of heavy fuel oil (HFO) in the Arctic is looking increasingly likely. In addition, we may see proposals to regulate black carbon in the not too distant future that could have a big impact on ships operating in Arctic waters, as they will likely be more restrictive than mainstream ship emission control measures.

The International Maritime Organization (IMO) has been discussing the need for controlling black carbon emissions from ships operating in or near the Arctic for years. Black carbon (BC), often referred to as soot, is light-absorbing. Suspended in the atmosphere it warms by absorbing sunlight, while soot deposits make ice and snow melt faster. BC is therefore associated with global warning.

In 2010, the IMO’s Marine Environment Protection Committee (MEPC) was informed that although marine vessels emit only around 2% of total global BC, the release of BC emissions in northern shipping routes affecting the Arctic is particularly damaging and magnifies their impact. In July 2011, the 62nd session (MEPC 62) agreed to initiate work to control BC emissions.

Progress has been slow, held up several IMO member states that have been questioning the scientific basis for regulating BC from shipping.

But as glaciers and Arctic sea ice have been receding at an alarming rate, opening up the region for more shipping activity, in particular the use of the Northern Sea Route (NSR), pressure to regulate BC has continued to grow.

Consideration of the issue was on the agenda at the fourth session of the Sub-Committee on Pollution Prevention and Response (PPR 4), which met at IMO’s headquarters in mid-January this year. PPR 4 had several documents and information papers submitted on the subject, mainly relating to the results of studies undertaken on the accuracy and practicality of various BC measurement methods, as well as observations about which factors contribute to BC emissions.

The workplan for this item, as defined by MEPC 62, calls for developing a definition; identifying the most appropriate measurement method(s) for international shipping; and investigating appropriate control measures. The Bond et al. definition for BC was approved by MEPC 68 in 2015, but much work remains on the rest.

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PPR 4 agreed that it would need an extension on the target date for completion of the current workplan from 2017 to 2019, and that intersessional work will be required even to meet this new target date. It will seek to finalize identification of the most appropriate method(s) for measurement of black carbon at PPR 5 (2018).

Discussions on BC showed divergence on opinions as to whether it is premature to begin to investigate control measures before appropriate measurement methods have been fully agreed. Some think this is premature as they fear it will lead to legislation before the merit of control measures has been proven, however, the door has been left open for proposals to allow progress on this third element of the workplan.

Any potential future control measures are only expected to be adopted for ships operating in or near the Arctic, as that is where BC emissions can have the most dramatic impact on global warming.

Observations & future predictions Studies suggest there is good correlation between several measurements methods that are part of the current measurement protocol for voluntary data collection studies on BC emissions from ships,

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ut even one method that has not been showing good correlation and is deemed impractical by most that assessed it has as yet not been excluded.

Most measurements have been done in laboratories. Doing measurements during actual operations is challenging and it seems many external factors have an impact on the result.

Fuel type has an impact on BC emissions, but the study results are not fully conclusive and overall it appears that engine load is a bigger factor.

Reduced sulphur content reduced the overall PM emissions, but not necessarily the BC emission according to one study presented to PPR 4, with variable engine loads creating variable results between fuels of 0.10%, 0.50% and 2.50% sulphur content.

Studies are missing on BC emissions from low speed engines, and studies on the impact of using 0.50% sulphur fuel are as yet limited.

Looking ahead, and reading the signals from discussions at PPR 4, we may see a push toward requiring ships in the Arctic to use only very clean distillate fuels combined with particulate filter technology, or LNG,

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and exclude the use of scrubbers combined with HFO as an acceptable control measure.

To date, such particulate filter technology has not been practical to use on larger ship types.

Any such decisions will only be taken in the next stage of the IMO’s work on controlling the impact on the Arctic of BC emissions.

Before then, there must be reliable measurement methods in place as well as more research to understand exactly which factors cause the worst BC emissions, and how these can best be controlled.

However, sooty emissions are not the only concern. Environmental NGOs have been pushing for a ban on the use and carriage of HFO in the Arctic, to reflect the one in the Antarctic, to prevent HFO spills in these very sensitive eco-systems.

That push has now received the full support of the European Parliament, which in March this year adopted a resolution on the Arctic. MEPs called on the Commission and the Member States “to actively facilitate the ban on the use of heavy fuel oil (HFO) and carriage as ship fuel in vessels navigating the Arctic seas through MARPOL of IMO” as part of an integrated European Union policy for the Arctic.

” Should this not prove feasible at international level, the Commission should come up with rules to prohibit the use and carriage of HFO for vessels calling at EU ports,” MEPs said.

The Clean Arctic Alliance, which counts many environmental NGOs among its members, believes that a ban on HFO in the Arctic can be achieved by 2020 if governments and business demand action by the IMO. If this were to reflect the HFO ban in the Antarctic, it would require an amendment to Annex I of MARPOL to extend it to the Arctic.

A reduction of BC emissions would be a positive side effect, but would it be enough? Ships operating on distillates also emit soot, and at some specific engine loads they may even be worse offenders than ships burning HFO. If the IMO agrees that BC emissions need to be reduced effectively, amendments to Annex VI of MARPOL may also be required, but identifying and agreeing on the appropriate control measures would likely take longer than adopting an HFO carriage ban under Annex I.

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Environment

The devil in the detail 2020 could see sharp increase in conflicts caused by differences between commercial and MARPOL principles for determining sulphur ‘off-specs’. Unni Einemo looks at the issue

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hen can a bunker fuel be said to meet a specific sulphur limit? Unfortunately, the answer to this fundamental question is not straightforward. There is a misalignment between the sulphur verification procedure prescribed by the International Maritime Organization (IMO) and the one applied in commercial contracts throughout the marine fuel industry. This has been creating confusion and distress for bunker fuel buyers and sellers for years, resulting in friction and frequent disputes.

Disputes regarding sulphur ‘off-specs’, and MARPOL-related ‘Notes of Protest’ (NOPs) for fuels exceeding sulphur limits lodged by ships with their flag states, have mainly related to products for use within emission control areas (ECAs).

They were particularly prevalent when the limits were 1.5% and later 1.00% sulphur; typically met by low sulphur fuel oil (LSFO) products that were blended to meet sulphur limits. There was a huge improvement in 2015, when the sulphur limit in ECAs dropped to 0.10%. By and large this has been met by using marine gasoil (MGO) which for the most part comes from a product pool that tends to be well within the upper 0.10% sulphur limit. Come 2020, however, the 0.50% sulphur limit is expected to reintroduce blending from a wide source of refinery streams on a much larger scale than what was seen to meet demand for LSFOs for the ECAs prior to 2015. Disputes regarding sulphur ‘off-specs’ and the associated sulphur NOPs could reach unprecedented levels.

The reason for this is that there was a desire for the sulphur limits in MARPOL Annex VI to be treated as “absolute”, which led to a unique interpretation of otherwise universally accepted statistical variance in sulphur test results.

“ISO 4259: Petroleum Products – Determination and Application of Precision Data in Relation to Methods of Test” recognises that no test method can measure absolute/true value with 100% certainty. It provides the industry with a scientific and statistically proven 95% confidence formula to work with in any form of measurement, recognising the limitation of each test method with regards to its accuracy.

It is defined as 0.59xR where R stands for Reproducibility, indicating the inherent variation that occur in test results when tests are conducted on the same sample, using the same test method, but in different laboratories.

Appendix VI in MARPOL Annex VI also uses 0.59xR but in a manner which disregards the inherent uncertainty of all test methods in a bid to establish MARPOL sulphur limits as “absolute”.

To demonstrate the difference between the IMO and ISO 4259 approaches to sulphur verification, let’s look at a parable.

In football, we all agree that as long as a shot at goal enters between the goalposts, we’re OK, it is on target.

In fuel testing terms, if the middle of the goal represents the ‘limit value’, the goalposts represent the 95% confidence limits. A test result between the goalposts is considered as meeting the limit value. What the IMO’s sulphur verification procedure effectively does is to say that only the left half of the goal meets the limit value, results in the right half are no OK. It does this by requiring the average of two test results from the MARPOL sample, performed in the same laboratory, to be at or below the limit.

If the average of the first two tests exceeds the limit, but is within the 95% confidence margin, it requires a further two tests to be performed on the sample in a different laboratory. The average of all four test results must not exceed the limit.

The drawing below illustrates what this means for a 0.10% and a 0.50% sulphur limit.

Implications The most keenly felt implication of this misalignment is the fact that a ship operator with a single test result from its own testing programme showing sulphur marginally exceeding a MARPOL limit is afraid of falling foul of MARPOL Annex VI sulphur limits. But if the ship operator raises a sulphur dispute with the supplier, they have no legitimate ‘off-spec’ claim case unless the test results exceeds the specified and limit and the 95% confidence margin.

When is a goal a goal?

In 2008, the 58th session of IMO’s Marine Environment Protection Committee (MEPC), adopted “Fuel Oil Verification Procedure for MARPOL Annex VI Fuel Oil Samples”. Why, you may ask, didn’t IMO simply agree to use the well-established principles for test result interpretation in ISO 4259, which is applied throughout the marine fuel industry?

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Environment

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ship which has a sulphur test result indicating potential non-compliance may lodge a ‘Note of Protest’ (NOP) with its flag state with a copy of the bunker delivery note (BDN), and the analysis report.

The vast majority of such sulphur NOPs, historically over 80%, tends to be for fuels with sulphur test results falling within the 95% confidence limits.

It is important to note that such a test result does not prove that the fuel supplied was non-compliant, it is merely indicative of a potential sulphur limit breach, but it isn’t clear if that is understood by the relevant authorities in flag and coastal states.

In 2014, experts at CIMAC published a paper illustrating that the Appendix VI to MARPOL approach not only fails in the task of measuring the ‘true value’, but by not adhering to the ISO 4259 process for assessing test results it can also result in a fuel oil being found noncompliant, in accordance with Annex VI when both the supplier’s and receiver’s test results meet the specification limit, where that is defined as a MARPOL Annex VI Regulation 14 sulphur value.

How, I hear you say. Let’s say you test a fuel which has a “true value” of 0.50% sulphur.

If you tested it 100 times, the number of test results falling either side of 0.50%, but within the 95% confidence margin, should be the same. But it is quite possible that out of the first four, two tested at exactly 0.50% and two tested slightly above, while the remaining 96 tests gave an even distribution and a final average of exactly 0.50% sulphur. But if you looked only at the first four test results, your average would be slightly above 0.50% and it would fail the MARPOL verification procedure.

The devil really is in the detail on this issue.

The CIMAC paper recommended that the sulphur verification procedure in MARPOL Annex VI should be aligned with ISO 4259 to provide a more uniform, robust and reliable system. In 2015, building on the arguments in the CIMAC paper, IBIA proposed this to MEPC 68. It was, however resisted because of suspicion among member states that bunker suppliers would then be tempted to blend either exactly to the sulphur limit

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or even marginally above because of the “error margin” afforded under the 95% confidence limit.

Correct application of ISO 4259 The CIMAC paper, and IBIA’s proposal to MEPC 68 in 2015, explained that there is an important distinction in the application of the testing precision boundary in commercial application using ISO 4259, with different approaches for the supplier and for the recipient as to whether a specification limit has been met. Applying ISO 4259, the recipient (ship) can only consider that a maximum specified limit value has been exceeded if their test result exceeds the limit plus 0.59R, or 95% confidence. For the supplier, with a single test result, the approach is that in the case of a maximum specification limit, the specification limit has been met, with 95% confidence, if the test result is less than or equal to the specification limit minus 0.59R. What this means is that if a supplier’s retained sample is tested, that test result must not exceed a maximum limit at all.

They do not have the ‘luxury’ of applying the limit plus 0.59R. If a supplier is using a blend target equal to the specified limit, there would be as many test results above the specified limit as below (50/50 chance), meaning that, for the supplier to be 95% confident that they do not exceed the limit, the supplier should blend to the limit minus 0.59R. These principles should suffice to ensure suppliers are careful not to blend too close to the sulphur limit, but in a competitive market place some may be tempted to blend to the actual limit rather than the limit minus 0.59R. The question is: what harm would that do? As long as the sulphur test results fall within the 95% confidence limits, the regulation’s intended benefits of reducing harmful sulphur emissions are achieved.

By and large, authorities in reality do not seek to crack down hard on marginal infractions, though practices with regards to penalising sulphur limit exceedances will vary between countries, as we have already seen in countries checking ships for ECA compliance.

IBIA efforts at IMO With an eye on the potential explosion of sulphur disputes that may materialise in 2020, what should we do? If IBIA were to put in a new proposal for the IMO to adopt ISO 4259, there is a risk of scoring an own goal because many would simply dismiss it as a repeat of the attempt at MEPC 68 in 2015 which was not sufficiently supported. So for now, IBIA is working on educating all parties to build a better understanding of these issues, playing the long game.

As part of this effort, on January 17 this year, IBIA put on a lunchtime presentation in the main hall at IMO’s London headquarters for delegations attending the fourth session of the Sub-Committee on Pollution Prevention and Response (PPR 4). IBIA took this opportunity raise awareness of the current differences between commercial and statutory approaches and the problems resulting from it. IBIA invited Tim Wilson, Principal Specialist on fuels at Lloyd’s Register, to do the presentation and worked closely with him on the content.

Among the key messages Wilson put across at PPR 4 was that sulphur inspection authorities need to be mindful of the current differences between commercial and statutory approaches, and to understand that all test methods use 4259 to define the confidence testing boundary.

He also suggested that NOPs should not include reports of ships’ single test results where the sulphur limit exceedance is within 95% confidence limits. This only causes anxiety for shipowners about potentially being non-compliant but gives them no commercial ‘off-spec’ case against the supplier. The key point to understand, Wilson said, is that inconsistency in testing procedures could result in wrong indictments of ships and/ or suppliers. By raising awareness of how the discrepancies between the regulation and commercial practices are causing a lot of pain for no gain, IBIA hopes this will help member states understand the issues and take a common sense approach when it comes to enforcement of MARPOL sulphur limits.

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INNOVATION Corvus Energy is to supply a lithium ion-based energy storage system for a new hybrid chemical tanker

Energy storage to boost propulsion Chemical tanker’s hybrid propulsions system will “improve efficiency, reduce exhaust emissions and lower noise levels”

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anadian company Corvus Energy is to supply a lithium ion-based energy storage system (ESS) for a new hybrid chemical tanker being built for Norwegian owner Rederiet Stenersen. The chemical tanker will be the first vessel of its kind to utilise an ESS for propulsion. Corvus Energy will supply its next generation Orca Energy ESS solution to integrate with Finland-based WE Tech Solutions’ propulsion system, which will deliver “industry leading environmental performance for this new vessel”.

Orca Energy is part of the Orca ESS product line from Corvus Energy which is specifically designed for maritime applications.

The Orca ESS solution will be integrated with WE Tech’s Direct Drive Permanent Magnet Shaft Generator solution into the 17,500 dwt IMO class II chemical tanker.

This vessel is the first of two on order by Stenersen. The delivery from WE Tech to the first vessel is scheduled for Q2 of 2017.

“Corvus Energy’s industry leadership and experience made our selection of Orca a very straightforward decision”, said Niklas Jakobsson Project Manager at WE Tech.

“The innovations Corvus has achieved on cost, safety and performance have created an extremely compelling energy storage solution.”

Stenersen operates a fleet of 16 purpose built chemical/product carriers ranging from 13,000 to19,000 dwt. All vessels are deployed in North West European trade and equipped to the highest standards in order to meet the customers’ requirements and the harsh conditions in Northern Europe. Utilizing Corvus Energy’s Orca ESS solution for the hybrid power and propulsion systems will allow for running fewer diesel generators for certain operations – improving efficiency, reducing the exhaust emissions and lowering noise levels, making it the most environmentally friendly chemical tanker ship in the Rederiet Stenersen fleet.

“The Orca Energy ESS from Corvus was an attractive solution for our new ships”, said John Stenersen, Director, Ship Management at Stenersen.

“By combining industry leading safety, performance and economic feasibility, the Orca ESS aligns with our mission to provide our customers with safe, reliable & cost efficient tanker transportation while meeting the highest quality, safety and environmental standards.”

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“This latest order from WE Tech Solutions shows the viability of energy storage for the hybridization of longer-haul vessels”, said Halvard Hauso, SVP Business Development of Corvus Energy based in Bergen Norway. “As the cost of lithium ion batteries continues to improve we will see more and more applications beyond the traditional ferry and tug base.”

ETI launches two energy saving projects UK-based Energy Technologies Institute (ETI) has launched two new projects aimed at boosting the fuel efficiency of ship operations. ETI is a public-private partnership between global energy and engineering companies – BP, Caterpillar, EDF, Rolls-Royce and Shell – and the UK Government.

ETI’s role is to act as a conduit between academia, industry and the government to accelerate the development of low carbon technologies. It is expected to bring together engineering projects that develop affordable, secure and sustainable technologies to help the UK address its long term emissions reductions targets as well as delivering nearer term benefits.

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INNOVATION

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ne new ETI project aims to develop and demonstrate a waste heat recovery system for ships that could deliver fuel efficiency savings of at least 8%. The £3.6 million (US$4.5m) project will be led by AVID Technology which is based in Cramlington, North East England. It will work alongside RED Marine Limited of Hexham, Newcastlebased Royston Power and Enogia based in Marseilles, France, to deliver a cost effective waste heat recovery system for use across all types of ships.

The 26 month project should see the waste heat recovery system installed on an offshore support vessel by the end of 2018 ahead of a further six months of testing.

ETI says that fuel efficiency in shipping can be improved by reducing the electrical load provided by the ship’s generators, through recovering heat energy from the exhaust stream, in addition, substantially reducing the temperature of the exhaust gas by converting the heat to electricity.

The technology being developed in the ETI’s project should be capable of being deployed on a range of marine vessels, including chemical tankers, general cargo vessels, container feeders, offshore support vessels and roll on roll off passenger ships.

Paul Trinick, the ETI’s HDV Marine Waste Heat Recovery System Project Manager said: “The ETI has recently published an insight report which analyses the UK shipping fleet, the potential opportunities for ship owners and operators and identifies the most promising technologies that could reduce fuel consumption economically.

We have established that a 30% reduction in fleet fuel consumption can be achieved by using a combination of innovative technologies, including waste heat recovery systems, with an approximate payback period of just two years.

This project will develop a commercially viable product suitable for a wide range of vessels types and capable of being retrofitted to ensure it is attractive to ship owners and operators.”

“It is important that we now develop and demonstrate this technology to provide confidence to shipping owners and operators that it can deliver tangible efficiencies and savings under real world conditions.”

Ryan Maughan, founder and managing director of AVID Technology, which specialises in the design and manufacture of electrically powered systems for low emission vehicles said: “The technology solution we are targeting with our partners is based on improving fuel efficiency by recovering heat energy from the exhaust stream therefore reducing the electrical load provided by the ship’s generators and by lowering the temperature of the exhaust gas by converting heat to electricity.”

In another initiative ETI is working with Teignbridge Propellers International Limited (TPIL) on a £3 million project to develop a High Efficiency Propulsion System (HEPS) for ships. The two year project aims to develop a commerciallyviable system that can be retrofitted to a variety of vessel types. Is expected that the HEPS technology will deliver a fuel efficiency benefit of greater than 8% on most vessels.

Deborah Stubbs, the ETI’s High Efficiency Propulsion System Project Manager said: “Unlike other forms of transport it is difficult to replace fossil fuels in marine vessels with low carbon alternatives so increasing fuel efficiency will become progressively more important if emissions and costs are to be reduced for the shipping industry.

Based in Newton Abbot, Devon, Teignbridge is the largest propeller and stern gear producer of its kind in Europe. Its chairman, David Duncan, said: “We are delighted to have been selected for this technology development and demonstration project, it fits very well with the company’s research and development strategy and plans.

Teignbridge Propellers has an excellent engineering design team and a background of design development.

The project will be helped by the use of the dedicated research test vessel presently under construction for Teignbridge Propellers. The selection by the ETI is a recognition and endorsement of the company’s abilities.”

The project will have the use of a purpose designed and dedicated research vessel currently under construction. The twin-hulled vessel will be used to trial and test a range of propellers and propulsion equipment.

The vessel which is a floating laboratory is believed to be the first of its kind.

It is capable of testing a range of propellers from slow speed with high bollard pull to high speed in excess of 40 knots.

TPIL’s dedicated research vessel will be used to trial and test a range of propellers and propulsion equipment.

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Equipment & Services

MetoeGroup’s global fleet monitoring system

Firms rush to help shipowners meet MRV deadline While many ship operators could be caught out by a new EU regulation, specialist firms are rushing to help them meet their obligations

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n a major new imposition on the global shipping industry that has gone largely unnoticed, operators of vessels larger than 5,000 gross tonnage that call at any EU port will be required to submit a plan for monitoring, reporting and verifying (MRV) its CO2 emissions by 31 August 2017, with data collection due to commence on 1 January 2018.

Monitoring applies to ships of any flag that call in a EU port, and is required on a per ship and voyage basis and will need to cover amount and emission factor for each type of fuel consumed in total, CO2 emitted, distance travelled and time spent at sea.

MeteoGroup says that its integrated solution for fleet monitoring, planning and optimization, FleetGuard ,can help shipping companies ensure that they adhere to the EU MRV and regulations already imposed by the IMO. It says that FleetGuard’s flexible and dynamic noon reporting system and pivot style database collects all data required by the verification body and an API for third party systems offers an easy connection for transfer of compulsory monitoring data.

“As a leading provider of weather solutions to the shipping industry, FleetGuard already provides added value to over 100 shipping companies.

The new regulations imposed by the EU now mean that reporting is in the forefront of many people’s minds, and I’m very pleased that MeteoGroup and FleetGuard are able to help more shipping companies meet these new requirements.”

FleetGuard acts as a complete analysis tool, not only ensuring monitoring regulations are adhered to, but also acting as a performance tool. Companies can monitor their own KPI’s, such as bunker type and consumption, speed, time and ETAs. User defined weather limits and restrictions, and extreme weather warnings ensure vessels are sailing at their optimum, helping to actually reduce fuel consumption and CO2 emissions.

The company says that shipping companies are worried about the accuracy of the information they are collecting and a significant amount of time is spent verifying data. FleetGuard supports customers with smart algorithms and experienced analysts, ensuring the validity of all data submitted.

Christel Pullens, Sales Director for Shipping at MeteoGroup, said, The only official magazine of IBIA, World Bunkering sUMMER 2017

Meteo Shipping says that studies show the shipping industry can potentially reduce fuel consumption by up to 55%, with weather routing and speed reduction named as two of the 10 most effective existing measures, reducing emissions by 1% to 4% and 17% to 34% respectively and cost savings of up to €280 per tonne. Weather routing and performance optimisation can be planned and monitored by FleetGuard to ensure shipping companies reduce emissions without compromising efficiency or ETAs. Meanwhile the United Kingdom Accreditation Service (UKAS), the sole national accreditation body recognised by the UK government to assess the competence of organisations that provide certification, testing, inspection and calibration services, has been busy accrediting organisations seeking to assist shipowners meeting the EU MRV rules.

Following an extensive UKAS audit, Lloyd’s Register subsidiary LRQA is in the first group of verification bodies to receive accreditation against the international management system standard for GHG validation or verification - ISO 14065 - to globally deliver assessment and verification services related to GHG emissions and specifically, the MRV Regulation.

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his is an extension to LRQA’s existing accreditation to ISO 14065 - under which related schemes are delivered.

Ged Farmer, Sustainability Technical Manager at LRQA, commented: “The MRV regulation represents a significant change in the way shipowners and operators will be required to monitor, report and have their CO2 emissions verified. The achievement of accreditation to ISO 14065 will allow LRQA to deliver a range of assessment and verification services to our many clients that operate within shipping, ensuring that they are well prepared and all relevant ships are compliant.”

Other organisations recently accredited

by UKAS include Bureau Veritas, Verifavia Shipping, and ClassNK. Patrick Le Dily, Vice President, Legal Compliance & Regulatory Management, Bureau Veritas said: “As a leader in both regulatory compliance and environmental performance services for the marine industry, Bureau Veritas has a deep understanding of EU MRV and the challenges it brings. UKAS accreditation combined with our worldwide organization and network of EU Maritime MRV Verifiers enables us to help clients meet the deadlines for compliance through timely approval of monitoring plans and future verification of monitoring reports.”

Verifavia Shipping stresses that the EU’s shipping MRV regulation is now a pressing reality for more than 12,000 vessels visiting EU ports.

Commenting on the accreditation, Julien Dufour, CEO, Verifavia Shipping, said: “We are proud to have earned this recognition by UKAS, which cements our position as the leading independent EU MRV verifier and one of the few accredited to offer both monitoring plan assessments and verification of emissions reports on a global basis. With many years of experience verifying aviation emissions, Verifavia has been actively involved in supporting the European Commission to shape the MRV legislation.

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Our team of knowledgeable MRV auditors has expanded greatly since the MRV regulation came into force, and we now have technical experts from across the world, ready to work hand in hand with ship owners and operators to help them successfully navigate the requirements of the regulation, and achieve compliance in a timely and cost-effective manner.”

Nikolas Theodorou, managing director, Verifavia Shipping (Hellas) added: “Having successfully completed the accreditation process, we are excited to be able to increase the scope of our existing service offering. By combining our innovative approach and streamlined procedures with the technical expertise and industry knowledge of our team, Verifavia provides a highly competitive service that ensures our customers have a smooth EU MRV verification experience. We continue to host free EU MRV seminars and webinars globally to help demystify the requirements of the legislation, as with just five months to go until the first legal deadline, it’s imperative that shipping companies are equipped with the right information on the various requirements, and able to act now to achieve compliance.”

Since July 2015, when the MRV regulation came into force, Verifavia has worked with several shipping companies to ensure that they had the right systems, capabilities, and understanding to comply with the legislation. In addition, the company has certified several information and communication technology (ICT) systems for MRV use, including those provided by SetelHellas, DYNAMARINe, KROHNE, and Viswalab.

ClassNK will be now able to assess Monitoring Plans, verify Emission Reports and issue DOCs in accordance with the EU MRV regulation. With extensive experience in the GHG verification, we are committed to providing the same highquality assurance services for the EU MRV assessment and verification activities.”

Meanwhile US-based classification society American Bureau of Shipping (ABS) says was the first organisation to be accredited for MRV compliance.

“We are proud to be the first class society accredited to perform EU MRV assessments,” said ABS Chairman, President and CEO Christopher Wiernicki.

“Endorsement by Greece’s National Accreditation Body acknowledges our leadership role in helping industry navigate complex operational and environmental regulatory challenges.”

ABS Executive Vice President for Global Marine, Kirsi Tikka, said: “As the first accredited class society, ABS is already working with owners and operators to help them verify that their monitoring plans are in compliance with the requirements. This recognition by the ESYD further demonstrates our leading role in providing EU MRV compliance solutions.”

Earlier this year, Verifavia announced a strategic partnership with Greek classification society, INSB Class.

As part of the agreement, INSB Class will offer its MRV services to contracted customers by leveraging Verifavia’s accreditation, knowledge, and expertise.

Toshiro Koiwa, Director of ClassNK’s Assurance Operations Division commented: “Following this accreditation from leading accreditation body UKAS,

BV’s Patrick Le-Dily - accreditation... enables us to help clients meet the deadlines for compliance

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The owner of a brand new bulker that accidentally spilt fuel oil in Canadian waters faces prosecution

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anadian prosecutors have charged the Greek owner of the 80,635 dwt, Cypriot bulk carrier Marathassa with 10 pollution-related offences that could result in multi-million dollar fines.

The company said the summons was delivered to the master who no longer worked for the company and to an insurance adjuster who worked for a completely different firm.

While at anchor in ballast awaiting her first cargo the ship accidentally pumped about 2,700 litres of fuel oil into the sea off West Vancouver, British Columbia.

On 4 April The Globe and Mail reported that a Federal Court judge had rejected Alassia’s application for judicial review and ruled that the company must make its case in British Columbia Supreme Court.

According to press reports about 80% of the spill was recovered within 36 hours but some went ashore on the city beaches and local fisheries were affected.

Press reports also blame the spill on faults in the new vessel’s piping system which was allowed oil to enter part of the duct keel which accidentally pumped overboard. The master of the vessel initially denied the oil was from the Marathassa.

Environment Canada estimates 20 birds were impacted by the fuel oil, with one fatality and three successfully captured and rehabilitated prior to being released into their environment.

So, it was accidental, less than 3 tonnes were spilt, much of the oil was recovered and very limited environmental damage occurred.

The press report highlighted the political aspects of the incident, noting: “The fuel spill shone a light on potential weaknesses in the country’s marineresponse system at a time when major pipeline projects were being hotly debated. Critics of such projects – such as the recently approved Trans Mountain pipeline project, which would triple the capacity of the existing pipeline and increase oil tanker traffic – have used such relatively small accidents to make the point of how difficult it would be to deal with larger spills.”

The newspaper said that, according to court records, the company and the ship have each been charged with six offences under the Canada Shipping Act,

two offences under the Fisheries Act and one count each under the Canadian Environmental Protection Act and the Migratory Bird Convention Act. The charges include unlawfully disposing of a substance and failure to implement an oil-pollution emergency plan.

A Public Prosecution Service spokesperson said the Canada Shipping Act offences each carry a maximum fine of CAD$1 million and the single offence under the Canadian Environmental Protection Act carries a maximum fine of CAD$4 million.

Maximum sentences are rarely imposed.

The City of Vancouver welcomed the charges in statement saying: “The city is supportive of efforts that will prevent future oil spills and make polluters responsible for their conduct”. Meanwhile British Columbia Environment Minister Mary Polak said in a statement that it would be inappropriate to comment on the charges since the matter is before the courts. But she said she was pleased to see the federal government is taking spill response seriously, as evidenced by its November announcement involving a CAD$1.5 billion marine protection plan.

Unfortunately for the Marathassa’s owner, Alassia NewShips Management, pollution from ships is a highly sensitive and politicised issue in Canada, and especially in British Columbia.

In March 2017, when the prosecution was initially mounted, Alassia asked the Canadian Federal Court to set aside summonses and declare that attempts to serve the documents by the Public Prosecution Service of Canada and the Attorney-General were invalid.

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Legal

Multi-million dollar fine looms for 3 tonne spill

FUEL QUALITY

ISO 8217 responds to industry trends Unni Einemo looks at what’s new in ISO 8217:2017, the rationale behind it, and what to expect for the next revision

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here are several significant changes in the sixth edition of ISO 8217 to address current industry trends: the addition of a new class of distillates allowing for bio-fuel blends; the introduction of further cold flow checks for distillate fuels; and a change of the scope (Clause 1) to allow for inclusion of hydrocarbons from synthetic or renewable sources.

For RM grades, the 2010 revision brought in Calculated Carbon Aromaticity Index (CCAI) as an indicator of ignition performance, and introduced a limit on sodium. Moreover, the RM grades saw limits for highly abrasive catalyst fines (Al+Si) reduced significantly, and limits for ash and vanadium were tightened compared to ISO 8217:2005.

There have also been substantial amendments to the general requirements (Clause 5) and the allowable sulphur content in distillate fuels has been lowered. A number of informative annexes have been deleted.

Sulphur limits were removed for RM fuels in 2010, stating that these must be specified by the purchaser in line with statutory limitations, but limits were maintained for distillate fuels.

The sixth edition, published on the International Organization for Standardization (ISO) website on March 19 this year, cancels and replaces the fifth edition (ISO 8217:2012). This is perhaps a moot point seeing as the industry choses which edition to use, and at present the most widely used edition in bunker contracts remains ISO 8217:2005.

The 2010 revision saw a number of key changes compared to ISO 8217:2005.

New for both distillate marine (DM) and residual marine (RM) fuel grades were the inclusion of acid number limits and, from July 1, 2012, a 2 parts per million limit on hydrogen sulphide to protect crew.

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For distillate grades, the 2010 revision saw minimum viscosity limits increased or introduced, and oxidation stability and a lubricity requirement introduced.

The fifth edition, ISO 8217:2012, made no changes to limits for either residual or distillate fuels; but was revised in response to a need to update the test method used to determine if marine fuels meet the 2 ppm limit for H2S. Perhaps just as importantly, ISO 8217:2012 replaced dated Normative References, which includes information on the test methods to be used, with undated references, meaning ISO 8217:2012 automatically applies the latest edition of a referenced test method.

The 2017 revision upholds all the tighter limits introduced in 2010 and updates to test methods from the 2012 revision, and has some new requirements for DM, but the biggest changes relate to how the standard now deals with nonpetroleum hydrocarbons.

Welcome to FAME The sixth edition introduces DF (Distillate FAME) grades DFA, DFZ and DFB which allow up to 7% fatty acid methyl ester(s) (FAME) content by volume. Other than the 7% FAME allowance, these grades are identical to the traditional DMA, DMZ and DMB grades for all other parameters.

The DF grades have been introduced to allow for greater use of automotive diesel in the marine distillates pool, which is expected to improve fuel oil availability in some ports which may otherwise struggle to provide fuels complying with a 0.10% sulphur limit to ships. The 7% upper limit is in line with the maximum content in road diesel in most countries, and the FAME in the DF grades have be in accordance with the requirements of EN 14214 or ASTM D6751 at the time of blending.

The regular marine fuel grades; DMA, DMZ, DMB and RM (residual marine) grades shall not include FAME other than a “de minimis” level,” while DMX must be FAME-free.

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Improved control of cold flow properties Additional requirements have been included for distillate fuels to protect ships against cold climate operability issues which have been experienced since the introduction of 0.10% sulphur limit in emission control areas (ECAs) in 2015.

Since then, some ships have experienced paraffins solidifying in tanks, especially when more paraffinic fuels have been stored in unheated tanks.

In response to these concerns, the sixth edition has introduced a requirement to report cloud point (CP) and cold filter plugging point (CFPP) in DMA/DFA and DMZ/DFZ winter grades. There is no limit specified; only a requirement to report to let the operator know in advance if the fuel will need heating. Only DMX, a specialist niche product mainly intended for emergency generators, has limits specified for CP. For summer distillate grades (DMA/DFA and DMZ/DFZ) the only defined cold flow property is pour point (PP).

Residual fuels (RF) also have specific PP limits, but RF cold flow properties have not been an issue as such fuels are kept in heated storage tanks.

According to a FAQ document on ISO 8217:2017 released by the International Council on Combustion Engines (CIMAC), the requirement to report CP and CFPP “will provide additional information on the cold flow properties of the fuel that will help ships to mitigate cold operability issues ahead of any potential problems being experienced and supply important data to the next revision of the Standard.”

Scope & general requirements The Scope (Clause 1) has been expanded to include fuels containing not only “hydrocarbons from petroleum crude oil” but also from oil sands and shale, and hydrocarbons from synthetic or renewable sources.

This has been amended to address the evolving composition of fuels.

Hydrocarbons from synthetic and renewable sources are similar in composition to and in practice indistinguishable from petroleum hydrocarbons.

Clause 5 – General requirements, has been extensively redrafted to allow for inclusion of hydrocarbons from non-petroleum sources, and blends with a FAME component (Clause 5.1).

References to contaminants have been modified and simplified. Clause 5.2 now states: “The fuel shall be free from any material at a concentration that causes the fuel to be unacceptable for use in accordance with Clause 1 (i.e. material not at a concentration that is harmful to personnel, jeopardizes the safety of the ship, or adversely affects the performance of the machinery).

The FAQ document on ISO 8217:2017 released by CIMAC said Clause 5 in earlier versions “was continuously being misread and misunderstood, so the working group agreed to rework the wording to clarify and minimize any future misunderstanding of the intent of this clause.”

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CIMAC says the FAQ responses “reflect the collective thinking of the ISO Committee”.

Sulphur limits Sulphur limits have been reduced for several distillate grades. The sulphur limit for DMA and DMZ has dropped from 1.50% to 1.00% by mass. The same limits apply to the bio-blend equivalent DFA and DFC. DMX is unchanged at 1.00% maximum sulphur.

The sulphur limit has been reduced from 2.00% to 1.50% by mass for DMB, and the bio-blend equivalent, DFB, has also been given a 1.5% sulphur limit.

The reduction in sulphur limits is mainly in recognition of market trends, as these fuels rarely exceeded the new upper limits. The new limits do not correspond to any current statutory limits with the exception of DMB, which at 1.50% is in line with the current limit for passenger vessels on regular service between European Union ports (outside ECAs) until 2020.

Other changes A number of informative annexes, which has grown significantly during development of earlier editions, have been deleted to keep them to a minimum.

Critical supporting information previously in the annexes has been moved into the body of the Standard.

Clause 8 (Precision and interpretation of test results) has been expanded to include some of the information previously dealt with in an informative annex. It still says ISO 4259, which covers the use of precision data in the interpretation of test results, shall be used in cases of dispute.

It also says: “NOTE: Since all fuel testing is subject to inherent variations, the assessment of fuels as supplied is governed by the provisions of ISO 4259.

More information is provided in the CIMAC guideline on the interpretation of marine fuel oil analysis test results.”

This is a publicly available document.

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n the previous edition, the “de minimis” limit was indicated as not exceeding approximately 0.1%. This has been increased to 0.5% because the working group in in charge of developing the marine fuel standards, ISO/TC28/SC4/ WG6, was confident this level does not cause any operational issues based on field experience. The limit is still low enough to prevent intentional blending of FAME into marine fuel, but high enough to allow for accidental trace amounts caused by shared supply chain infrastructure with fuels for the automotive sector, and should broaden the scope for fuel availability.

FUEL QUALITY

Next revision looking to 2020 issues ISO 8217:2017 has not been able to address some of the issues arising from the introduction to the market of several products designed for designed for operation in emission control areas (ECAs) with maximum 0.10% sulphur fuels, products that were different from traditional DMA-grade marine gasoil (MGO). These appeared in the market during the latter stages of the ISO 8217 revision process.

Quality concerns specific to these less conventional types of fuel, which do not fit neatly into the current ISO 8217 RM/ DM grade specifications, are expected to become even more pressing with the 0.50% sulphur limit in 2020. The group in charge of developing the standard, ISO/TC 28/SC4/WG6, has already started the process of analysing the needs.

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It is also likely that the International Maritime Organization will request ISO to consider the framework of ISO 8217 with a view to accommodating the types of fuels expected to enter the market to comply with the 0.50% sulphur limit in 2020.

It is perfectly feasible to use the current grade classifications to buy “non-MGO” low sulphur products, although perhaps confusing when a product is sold as a RM grade but is more akin to a DM grade, sometimes with viscosity and density being the only exceptions. One of the things ISO/TC 28/SC4/WG6 will look at is “any possible grade rationalisations,” according to CIMAC’s FAQ document.

The last time we saw changes to ISO 8216, the classification of marine fuels, was in 2010.

It now comprises four categories of marine distillates (DM) and six categories (11 grades in all) of residual fuels (RM), reflecting the bunker grades ordered and sold at the time of the revision.

It will be a challenge for ISO/TC 28/SC4/ WG6 to produce a revision in time for 2020 that addresses the request from the IMO and the industry’s needs when we enter this new low sulphur era, in part because the ‘normal’ process takes at least three years from start to finish, and in part because it will be difficult to assess the characteristics of the 0.50% sulphur fuels unless these become widely available and used prior to 2020.

The working group will have relevant experiences to draw from the 0.10% sulphur fuels that are not traditional DM grades, but there may be even greater variety in the 0.50% sulphur graders.

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Intertek ShipCare’s Global Technical Manager Michael Green puts the latest changes to ISO 8217 in a historical context and stresses the need to adapt to new fuels

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However, despite this rapid development there is one thing that stands out as a constant, an appropriate understanding of the fuel itself and how that fuel needs to be handled on board.

We now have a greater awareness of the potential risks surrounding solvency of the product and with appropriate preparation of storage tanks and the fuel system before bunkering we can remove a sizable portion of the potential risk.

Similarly an exposure to the challenges surrounding the cold flow properties of both ULSFOs and distillate products has promoted a change in thinking for those owners / operators using these fuels in that the cold flow properties have become key parameters when looking to source a particular product. Indeed it has been suggested that cold flow properties will become the most influential factor moving forward, for owners / operators when looking to order fuels.

Unlike the fuel we put into our motor cars, marine products aren’t simply a “plug and play” option with vessels being equipped with fuel treatment plants to extract the unwanted “bits and pieces” prior to use.

Additional considerations such as storage conditions and possibility of co-mingling with other products plays also figure highly in the minds of the on board crew in order to prevent unnecessary problems.

However, the lack of experience using the 0.10% fuels is a distinct concern as it then begs the question - what will owners / operators do when they are faced with the inevitable new 0.50% fuels? At this current time we can only speculate as to what we expect to see but forewarned is forearmed and any experiences gained using new and different fuels types can only be of benefit.

The publication of the revised ISO 8217 specification on 19th March 2017 sees the latest instalment of an evolutionary process that began back in 1946 when the MT Auricula became the first vessel to utilise boiler fuel in its main engine. Since then we’ve seen the works of John Lamb, the birth of the BSMA 100 fuel standard, Marpol Annex VI and the continued development of the now familiar ISO 8217 specification in all of its many guises.

However, this learning experience has been stifled somewhat by many owners / operators who are still reluctant to use the new ULSFOs and as such some vessels have had little to no experience with the use of ULSFOs on board. A fear of the unknown, compounded by speculation into the perceived problems noted when using such fuels – stripping of tanks due to solvent effects, severe incompatibility issues, excess sludge formation during purification – has driven many to simply ignore these fuels and lean towards the more traditional distillate products.

To quote Charles Darwin “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is the most adaptable to change”.

This being the case now must surely be the time for people to open their mind to the possibility of change, if not we seriously jeopardise our chances of survival moving forward.

All of these changes have provided a learning experience for vessel owners / operators regarding the fuel on offer, the limitations applied to those fuels and how those limitations impact upon the handling / treatment of those products on board.

It is clear that the use of the ULSFOs has led to challenges and some of the afore mentioned perceptions have indeed created problems. However, it is fair to say that in tackling these challenges a greater knowledge base has been achieved.

f we could take a step back in time to 1888 and pick up a copy of the Montreal Star we may see references being made to a gentleman by the name of Milton Hersey who had seized upon an opportunity and established a new and innovative venture. The nature of this particular venture was to establish a chemical testing facility in Montreal, Quebec, pioneering the idea of independent testing laboratories.

Coming back to the present day the initiative launched by Mr Hersey has grown and evolved such that it still sits within the independent laboratory testing network but as a wholly different entity in the form of Intertek.

The path taken to reach this particular point has been a long and winding one which encompassed a significant amount of change and diversification particularly in relation testing requirements, analytical techniques and, most important of all, the standards imposed to determine the quality of the final product.

In looking at the development of the shipping and bunkering industries it is clear that this has also followed a similar path.

The past 12 years in particular has seen a rapid progression of fuel types being made available as a direct result of the passage of legislative reform. In looking particularly at the development of regional legislation within the ECA’s we have seen the introduction and subsequent demise of the 1.50% and 1.00% sulphur residual fuel grades respectively, the shift to a more expansive use of distillate product for compliance and the emergence of the 0.10% ULSFOs.

The only official magazine of IBIA, World Bunkering sUMMER 2017

Michael Green

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Fuel management

Caution: Handle With Care

oil Majors

Shell to supply SCF Group with LNG Sovcomflot ships will be first gas-fuelled Aframax tankers

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hell Western LNG (Shell) has signed an agreement with SCF Group (Sovcomflot) to supply LNG for the world’s first LNG-powered Aframax crude oil tankers The agreement was announced by Sergey Frank, President & CEO of Sovcomflot, and Maarten Wetselaar Shell’s Integrated Gas and New Energies Director.

The deal calls for Shell to provide the LNG fuel for the new generation of SCF Group’s 114,000 deadweight ice-classed Aframax tankers that are scheduled to come into operation beginning in Q3 2018. They will be the first LNG-fuelled Aframax tankers and will operate primarily between the Baltic and Northern Europe transporting crude oil and petroleum products. Shell will fuel the vessels from a specialised LNG bunker vessel at the Gas Access to Europe (GATE) terminal in Rotterdam, the Netherlands and other supply points in the Baltic. Each LNG-fuelled tanker will have an ice class 1A hull enabling year-round export operations from the Russian Baltic.

KOTC is “early adopter” Kuwait Petroleum Corporation (KPC) tanker operating subsidiary, the Kuwait Oil Tanker Company (KOTC) recently completed a nine-vessel newbuilding programme. KOTC says it worked with different suppliers to implement new systems to operate a “cleaner, safer, and more fuel-efficient fleet”.

Ali A Shehab, KOTC’s deputy CEO (Fleet Operations), says that unlike most shipowners, whose approach to operations has been driven by new regulations and bunkering costs, the company goes much further and consciously travels the extra mile.

“Rather than wait for new regulations or react to changes in bunker prices, we actively seek new ways to improve our overall performance,” he says.

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“As a state-owned entity, KOTC not only has an obligation to provide KPC with excellent and cost-effective transportation services, we also represent the State of Kuwait, which has very specific policies on how we behave as a company.”

Shehab acknowledges that there are risks in being an early adopter, but says the results speak for themselves. “Measured against the voluntary targets set by the IMO’s Energy Efficiency Design Index (EEDI), our initial analysis shows that we have achieved around 12% below the benchmark for the VLCC and 20% below on our MR tankers,” he says. “What we learn from this newbuilding programme will optimise our decisions for the next phase of our fleet renewal.”

In 2014, KOTC completed Phase III of its ambitious newbuilding programme, a nine ship order that included four VLCCs, four medium range (MR) product tankers, and one long-range Aframax petroleum product and crude oil tanker.

The company is now moving ahead with Phase IV of its newbuild programme, which envisages delivery of up to eight new tankers during 2017 and 2018.

BP launches Fujairah bunker operation BP Marine says its new bunker service in Fujairah offers customers greater choice and flexibility.

The company notes that Fujairah enjoys a unique and strategic position on the Gulf of Oman, adjacent to the Strait of Hormuz. Bunkers will be available 24 hours a day, 365 days a year. The main grades available are RMG380 and DMA, with RME 180 subject to availability.

Bunkers can be supplied via barge at anchorage and, the company says, no overtime charges are applicable for bunker supply.

Total to provide 2020 solutions for CMA CGM In February, Total Group announced that its affiliate Total Marine Fuels Global Solutions had signed a three year memorandum of understanding to ensure that containership operator CMA CGM would be able to meet the latest low sulphur regulations by supplying it with LNG, 0.5% sulphur fuel and 3.5% sulphur fuels for use in ships installed with scrubbers. The agreement also covers the supply of lubes suitable for all fuel types.

KOTC’s newbuildings include a number of innovations, amongst others the latest generation Tier II energy saving engines to reduce SOx, NOx and CO2 emissions and hull forms designed to optimise the water flow to the propeller, reducing hydrodynamic resistance during vessel transit. Furthermore, the four VLCCs and the Aframax are also equipped with volatile organic compounds (VOC) reduction systems (De-VOC) which work by controlling and maintaining the pressure in the cargo loading drop lines above ambient pressure, minimising the generation of VOCs, especially at the initial stages of cargo load.

SCF LNG fueled Aframax tanker

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Lubricants

Lubricants in a changing market Total Lubmarine is developing new solutions to meet rapidly changing demand while Shell marine has received IMPA’s Sustainable Maritime Suppliers scheme accreditation

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otal Lubmarine’s new general manager, Robert Joore, has laid out his vision for the company, focusing on developing a range of innovative solutions for ship operators operating in poor freight markets in a low-sulphur era.

Speaking at the company’s headquarters in Paris, he said: “Total Lubmarine believes that innovation is the key to success. In 2017 we will continue to invest heavily in developing a generation of marine lubes which are suitable for engines running both low and high sulphur fuels.

At the same time, we anticipate that the demand for environmentally acceptable lubricants (EALs) will continue to grow, driven by the rising numbers of ships trading in the Polar regions.”

Last year saw the launch of Talusia Optima, a cylinder lube oil suitable for use with fuels ranging in sulphur content from 0-3.5%. The company says that, when changing from low to high sulphur fuel or vice versa, ships no longer need to change lubricant:. It says that this is particularly useful for vessels transiting in and out of Emission Control Areas (ECAs). Talusia Optima has been available in major maritime hubs since September 2016 and Total Lubmarine is now rolling out availability across many of the 1,000 ports in its network.

Noting the tough market conditions facing the shipping industry, Joore said: “Many of our customers have been battling with low freight rates for almost ten years. Lubes are of course a big part of any shipping company’s daily operating costs and we are very focused on helping our customers reduce their lube consumption as well as extend the life of engines and vessel equipment in a practical way. We will continue to offer a customised feed rate reduction programme to all our customers, visiting customers’ vessels and ensuring that their on-board teams are making best use of our lubes.”

He added: “Total Lubmarine is committed to playing its role in helping its shipping clients develop long term strategies that allow them to operate profitably whilst at the same time complying with ever stringent regulations.” According to Joore, Total Lubmarine’s strategy is based on developing future-proof technology by redesigning conventional lubes, a focus on customer support through a network of 200 marine engineers, supply chain specialists, customer service and commercial managers and the ability to serve clients wherever they trade. Total Lubmarine products are available in 1,000 ports across 100 countries worldwide.

Meanwhile Shell Marine said its had become the first company involved in the development, supply and support of marine lubricants to receive accreditation under the International Marine Purchasing Association’s IMPA ACT Sustainable Maritime Suppliers scheme. The preferred supplier status is conferred within the IMPA Responsible Supply Chain Management Initiative which seeks to improve the economic, social and environmental sustainability of international shipping and marine industries.

“We, at Shell Marine, are delighted to be the first in our sector to secure accreditation under the scheme,” said Jan Toschka, Executive Director Shell Marine.

“As a global supplier with more than 30 blending plants and a maritime supply network of more than 700 ports in 58 countries, anyone visiting or working with Shell Marine will know how seriously we take our responsibilities as a world citizen.“ “However,” he added, “we also realise it is imperative that our own strict code of ethics is fit to stand up to the scrutiny of external parties. That’s why we see this recognition under the IMPA ACT scheme as particularly important.

Our customers also confirm that the IMPA ACT preferred supplier status is being used as a benchmark for quality throughout the supply chain.”

“IMPA ACT is an exclusive community of ship purchasers and suppliers working to become sustainability frontrunners by working towards compliance with internationally endorsed standards,” said Stephen Alexander, IMPA Secretary General and COO. “It is an independent initiative representing international best practice and is aligned with UN principles.”

Robert Joore is the new general manager of marine lubricants supplier Total Lubmarine

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LNG

New ship designs on offer Classification society ABS has approved in principle a dual-fuel project while prolific shipbuilder Damen is marketing designs for smaller gas carriers that could be LNG bunker tankers

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S-based classification society ABS has granted Approval in Principle (AIP) for the Seatransporter-DF, a dual-fuel design concept developed by Nassau, Bahamas, -based Algoship Designers.

The design has the capability to accommodate multiple engine types as well as Type-C or membrane containment systems for LNG fuel.

“Technically innovative designs that advance the use of LNG as fuel will play an increasingly important role in the marine sector, and ABS is working alongside industry to enable this critical technological advancement,” says ABS Executive Vice President for Global Marine Dr. Kirsi Tikka. “As industry considers future fuel strategies, design concepts that promote the use of LNG as fuel will play an increasingly important role in that mix.”

Algoship worked with CleanShips LLC of Stamford, CT, to develop a version of the bulk carrier design that would meet specific operational requirements without compromising cargo carrying capacity.

The 38,000 dwt version is equipped with a 2,400 m3 LNG fuel containment system that could allow for approximately 100 days’ endurance. Algoship is applying the same design philosophy to Panamax, Ultramax and Kamsarmax sized carriers and has determined that the dual fuel technology is also applicable to other vessel types.

Meanwhile, Netherlands-based Damen Shipyards Group says its new range of small gas carriers is a response to the changes seen in the maritime LNG market in recent years. The company’s designs meet a variety of capacity requirements, from 500 m3 to 7,500 m3.

According to Damen the maritime LNG market has long been faced with the conundrum around the subject of supply and demand. Ship owners have been reluctant to make the switch to LNG because of the lack of bunkering infrastructure. At the same time, development of bunker infrastructure has been slow to get off the ground due to the low demand from the market.

This has been described on numerous occasions as ‘the chicken and egg’ situation.

However, Damen believes that the outlook for the LNG market is changing due to a number of factors.

“Firstly,” states Bastiaan Schurink, Damen Shipyards Bergum’s Design & Proposal Marketeer, “there is a continued focus on tightening exhaust emissions. Emissions regulations are getting tighter every day.

Ships need to reduce their emissions – and one way to do that is LNG.”

Indeed, following the establishment of the emissions control areas (ECAs), ship owners are looking for solutions to meet new legislation. Of course there are other ways, but LNG is a preferred method to reduce not only SOx and NOx, but also a substantial amount of CO2 emissions. Another important point is that the subject of LNG is becoming more and more interesting: “both commercially and politically,” highlights Mr Schurink.

“There are a growing number of European LNG bunkering projects that have been initiated by well-known oil and gas majors. EU funding is also making its presence felt.”

In response to these developments, Damen is promoting its range of liquefied gas carriers. Richard Nugteren, Damen Product Director Cargo Vessels, says: “These vessels will be capable of transporting all types of liquefied gases.

LPG and VCM in addition to LNG, for example.” He says his company’s designs draw on a number of tried and tested characteristics. “For example, they are designed with proven hull forms,” says Nugteren. “Focused on efficient hydrodynamics, this results in minimal resistance during sailing which, in turn, minimises fuel consumption.”

“ABS contributed to this effort as a trusted advisor, engaging early in the process to apply its rigorous engineering and safety standards and verify the feasibility of the design,” said Algoship Designers Ltd President Antony Prince. “By working with ABS through its AIP process, we’ve been able to demonstrate that the Seatransporter was developed with a focus on safety and reliability and will be able to satisfy flag and port state requirements.”

Damen is promoting its range of liquefied gas carriers

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The only official magazine of IBIA, World Bunkering sUMMER 2017

SCRUBBERS

Scrubbers make sense

HSFO is the obvious energy source of choice for merchant ships, says EGCSA director Donald Gregory. Here he explains his organisation’s role and objectives and outlines his views on the options open to the shipping industry

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ith three founder members, the Exhaust Gas Cleaning Systems Association (EGCSA) started life in 2008.

It was then known then as the Technology for Sustainable Shipping Association (TSSA). Today EGCSA represents 20 member companies with a truly global coverage of designers and turn-key suppliers. The Associate membership is proving to be attractive to a number of sub suppliers, all of whom participate in the Association’s six annual technical workshops. To date the workshops have taken place in the UK; the location of EGCSA offices. With a wider representation of Members, the 4th EGCSA workshop in November 2017 may well be convened in Asia. Acknowledging its maritime hub, the City of Southampton is soon to become EGCSA’s registered and physical offices.

With environmental technology being increasingly required on board ships, there is a lack of adequate representation for this sector. Following recent discussions with the organisation that represents Selective Catalytic Reduction Technology suppliers (IACSEA), it seems the time may have come for the original 2008 idea of an umbrella Association for Sustainable Shipping Technology.

EGCSA will be assessing the prospects for moving that idea forward.

It should come as no surprise that the decision taken by the Marine Environment Protection Committee of the International Maritime Organization in October 2016 was welcomed by EGCSA members and associate members alike.

Unfortunately, the decision to confirm the entry into force date of a global limit on the emission of sulphur dioxide to that equivalent to burning 0.50%S fuel comes at a time when ship-owners have been suffering the longest industry downturn since the introduction of the motor-ship.

With little prospects of an imminent upturn, investment decisions are being progressed with extreme caution. This is particularly damaging for the manufacturers and will almost certainly have consequences for the cost of technology.

The implications for 2020 are wide ranging, from non-compliance, to regional shortages of land-use distillates. Alternatively there may be sufficient 0.50%S fuels at a reasonable premium. One can hope that the latter scenario plays out, as it did in 2015, when falling crude oil prices and slow steaming cut demand and softened the impact of the emission control area limit change from 1.00%S to 0.10%S. The regulators and in particular IMO should learn from this situation; where operational costs are being evaluated against capital costs to meet a step change in regulatory limits.

There is at least one alternative approach which was promoted by a joint oil and shipping industry forum known as Shipping Emissions Abatement and Trading (SEAaT). The principles of banking and trading are low cost and effective market mechanisms that reward prudent operators and avoid the precipices such as the one that will be with us on 1 January 2020. Unfortunately, the approach was roundly rejected by shipowners. Perhaps that mistake will be learnt and the benefits of such trading introduced into the schemes to reduce greenhouse gas emissions. There is no doubt if such schemes are controlled by the industry, the outcomes will reduce uncertainty and cost to the industry.

The only official magazine of IBIA, World Bunkering sUMMER 2017

Over the eight years since the EGCSA founding exhaust gas cleaning companies came together to solve the objections to the technology it is now regarded as a robust technology with a very low regret investment risk. Despite the IMO’s first EGCS Guidelines being developed when there were virtually no operating systems, the upcoming revisions are not significant and reinforce the sustainability of the technology and its very positive environmental impact, not least a GHG reduction between 5% and 10% when compared to a 0.50%S fuel or LNG. With the experience of some 500 ship installations, the challenges of retro-fit remain. However today the retro-fit best practice solutions and the means to accelerate installations are well known and being applied.

Even the high profile promoters of LNG as a ship fuel acknowledge that LNG will remain a niche fuel for the foreseeable future. On the other hand the low cost, high energy density HSFO - which will continue to be widely available - is the obvious energy source of choice for merchant ships. The unanswered question is at what point ship-owners will decide that they must invest in exhaust gas cleaning systems in order to continue to benefit from using HSFO.

Don Gregory

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Company news

Orion Bunkers Limited Orion Deliver Quality Services & Peace Of Mind Orion Bunkers Limited is delivering 100% quality bunker services at port Karachi, Bin Qasim and both anchorages.

We have infinity number of clients worldwide who trusts us as their most favorite and reliable bunker suppliers in Pakistan. This milestone achieved by using local refinery best quality product which is guaranteed under ISO 8217:2005 specs.

Our services make us different from others because we are the only bunker suppliers with largest fleet of barges, trucks and storage tanks. Therefore, we can supply urgent orders that no other supplier can.

In addition, our pricing strategy along with quality services is what makes us to deliver 70% volume of Pakistan bunker market.

On the other hand, overall market volumes in Karachi have declined due to no specific reason. If we first take price as an issue, it is not an issue as Karachi has competitive prices compare to other ports.

Moreover, if we talk about services and quality, we are the pioneers in both.

The decline bunker volumes are a threat to our market but we hope it will overcome soon. We have to lift this market up together as it was few years back. There is a lot of potential in terms of bunkering in Karachi. Vessel owners can get attractive price, quality product and best services if their platform recommend them to use Orion Bunkers as their trusted supplier. Furthermore, we must make a strong bond together to get maximum benefits from each other, in terms of business.

We hope, the future of bunkering is bright in Pakistan and we shall together do hard work to bring back the volumes. We are pleased to say that our existing clients are really helpful and we thank you all of them to be family of Orion Bunkers.

SWAN Established in 1955, SWAN is the leading insurance company in Mauritius The company provides a full-range of non-banking financial solutions which are tailor-made to better fit our individual and corporate clients’ needs. These services are offered by different companies bearing the brand name SWAN. These are namely Swan Life Ltd for life insurance policies, Swan Pension Ltd for the management of pension funds, Swan Wealth Ltd for wealth management services, Swan Securities for trading on stock markets and finally, Swan General Ltd for all services pertaining to general insurance.

More than 40 years ago, SWAN created a Marine Department to cater for the needs of different players in International Trade Business. The creation of this new department, at that period, was driven by the transformation of Mauritius into an export processing zone, leveraging on its ideal geographical position to receive and dispatch cargo shipments from and to

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many international destinations.

Besides offering a built-in flexibility to cover both importers and exporters as well as a seamless protection from seller’s warehouse to buyer’s warehouse, our department also offers advice on delivery contracts between buyer and seller.

The Marine Department goes further in offering insurance cover to cater for all your bunkering activities, whether as owner or charterer of Vessel.

Through different partnerships, SWAN provides its clients with a comprehensive insurance coverage. Indeed, backed by International A-rated partners, we provide for Hull & Machines, the bunker as well as any liabilities involved through P & I cover or Charterers liability. As international business and shipments continue to grow, bunkering activities are becoming more and more important.

We are always ready to welcome new clients from all over the world to push start with us and definitely they would love to work where peace of mind is waiting for them.

Thank you all for your support and please do contact if any questions.

Orion Bunkers Limited Suite 503 5th Floor Horizon Tower Block-3 Clifton Karachi- Pakistan

Zeeshan Arshad Director Bunkers T: +92 21 35292523 - 24 Ext 103 D: +92 21 35292525 M: +92 333 5045048 orionkhi@cyber.net.pk www.orionkhi.com.pk yahoo: zishan.orionkhi skype: orionbunkers2004

Protect Marine Insurance.

Insure what’s important, call us today on (230) 2073500 It is therefore essential to regularly evaluate risks involved in such activities to better manage them by offering the best insurance cover. Our Specialised team has developed expertise to service your needs in your International Trade business and we strive to be the preferred partner in accompanying you in this adventure with the most adequate products and progress towards a better business life.

Swan General Ltd, Swan Centre, 10, Intendance Street, Port Louis, Mauritius.

Bruno Nalletamby T: (230) 2073500 E: Bruno.Nalletamby@swanforlife.com W: swanforlife.com

The only official magazine of IBIA, World Bunkering sUMMER 2017

Company news

Indian Oil (Mauritius) Ltd

(IOML) is a fully owned subsidiary of Indian Oil Corporation Ltd, the largest commercial enterprise & the highest ranking Fortune Global 500 Company of India.

Driven by its customer centric approach and backed by excellent bunkering infrastructure, IOML has become major player in the bunkering business in Mauritius. It is widely known that Port-Louis, with its strategic location, modern harbour and excellent bunker infrastructure is becoming a popular destination for bunker only calls vessels.

Two grades of bunker fuel namely MGO (DMA) and IFO 180 CST (RME) are supplied by IOML in Port Louis.

Underlining the future growth potential, IndianOil (Mauritius) Ltd has invested substantially in the bunkering sector.

IOML has laid 200 mm diameter pipelines for both Fuel Oil and Marine Gas Oil on Terminal II quays No. 1, No. 2, No. 3, No. 4, Mauritius Freeport Development (MFD), and at the New Oil Jetty (NOJ).

To ensure faster bunkering operations and reduce bunkering time, IOML has installed high capacity pumps that can deliver fuel with high flow rates. Currently, IOML is actively seeking to engage a barge to meet the growing requirements of our bunker customers.

Contact details:

IndianOil (Mauritius) Ltd also markets SERVO brand of Marine Lubricants.

SERVO is India’s largest selling lubricant brand with over 450 commercial grades under its belt. At IOML, SERVO Lubricant grades are available to suit various requirements of a vessel viz. Main Engine Oils, Auxiliary Engine Oils, Hydraulic Oils, Compressor Oils, etc. SERVO Marine grades are approved by leading Marine equipment builders such as Wartsila, Sulzer, MAN B&W and SEMT Pielstick.

T: (230) 217 2710 M: (230) 5 943 9578 F: (230) 217 5500 E: bhavesh@ioml.mu W : www.ioml.mu

The only official magazine of IBIA, World Bunkering sUMMER 2017

Bhavesh Guttoo Marketing Officer IndianOil (Mauritius) Ltd Mer Rouge, Port Louis, Mauritius

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NEXT ISSUE

World bunkering

AUTUMN 2017... now open for bookings

Special Features: IBIA Convention preview This year IBIA is holding its Annual Convention in Singapore. World Bunkering is including and in depth look at what will be discussed and the big issues concerning the global bunker industry. We also flag up what else is on offer at Singapore, and report on developments at the world’s biggest bunkering hub.

Independents What does the future hold for the independents at a time of great change in the bunkering industry?

We look at the key players and ask what effect the shock of the OW Bunker collapse is still having.

Fuel Quality As the shipping industry moves towards greater use of new and hybrid fuels what is happening to fuel quality?

What will be the industry’s response to the new ISO 8217 standard? We talk to the testing agencies.

Geographical Focus: Middle East Our annual survey of this key, but volatile region. With Iran now back on the scene, how are shipowners responding to take advantage of this highly competitive market.

Far East Our annual survey of the marine fuel industries from Russia’s Far East to the ports of Indonesia.

While Singapore continues to be the dominant global bunker hub, China’s influence extends throughout much of the region.

Regular Features News, Views & Analysis - Russian Update Plus: Interview - Industry News – Environment – Scrubbers LNG- Lubricants – Innovation -Legal News - Equipment and Services – Diary - Event Previews & Reviews

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The only official magazine of IBIA, World Bunkering sUMMER 2017

16 MAY 2017

BUNKERING IN THE DIGITAL AGE This one-day forum, co-hosted by IBIA & the Port of Rotterdam in conjunction with the Platts European Bunker Fuel conference in Rotterdam (17-18 May), will provide delegates with first-hand information on how to improve efficiency and transparency in bunkering with the application of technology.

It will explore how the industry can benefit, covering mass flow meters, digitalisation of the bunker delivery note and other processes, how technology can address the contentious issues around fuel oil sampling, and the Port of Rotterdam’s port call optimalization project.

The event will conclude with a networking boat trip through the port of Rotterdam. http://ibia.net/event/bunkering-in-the-digital-age/

17-18 MAY 2017

PLATTS EUROPEAN BUNKER FUEL CONFERENCE This year’s event will aim to understand just what the 2020 global cap decision means for the industry.

Can the refining industry supply enough 0.50% sulphur fuel come 2020 and do they feel secure in making the investment?

The conference will also identify the challenges ahead as the oil price fluctuates. The low oil price has certainly helped the shipping industry keep afloat over the last two years, but as the price climbs, what does this mean for the supply chain?

The conference will also explore the outlook for scrubbers and alternative fuels. Will the uptake in scrubbers keep HSFO on the table? What future will alternative fuels have in the fuels mix, when will we see growth? www.platts.com/eurobunker

DIARY

DIARY

25 – 28 JULY 2017 BUNKERING WEEK

IBC’s biennial Bunkering Week is back with its successful series of 3 co-located events: 8th Bunkering in Asia, 4th LNG Bunkering and EMTECH: Ship Emissions Technology Conference.

With a proven track record of bringing together top decision makers from various industry sectors, this remains the go to event for ship owners, fuel suppliers, traders and technology solution providers. Get in-depth and detailed market insights from experts who are taking the decisions, assess peer strategies and give shape to your own in this unrivalled gathering of shipping and marine fuel industry leaders. www.bunkeringweek.com

11-15 SEPTEMBER 2017

LONDON INTERNATIONAL SHIPPING WEEK This, the organisers say, will be the ‘must attend’ event of 2017, offering over 160 industry functions and unique networking opportunities for leaders across all sectors of the international shipping industry – regulators, charterers, ship owners, ship managers, bunker suppliers, lawyers, ship brokers, bankers, insurers, insurance brokers, commodity traders and brokers, ship suppliers, port operators, shipping service providers and many more.

The sell-out one-day LISW17 Conference and Gala Dinner, to be held on Thursday September 14, will attract the very highest level government and shipping industry leaders from the UK and around the world to crown what promises to be another amazing week. www.petrospot.com/events

3-6 OCTOBER 2017

IBIA AFRICA FORUM, TENERIFE IBIA will host its 3rd Africa Forum in Tenerife this year. Tenerife is connected to 278 ports and strategically placed on shipping routes. This event will include one full day’s bunker training suited to the region as well as a one and a half day forum, plus a half day port tour. The Forum will invite key players and partners within the West Africa and Canary Islands region to meet and discuss developments within the port and how this location offers new fuels to meet the industry’s future needs.

Should you have any enquires regarding this forum please email tahra.sergeant@ibia.net

6-10 NOVEMBER 2017 30 MAY-2 JUNE 2017 NOR-SHIPPING

This major shipping event takes place in Oslo and Lillestrøm, Norway. Nor-Shipping 2017 is taking a pro-active approach to the challenges facing the industry, adopting an overall theme of ‘Catalyst for Change’, while dedicating exhibition Hall A to Disruptive Sustainability. Problem to Profit marks another move against convention, tapping into fresh talent while building bridges between established players and future leaders. https://messe.no/en/nor-shipping/

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IBIA ANNUAL CONVENTION

Mark your calendars now for the IBIA Annual Convention 2017!

Our flagship event, aimed at all our members globally, will take place from 6 to 10 November in Singapore, the world’s leading bunkering hub.

This will be a great opportunity for delegates to participate in shaping IBIA’s agenda and direction, to learn and get a better understanding of industry developments, and make valuable connections with industry peers. www.ibia.net

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