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World

Winter 2012

Winter 2012

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World BUNKERING

Dubai success Crunch time on fuels

l Americas round-up l Optimism in adversity on the Cape l Legal Catch 22

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World

winter 2012

Bunkering Publisher: W H Robinson Editor: David Hughes (editor@mar-media.com) Deputy Editor: Sandra Speares (sandra.speares@mar-media.com) Project Manager: Dawn Barley (dawn.barley@mar-media.com) Project Consultant: Alex Corboude (alex.corboude@mar-media.com) Designer: Justin Ives (www.justindesign.co.uk)

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 Maritime Media Ltd on behalf of IBIA and is supplied to members as part of their annual membership package.

Published by:

Maritime Media Ltd The Diary House Rickett Street London SW6 1RU UK Tel: +44 (0) 20 7386 6100 Fax: +44 (0) 20 7381 8890 E-mail: inbox@mar-media.com Website: www.worldbunkering.com On behalf of:

IBIA Ltd Latimer House 5-7 Cumberland Place Southampton SO15 2BH UK Tel: +44 (0) 20 3397 3850 Fax: +44 (0) 20 3397 3865 E-mail: ibia@ibia.net Website: www.ibia.net

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Š The International Bunker Industry Association Ltd This publication is printed on PEFC certified paper. PEFC Council is an independent, non-profit, non-governmental organisation which promotes sustainable forest management through independent third party forest certification.

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Rules and regulations Editor David Hughes looks back on a busy few months, where there has been much debate on upcoming legislative changes.

T

he past few months have been busy and exciting. There have been several shipping events taking place with a bunkering element, but specifically on the bunkering scene, October saw Singapore host the major biannual Sibcon conference and exhibition. World Bunkering was there and this issue includes a review of that major gathering of the marine fuel industry. However, talking of major gatherings, the key date in IBIA’s calendar was its Annual Convention, held in Dubai in November. In this issue we review the event – which was also very much a celebration of IBIA’s first 20 years – while many of the issues raised at Dubai pop up in several of our features. The IBIA Convention was also notable as the first chance members had to meet and hear the association’s new Chief Executive, Cliff Brand, who has written his first report in this issue. I also caught up with him as we were all about to head home from Dubai and the resulting two-page interview gives a good idea of how he intends to approach his new job. There were also important developments on the regulatory front. Not surprisingly, they all concerned environmental measures and not everyone will have been pleased by the general direction of travel. Certainly, the International Chamber of Shipping was disappointed when IMO’s Marine Environment Protection Committee voted narrowly not to have an early review of the effects of the 2020 implementation of 0.5% SOx limit. In this issue, we have four pages devoted to environmental issues with one message coming out clearly. On 1 January 2015, when the 0.1% limit within Emission Control Areas (ECAs) comes into effect, owners choices will be limited. LNG is being discussed in great depth, but will not be an option for operators of existing tonnage, leaving the options of using distillate or fitting scrubbers. Those options are also examined at some length in this issue. This edition also includes features on barge design and Testing while our geographic coverage focuses on the Americas and Africa. Our Africa feature includes a report by the chair of IBIA’s Southern African Branch, Shanaaz Bennett, which takes an optimistic view of bunkering in the continent’s emerging markets. As usual, our regular features include testing, risk management and also our legal page where Carel van Lynden reports that the detention of vessels in the Netherlands for off-spec bunkers has put the industry in an impossible position. That is certainly essential reading, especially if you trade to the Netherlands. Meanwhile, our Russian update also looks at developments that will have implications for the global industry. Our Russian correspondent, Olga Bogacheva, looks at impending problems for the country’s bunker industry and talks to Vitaliy Kovalev, president of the Russian Association of Marine and River Bunkering Suppliers. With the turn of the year fast approaching, it will soon be time to think about the New Year and the IBIA Annual Dinner in February – in fact, it is already high time to book your seats! So all that’s left to do now is to wish our readers all the best for upcoming festive season and I hope to meet you in London at the Dinner. Best wishes David Hughes

World Bunkering Winter 2012

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Contact: Shazmeer Jiwan Alba Petroleum Ltd PO Box 97155 Mombasa, Kenya Tel: + 254 734 539777 + 254 720 630000 Fax: + 254 20 2689549 Mobile: + 254 734 575744 E-mail: sales@albapetroleum.com


World

winter 2012

Bunkering IBIA Reports Editor’s Letter 3 Chairman’s Introduction 7 Chief Executive’s Report 9 New Members 10 Noticeboard 12 AGM Notice 13 IBIA Dinner 15 Membership Application 16 IBIA Convention 19

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9

19

22

Industry News Environment Interview Blending Barge design Testing Risk Management

Special Features 22 24 28 30 32 35 37

Geographical Focus North America 42 Caribbean and Central America 45 South America 49 Africa 52 Sibcon Review

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Russian Update

57

Legal News Equipment and Services Book review Review: BIMCO

68 70 71 72

Diary

80

24

30

32

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Chairman’s welcome

‘There is never a dull moment at IBIA’

N

o sooner had the wheels touched down at Heathrow Airport than I received a lessthan-gentle reminder that World Bunkering needed a few words from me about the efforts of the past three months. A lot of news and almost all of it good. At the end of September, I met our new Chief Executive, Cliff Brand. I had not taken part in the interview process, leaving that to the Board Development Committee, but it had advised me what to expect and when we met for lunch at the Naval Club I was not disappointed. I am sure that Cliff will prove to be a major asset to the Association and a good leader in managing the secretariat and moving our Association forward. Our thanks

It is appropriate that I should formally record our thanks to Trevor Harrison for the hard work and enthusiasm with which he has filled the role of acting Chief Executive for the past 15 months whilst not neglecting his duties as a board member. How he has managed his time and still been able to keep up with his “day job” I do not know. At the invitation of SIBCON, I attended the conference in Singapore, acting as a session chairman. The association was very well represented with board members Jens Maul Jørgensen and Simon Neo and past

World Bunkering Winter 2012

Chairman Antonio Cosulich all taking part in the formal programme. The IBIA stand in the exhibition hall was popular, with Trevor Harrison and his wife Shirley and Fook Sing ensuring that our visitors interest and queries were attended to. The board (those of us in Singapore) also took the opportunity to meet the executive committee of the Asia branch. Refreshing knowledge

By the time we arrived in Dubai, Cliff Brand was in post. He took part in the Petrospot course preceding the convention (as did Board member Eugenia Benavides) in order to refresh their knowledge of the industry. I was delighted to introduce Cliff to the Convention on the opening day. Others will have plenty to say about the Convention so I will restrict myself to observing that it was a first-class event, well organised, great fun and with a lot of serious discussion. Much of the success is due to the hard work of Charlotte and Chanette, both before and during the event. It was delightful to see our latest recruit – Chanette’s baby Honey – charming all of the delegates at the welcome reception and providing a distraction for some delegates’ spouses, who volunteered for baby-sitting duty. The real result was the decisions taken by the board at our meeting on the first

Nigel Draffin

morning of the Convention and by commitments that came from the Convention, particularly that IBIA should: • Engage in discussions with national delegations to IMO with a view to proposing a small amendment to the MARPOL Annex VI BDN requirements to address an anomaly relating to equivalences • Develop, in consultation with other appropriate bodies, an industry acceptable bunker quantity and quality claims clause that includes realistic time limits • Continue to improve communication with members and • Further develop education and training initiatives. Busy times ahead

Between now and the year end, we will be participating in: • The Bunkering Symposium in Antwerp • Platts Mediterranean Bunker Fuel Conference • Mediterranean Bunker Fuel Conference in Barcelona • The Amsterdam Small Scale LNG Conference • The Maritime Safety Committee (MSC) meeting at IMO. There is never a dull moment at IBIA. All that I have left to do now is my Christmas shopping. . .

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Reliable, efficient service in ARA and beyond Quick and timely delivery of a wide range of grades Our contact information: Office address: Wilhelminakade 85, Building “De Maastoren�, 36th floor, 3072 AP Rotterdam, the Netherlands Post address: PO Box 24065, 3007 DB Rotterdam, the Netherlands Tel. 24/7: +31 10 264 27 00 E-mail: Bunkers@lukoil.nl


Chief executive’s message

‘I want IBIA to play a greater role in shaping the debate’

F

irst, let me introduce myself to all members of IBIA. I’m a former seafarer-turned-port authority man, someone who dealt with the bunkering industry close up during my time at Gibraltar as the chief executive/harbour master of the port. While in Gibraltar, I was responsible for port state control and ensuring the efficient delivery of close to 5m tonnes of bunkers a year in one of the world’s busiest filling stations. I saw the impact of increasingly stringent legislation on the bunkering community, as well the difficulties faced by ship-owners dealing with the many different requirements of the different Port State Control regimes. I met the many characters in the Gibraltar bunkering scene and I’m more than aware that working in this industry is not a place for the faint-hearted! Prior to my time in Gibraltar, I was a marine accident investigator, afterwards a harbour master at one of the UK’s major ports before moving into marine consultancy. It gives me great pleasure to be taking up the helm at IBIA and I’m looking forward to the challenge immensely.

My predecessors

I would like to take this opportunity to express thanks to my predecessors for the work they have done in the development of the association to date, namely Trevor Harrison, who held the fort until my recent appointment, and Ian Adams for his sterling work beforehand. Without them, the association would not be in the enviable position it is today. I would also like to pay tribute to the remaining secretariat, Charlotte and Chanette in the UK, Fook Sing in Singapore and Shanaaz in our South Africa branch. As the association’s new chief executive, I intend to build on the good work of my

World Bunkering Winter 2012

predecessors and take the work of this association forward. Annual convention

At the time of writing this report, I have recently returned from the Association’s annual convention in Dubai, which I believe was a huge success. What really struck me was the diversity of people I met. Bunker buyers, bunker suppliers, bunker traders, bunker brokers, not to mention people from barging and storage companies, surveyors, port authorities, credit reporters and consultants, all competing with each other in the commercial world, but who all came together in Dubai to learn, collaborate and network. And that is why IBIA has been so successful since its launch in 1992. As an organisation bringing together a diverse and often conflicting group of interests, IBIA has taken the industry forward, given it a collective voice and delivered tangible improvements to the industry. The future

As I heard from the many expert speakers during our recent convention, the bunkering industry stands at a critical crossroads as governments around the world seek to change fuel consumption patterns and reduce the use of heavy fuel oils. The shipping industry still remains undecided as to what form of alternative fuels it will use in reducing high sulphur fuel oil, or even heavy fuel oil altogether, or what abatement technologies to use, but we all know that the longer it waits, the narrower the choices will be. We all know that the global sulphur cap reduced to 3.5% from 4.5%, at the beginning of the year, but will the global 0.5% figure by 2020 mooted by so many really come to pass?

Captain Cliff Brand

Is it all about investment cycles, freight markets and oil price or is there something that we as an industry can collectively achieve to steer the debate? Where do we as an association made up of buyers, suppliers and brokers and service providers stand? I want IBIA to play a far greater role in shaping the debate. Rather than throwing our hands up in the air and complaining that “the regulators just don’t understand the practicalities”, we need to ensure our regulators do understand the practicalities of their decisions. To achieve this, we need to understand what members want to see happening and the position that IBIA is to take. We need to include you in the decision-making process. As non-traditional fuels evolve to meet regulatory demand, we need to ensure that the views of the entire supply chain are taken into consideration in the evolving commercial and regulatory framework. Our collective expertise needs to be listened to and acted upon. And we want to be in a position to understand and interpret what is happening at IMO, European and regional level. Therefore, as an association we need more engagement on current issues such as, fuel quality, minimum sulpur content, market based measures and dispute resolution, to name just a few. As a trade association representing so many of the best and biggest companies in the maritime world, we need to raise standards across the whole bunker industry. I also believe that as an Association we need to offer more services to you, its members, and this is an area I will be devoting time to. Finally, I look forward to making contact and working with you all in the future success of the Association.

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New Members Corporate

Aberdeen Oils Ltd Bunker Supplier Michael Sutherland 3 Esplanade Lerwick ZW1 0LL Shetland Isles Scotland michaelsutherland@highlandfuels.co.uk

FAIR DEAL MARINE SERVICES Costas Papantonis Bunker Supplier Fair Deal Building P.O. Box 298 Fujairah UAE E: bunkering@fairdeal.ae

Managing Company “YugBunkerService� LLC Bunker Broker Alexander Putilin 55/57 Beregovaya Str. Rostov-On-Don 344022 Russia ubs@aaanet.ru

Holab Maritime Services Ltd Bunker Supplier Andrew D. Wilcox 13A Marine Road Apapa Lagos Nigeria holab@holabmaritimeservices. com

Enacol SA Bunker Supplier Carlitos Fortes Largo John Millers Mindelo 1 Cape Verde Islands carlitosfortes@enacol.cv

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Ghana Oil Company Ltd Bunker Supplier Patrick A.K. Akorli GP P.O. Box 3183 Accra Ghana akorli@goilonline.com

CORPORATE ADDITIONAL

Emerson Process Management AB Service Per Stenhammar P.O. Box 5056 Johanneshov 12116 Sweden per.stenhammar@emerson.com

Charles Stucky

Yaqub Annan

Service DNV Petroleum Services One International Blvd. Suite 1200 Mahwah New Jersey 7495 USA charles.stucky@dnvps.com

Bunker Supplier Ghana Oil Company Ltd P.O. Box 349 Accra Ghana yaqubannana@yahoo.co.uk

Monique Vermeire Bunker Supplier Chevron Global Marine Products LLC Technologierpark Zwijnaarde No. 2 Gent-Zwijnaarde B-9052 Belgium vermemb@chevron.com

Bambo Adesanya individual

Hans Erik Christensen Service A/S Global Risk Management Strandvejen 7 Middelfart DK-5500 Denmark hec@global-riskmanagement. com

Hammad Ali Mirza Bunker Supplier Shaukat Marine Services Plot No. 12-C Mezzanine Off No.2 Sunset Lane, No 4 Phase II EXT. DHA Karachi 75500 Pakistan info@shaukatmarine.com

Service Ayanlaja Adesanya + Co. Solicitors A.W. Deloitte House, 2nd Floor 235 Ikorodu Road Ilupeju Lagos Nigeria bamboadesanya@hotmail.com

Alex J.Osiah Adzew Bunker Supplier Ghana Oil Company Ltd P.O. Box GP 3183 Accra Ghana adzew@goilonline.com

Lawrence N. Okantey Bunker Supplier Ghana Oil Company Ltd P.O. Box GP 3183 Accra Ghana okantey@goilonline.com

Kwong Shiu Yoong N/A N/A 27 Soo Chow View Singapore 575419 Singapore shiuyoong@yahoo.com

Madeline Lee Bunker Supplier Dan Bunkering (S) Pty 6 Temasek Boulevard #36-03 Suntec Tower 4 Singapore 38986 Singapore mle@dan-bunkering.com.sg

Tok Lim Hoe Bunker Supplier Sciencescan Consultancy & PR Services Pte Ltd Block 1002, Jalan Bukit Merah #04-05 Singapore 159456 Singapore toklimhoe@gmail.com

Donald Gregory SERVICE Sustainable Maritime Solutions Ltd 8 The Island Wraysbury Staines Middlesex TW19 5AS donald.gregory3@googlemail. com

Martin Isaksen BUYER POLARCUS DMCC Almas Tower Level 32 P.O. Box 283373 Lakes Towers Jumeirah UAE martin.isaksen@polarcus.com

World Bunkering Winter 2012


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REPORTS

IBIA noticeboard Benefits to members as at 1 Novemeber 2012. IBIA Announcements

At the IBIA Board meeting on Monday 16th April 2012, it was decided that after eight years it was time to increase membership subscription rates as follows: Individual Membership: £150 Corporate Membership: £700

These increases took effect on 1st July 2012 and in future there will be small annual increases. The Board has also decided that the present practice of listing Corporate Additional Members does not properly and fairly meet members’ needs and some changes have therefore been introduced that will more accurately match the benefits of membership to its cost; affected members will be contacted directly by the Secretariat. If you have any queries or comments about these changes, then please contact ibia@ibia.net or telephone: +44 (0) 20 3397 3850. IBIA Publications and Benefits

IBIA World Bunkering Magazine Discounts on Advertising

Discounted advertising rates are available for members. Please contact the Advertising Sales Team at Maritime Media London on + 44 (0)20 7385 6100

IBIA List of Members

If your details are not correct then please let the IBIA Administration know at ibia@ ibia.net. This publication is only available to members.

IBIA Guide to Good Commercial Practice

On sale to non-members at £50.00 per copy.

IBIA Safety Cards for Vessel’s crews

IBIA buyer members receive copies of the IBIA Safety Cards for distribution to their ships, giving basic, plain English advice about safe handling of bunker fuels Please note that all the above publications can also be downloaded by members by visiting www.ibia.net and logging in to your account. Please then go to the download section of the website.

IBIA Guide to In-Line Blending

Available free of charge to members

IBIA LogO

Free bromide supplied for use by corporate members only. IBIA Guide to Avoiding and Resolving Bunker Disputes

IBIA members receive their personal copy free, but the report is offered for sale to non-members at £50.

IBIA World Bunkering Magazine – Free copies for Members of IBIA

Please note non-members are requested to subscribe to the magazine at a cost of Pounds Sterling £45.00, £60.00 or £80.00 depending on location. Up to 20 additional free copies of the magazine are offered to buyer members of IBIA for forwarding to their vessels.

Evaluate the Merits of a Bunker Claim

Interpretation of specifications for bunker fuels and a guide to the question of repeatability. For sale to non-members at £35.

IBIA Glossary of Bunker and Lubricating Oil Terminology

A comprehensive guide to all those complicated terms which are in daily use in the bunkering industry. For sale to nonmembers at £45.

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World Bunkering Winter 2012


The International Bunker Industry Association Limited 19th Annual General Meeting Monday 18 February 2013 NOTICE IS HEREBY GIVEN THAT The 19th Annual General meeting of the Association will be held at: The Cunliffe-Owen Room The Naval Club 38 Hill Street London W1J 5NS 13.00 hours on Monday 18 February 2013 EVERY MEMBER HAS THE RIGHT, UNDER THE COMPANIES ACT 2006, TO APPOINT A PROXY. SHOULD YOU WISH TO DO SO PLEASE CONTACT THE IBIA ADMINISTRATION TO OBTAIN A FORM

By order of the Board Nigel Draffin Chairman AGENDA 1. Apologies for absence. 2. Approve the minutes of the last Annual General Meeting. 3. Appoint Nunn Hayward, Accountants, as auditors of the Association until the conclusion of the next Annual General Meeting. 4. Approve the Accounts of the Association for the year 2012/2012 (a summary of which is in the Annual Report of the Association included with this issue of World Bunkering). 5. Vote upon the appointment, or re-appointment, of Members of the Board pursuant to Article 46 of the Association’s Articles of Association. 6. Transact any other ordinary business. World Bunkering Winter 2012

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19th IBIA Annual Dinner Monday 18 February 2013 at the Grosvenor House, a JW Marriott Hotel, London kindly sponsored by

Sponsorship opportunities available please contact: Charlotte Egan: T: +44 (0) 20 3397 3850 E: charlotte.egan@ibia.net

The 19th IBIA Annual Dinner will be held at the Grosvenor House on Park Lane, London 18 February 2013 at 19:00 hours The Champagne Reception and Three Course Dinner with Coffee, will cost ÂŁ125.00 per head + VAT This price also includes a Half Bottle of Wine per head Champagne Reception kindly sponsored by Akron Trade & Transport Fujairah

Following the meal there will be a Post-Dinner drinks bar If you are hosting a table please ensure that all of your guests are aware of the following: DINNER ETIQUETTE 1. The correct and normal dress for formal dinners for gentlemen is Dinner Jackets (black tie) and for ladies long or medium length dress. 2. Members and their guests should not leave the dining table at any time before coffee is served, except of course in case of an emergency. 3. Silence should be observed during the speeches and grace.

kindly sponsored by Platts

Dress code: Black Tie Corporate Members are welcome to reserve tables, which are available for 10 or 12 people Individual Members are respectfully requested to limit their guests to a maximum of 5 (exclusive of individual member ticket) To register your interest, please contact Charlotte Egan: +44 (0) 20 3397 3850 or email charlotte.egan@ibia.net


REPORTS

The International Bunker Industry Association Ltd The Aims of the Association • To provide an international forum to

• •

address the concerns of all sectors of the bunker industry; To improve and clarify industry practices and documentation; To represent the industry in discussion with relevant governmental and nongovernmental bodies and to make the concerns of the industry known to such bodies; To assist members in the event of disputes by identifying the options and exploring the alternatives open to them and eventually to provide a panel of experienced mediators and arbitrators; To increase the professional understanding and competence of those working in the industry.

In the beginning

Eight members of the industry conceived the International Bunker Industry in October 1992, and the association was formally registered on 29 January 1993. Since then it has expanded steadily with a worldwide membership comprising shipowners, charterers, bunker suppliers, traders, brokers, barging companies, storage companies, surveyors, port authorities, credit reporting companies, lawyers, P&I Clubs, equipment manufacturers, shipping journalists and marine consultants. In 2012, our membership stands at over 600 and is spread over 87 countries. There are three categories of membership, namely: • Individual membership: open to all people with an interest in bunkering, whether they are involved in the day-today business of bunkering ships or have

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an interest in the industry. Each member has one vote in association business, but this category does not allow delegation. • Corporate membership: open to companies and associations with an interest in bunkering, whether they are involved in the day-to-day business of bunkering ships or have an interest in the industry. Each member has one vote in association business, but corporate membership has the advantage of allowing companies to delegate different members of their company to participate in different working groups. • Corporate sponsor: this is the newest category and allows a company to contribute any sum they see fit to the association. In return they receive the same benefits as a corporate member but in addition have their logo printed on all IBIA publications and are offered further sponsorship opportunities ahead of other members.

the Board. Areas covered have included: Education Safety Technical Environmental Commercial Dispute Resolution Blending

• • • • • • •

The Board and the Secretariat welcome expressions of interest from members to participate in the activities of working groups and committees, and invite suggestions and proposals for further areas of engagement and research.

The board

The board is constrained to have a balance of members from each sector of the industry in order to preserve the industry-wide representation and approach of the association. The board regulates the association and is elected by the membership to perform that role. Working Groups and Committees

IBIA is an association dedicated to its membership and strives to reflect members’ wishes and react to their needs. This is achieved in part by the formation of working groups and committees that report to

World Bunkering Winter 2012


Membership application

PLEASE PRINT VERY CLEARLY

Applicants must fill out all appropriate sections including method of payment. Corporate members must give the name of the individual contact.

Name of Member

  Title (eg Mr, Mrs, Miss, Dr, Capt) 

CompanyName  Address 

  Zip (Postal) code

  Country 

Tel No

  Fax No

  Cellphone/Mobile 

E-mail  Accounts e-mail for all invoices/accounts queries (Mandatory) Please indicate your company’s principal business activity: (please mark one only) Owner/Charterer/Buyer Supplier

  Trader

   Port Operations/Storage/Delivery    Broker

   Services (eg Legal/Financial/Analytical)

  

Please indicate the type of membership being applied for: Individual Member £150

  

Corporate Member £700 (you can list up to two other offices for free with this option online and also in our printed directory, please inform us of these additional offices, when emailing this form.) (please indicate number of offices other than your two additional offices included in yout membership as well Corporate Additional £150 as the main corporate account holder officer, which you would like to pay £150.00 per office to list. We will then contact you for these details.) Please state amount being remitted to us in Sterling £ Individual members must provide the following information: Home address 

  Zip (Postal) Code

  Country 

Payment instructions

PLEASE PRINT VERY CLEARLY

Payment must be made free of all charges at both the paying bank and its overseas correspondent where applicable.

UK Sterling

Amex

Visa

Telegraphic Remittance

  Mastercard

  Cheque

1. Credit card payment. Please complete following details: PLEASE PRINT VERY CLEARLY

Cardholder’s name 

Card number

Security Code (Last 3 or 4 digits on back of card)

Expiry date

Billing address 

  Zip (Postal) code

  Country 

Signature

  Date 

2. Telegraphic Remittance Bank Name and Address: Clydesdale Bank plc, Mountbatten House, Grosvenor Square, Southampton. SO15 2JU. ENGLAND

Pound Sterling:   Sort Code: 82-60-04   GB£ Account No: 10247629  Account Name: IBIA Ltd IBAN: GB95 CLYD 8260 0410 247 629  SWIFTBIC: CLYD GB2S

3. Cheques Made payable to ‘The International Bunker Industry Association Ltd’ Application forms must be sent by mail or by fax to the IBIA Administration office ibia@ibia.net  +44 (0) 20 3397 9865 ALL APPLICANTS MUST SIGN AND DATE HERE:

Signature

  Date 

The Administrator, The IBIA Ltd, Latimer House, 5-7 Cumberland Place, Southampton, Hampshire SO15 2BH, United Kingdom. Tel: +44 (0) 20 3397 3850  Fax: +44 (0) 20 3397 9865

/


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20 years young

IBIA celebrated its first 20 years at its 2012 Annual Convention, in Dubai, with serious debate – and plenty of fun

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ver 150 delegates gathered at the Jumeirah Towers Hotel, Dubai, for IBIA’s 2012 Annual Convention, which marked the association’s 20th anniversary. In his anniversary address, IBIA chairman Nigel Draffin listed the many achievements of the past two decades. However, he said that the emphasis must now be on managing the future and being prepared for the many challenges facing the industry. He said any player that does not do that cannot expect to stay in the bunker business The theme of managing the upcoming challenges was reflected by the keynote session “Spotlight on 2015” and the further sulphur emission reduction to 0.1% in Emissions Control Areas (ECAs) OW Bunkers’ global sales manager Asia Morten Kalle and Oldendorff Carriers’ director Jens Jorgensen answered the question: “The lights are on green, but everyone is stalling. Shipowners v Bunker retailers – who will be the first to start?” Kalle stressed the need for co-operation between suppliers and ship operators. He cautioned against “false hope” that the 2020 global 0.1% limit could be put off and said there was now some certainty about what would be imposed following the European Parliament’s recent decision on the issue. Jorgensen spoke from the point of view of a bulk carrier owner. Possibly surprisingly, he said there was no crisis in the supply of cargo, but there was problem of overtonnaging. He pointed out that freight rates were back at their long-term normal levels before the boom in the mid-2000s, until the economic crisis in 2008. The first day’s session was followed by a reception at the hotel, the perfect chance for catching up with old acquaintances and meeting new ones. Delegates at the second day heard from a number of of speakers that both owners and suppliers were holding off from preparing for, initially, the 0.1% sulphur limit in ECAs in 2015 and, subsequently, the 2020 or 2025 global cap. Henrik Zederkof, CEO of Dan Bunkering, said it was a classic “chicken and egg situation”. He also cautioned that the situation as the impending changes came in would be different from the experience of going down to 1.0% in the ECAs. He said the big difference is that 1.0% residual fuel exists, 0.1% does not. The second day’s proceedings finished promptly so that delegates could change into “smart casual” barbecue attire and board buses to take them to the IBIA 20th Anniversary Gala Reception and BBQ in the amazing surroundings of the Jumeirah Beach Hotel’s grounds. It was definitely the best Convention party so far. The following day IBIA’s new chief executive Cliff Brand told delegates at the last session that the industry was at a crossroads and facing decisions on fuel options. He noted that both suppliers and owners were unsure which way to go. He emphasised that he wanted to hear from members what they wanted from IBIA, but he believed that a successful trade association needed to provide its members representation, services and information. He said IBIA already did this to a significant extent, but could do more. He said that information was an area that needed work, possibly with the production of a monthly newsletter. Brand’s speech was followed by an extensive discussion with input from members. This followed up on his points, but the idea of a possible “IBIA quality claims clause” emerged, following a call from a shipowner for a standard bunker contract. Several speakers pointed out that previous attempts to introduce a standard contract had been unsuccessful, but there appeared to be a consensus that it was worth developing specific clauses. The quality claims clause idea followed concern about unrealistic time limits for making quality claims in many contracts. Finally, those delegates who did not have to to rush off to the aiport after the final lunch were able to see just how massive Dubai’s main port of Jebel Ali has become. That was a fitting finale to an impressive event.

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Serious business. . .

Above: IBIA chairman Nigel Draffin explained how the bunker industry works at a three-day Advanced Oxford Bunker Course immediately before the Convention. Below: Snap shots of two days of presentation Over 150 delegates attended

Cliff Brand

Terje Cook and Robin Meech

Council members follow the debates

Eugenia Benavides

Trevor Harrison Delegates heard from a range of speakers at the convention

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THE ONLY OFFICIAL MAGAZINE OF

Convention 2012 And now for some fun . . .

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Industry news

Global round-up Pirates attack bunker barges

Pirates attacked two bunker barges in the Malacca Strait region in September and appear to have had control of a third tanker being used to steal fuel. According to the New Straits Times on 14 October, the Malaysian Maritime Enforcement Agency (MMEA) prevented an attempt by six pirates from transferring and selling bunker fuel from a hijacked vessel in the waters off Tanjung Pia, Malaysia, just to the west of Singapore. A few days later, on 22 October, MMEA officers intervened during a similar attack on an a Mongolian-registered tanker in Malaysian waters about a cable from the Malaysia-Singapore sea border. In the earlier attack, a patrol boat spotted unusual ship-to-ship activity between the bunker tankers Scorpio and Sea Jade and six masked men were seen fleeing in a wooden boat installed with a high-powered engine. The Sea Jade’s crew were suspected of assisting the pirates and were detained. When the MMEA officers boarded the Scorpio, they found all 12 crew members with their hands tied. In the later incident, eight men armed with machetes and a gun attacked the bunker tanker Bintang. The MMEA said it was alerted to the incident and responded by sending a patrol boat to the tanker, but as it approached, the pirates escaped in a wooden speedboat with laptops, mobile phones and cash stolen from the crew.

Singapore Straits commercial tidal model is the first of its kind in the region and addresses one of the major needs of the 60,000 ships transiting these channels annually – that of improved efficiency and reduced emissions. Tidetech managing director Penny Haire said the global industry drive for improved efficiency in shipping, especially in light of the uptake of slow steaming, meant speed optimisation via the use of accurate tidal models could allow ships to save significant amounts of bunkers. “By arriving at the optimal time, a ship can benefit from a favourable tide or current through busy, narrow or restricted shipping channels,” Haire said. OW buys Bergen

OW Bunker has bought Bergen Bunkers for an undisclosed sum. An OW statement said the two marine fuels and lubricants suppliers “confirmed a strategic co-operation by which OW Bunker will acquire the entire share capital of Bergen Bunkers”.The acquisition was expected to be finalised by the end of November, subject to

Tidal model

Oceanography specialist Tidetech claims its new high-resolution tidal model for the Malacca and Singapore Straits will potentially save ships thousands of dollars in bunker fuel costs. It says simulations have shown that transit time savings of between three and 12 per cent can be made, depending on vessel type, speed and tidal phase. Tidetech says the high-resolution (up to 800m) Malacca and

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Tidetech’s Malacca tidal model

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approval from the relevant competition authorities. Bergen Bunkers, with offices in Bergen and St Petersburg, will retain its existing brand name, operating as an integrated and wholly owned subsidiary of OW Bunker. Meanwhile, OW has launched a new bunker service operating offshore in the Gulf of Mexico lightering zones, the 22,0000 dwt Elisalex Schulte, which has been taken on a long-term time charter. She is equipped with dedicated tanks to provide complete segregation of low-sulphur fuel oil (LSFO) and heavy fuel oil (HFO) and has a pumping rate in excess of 1000m tonnes/hr. This ensures the highest level of quality control and facilitates the quick supply of bunkers to maximise operational efficiencies for customers. OW said: “Operating in international waters off both the Texas and Louisiana coastlines, the vessel will provide an important service for customers, particularly the many tanker fleets transiting the region. By taking products offshore, customers can avoid costly deviations and port calls to other bunkering locations.”

Company CFO Fred Bendle said: “Increased volumes led to a 25% improvement in overall gross contribution, although the per-unit margins remained flat. The strong gross contribution compensated for decreases in margins as well as costs from our non-core subsidiaries, and allowed us to improve profit before tax from the third quarter last year.” Chemoil CEO Tom Reilly said: “As we maintain positive profit contributions from our core marine fuel business, we will continue to create opportunities for profit contribution from our new businesses such as aviation, diesel and renewables.”

Better Q3 for Aegean

Aegean Marine Petroleum Network made a US$8.0 million net profit in the three months ended 30 September, compared to a net loss of $3.3 million in the same quarter last year. Total revenues for the three months ended 30 September, 2012, decreased 0.7% to $1,825.3 million compared to $1,838.3 million for the same period in 2011. Gross profit increased by 3.8% to $74.4 million in the third quarter of 2012 compared to $71.7 million in the same period in 2011. Company president E Nikolas Tavlarios commented: “Our results for the third quarter reflect management’s unrelenting focus on steadily enhancing profitability under challenging market conditions as adjusted net income increased more than 50% compared to the year-earlier period. During this quarter, we commenced physical supply operations in Hong Kong, increasing Aegean’s current global scale to 20 markets covering approximately 60 ports. “We also announced plans to launch operations in Barcelona, Spain, further enhancing our ability to leverage Aegean’s highquality logistics infrastructure. “Consistent with our objective to expand Aegean’s worldwide marine fuel logistics chain, we commenced utilisation of the onshore storage facility in Tanger Med during the third quarter. This new facility provides important strategic benefits that will enable Aegean to ensure the availability of product for credit quality customers, enhance its purchasing power for marine fuel and generate third-party leasing income. With an expanding global full-service platform, we remain well positioned to strengthen Aegean’s global brand recognition and drive future performance.” Chemoil boosts profit

Singapore-listed marine fuel supplier Chemoil has tripled its third quarter profit on the back of a 26% increase in sales to $3.4 billion. Net profit was US$7.7 million, compared to $2.5million in the same period last year.

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Environmentally friendly tanker

South Korea’s Hyundai Mipo Dockyard (HMD) has delivered King Gregory, a 52,000-dwt tanker, to Consolidated Marine Management (CMM), the shipping branch of the Latsis Group. Classed by Lloyd’s Register, the oil-and-chemical carrier is described as having the latest environmental and efficiency features The King Gregory is the first of two medium-range (MR), IMO II & III-class oil/chemical tankers contracted by Consolidated in August last year. It is estimated that the ship’s daily fuel consumption in the ballast condition with a speed 12.5 knots will be no more than 17.5 tonnes, while the consumption in laden condition at a speed 13 knots will be less than 19.5 tonnes. The ship features the latest equipment and technology to cope with new environmental requirements and energy-saving demands, according to Kostas Vlachos, Consolidated’s Chief Operating Officer. He said: “She is equipped with an electronic main engine, a larger diameter propeller, Mewis Duct and ship-performance monitoring – transmitting data to the office, including but not limited to the monitoring of daily and specific fuel oil consumption and, hence, CO2 emissions, the trim of the ship, and other key data – to help ensure the optimum performance.” According to a statement the King Gregory has started a threeyear time charter with Cargill, with both owners and charterers expected to realise considerable savings when compared with other ships in its class.

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environment

‘Some governments still have their heads in the sand’ The shipping and bunkering industries are all too aware that impending low sulphur limits, as well as demands to reduce shipping’s carbon footprint, mean they will have to act soon. But so far there is no consensus on what to do, as David Hughes reports.

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hipowners’ body the International Chamber of Shipping (ICS) expressed “disappointment and concern” at a decision by the International Maritime Organization (IMO) to reject its call to accelerate a critical study into the global availability of low sulphur fuel for ships. A small majority of IMO member states, led by the US, rejected an ICS submission to the IMO Marine Environment Protection Committee (MEPC), which was debated in London. The IMO vote was very close. As well as having the support of major shipping nations such as China and several open registers, ICS was supported by some EU member states. ICS was pressing for IMO to start work without further delay on a comprehensive fuel availability study that could consider the impact of all the changes required by the new MARPOL Annex VI regime, to reduce atmospheric pollution, before it is too late for the oil refining industry to respond and invest. Shipowners are worried about whether sufficient fuel will be available to allow ships to comply with the strict IMO regulations on sulphur emissions and whether, as a result of insufficient supply, the costs for those ships that are able to obtain the required fuels might be prohibitively expensive. In some trades, this could lead to a significant modal shift to shore-based transport, with negative consequences for congestion and the environment. These are issues that were not anticipated when the regulations were agreed. Speaking after the vote, ICS secretary general Peter Hinchliffe said: “Some governments still appear to have their heads in the sand with respect to fuel availability. What will be the impact of ships switching to distillate on the availability of diesel for road transport or heating oil for homes? We still think it’s essential that a global fuel study is carried out sufficiently in advance of 2020

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to give the refiners adequate time to invest and react. The major refinery upgrading required could take a minimum of four or five years, perhaps longer, and we believe that completing the study in 2018 would simply be too late.” ICS argues that the need to move the IMO study forward is more important than ever, especially as the EU has already decided that it will definitely implement the 0.5% sulphur requirements in 2020, even if the IMO study results suggest, as permitted by MARPOL, that full implementation should be postponed until 2025. “ICS has not given up and we will bring the issue back to IMO next year” said Hinchliffe. “The issue is just too important. The enormity of the switch to distillate and its economic impact on shipping, and indeed the world economy as whole, should not be underestimated or swept under the carpet.” ICS emphasises that when the global requirement to switch to distillate was adopted in 2008, it supported the agreed IMO timetable as an acceptable compromise. “However,” ICS says, “if the switch to low sulphur fuel is to be successful, ICS believes that those governments that advocated such ambitious goals need to do everything possible to assure themselves and the industry that the refineries are able to deliver. ICS believes this means undertaking the required studies of fuel availability as soon as possible.” There is already a formal mechanism in MARPOL Annex VI for IMO to complete a review, by 2018, of progress made towards meeting the demand for 0.5% sulphur fuel that must be used globally outside of Emission Control Areas (ECAs) by 2020 or 2025. However, ICS had suggested that a preliminary IMO study of the availability of compliant fuel, taking into account the introduction of the 0.1% sulphur in fuel requirements to be used in the Baltic Sea, North Sea and the North American ECAs in 2015, would

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provide a suitable test case. Such a study would provide a projection of possible scenarios resulting from the introduction of the 2015 0.1% ECA standard, against the background of the world market. This could then be considered in comparison with the real situation encountered in 2015 The consensus at the IBIA Annual Convention in Dubai (see p19) appeared to be that the industry had no choice about complying and calling for a delay in implementation would probably be a waste of time. The big issue was how to comply with the 0.1% limit in the ECAs which comes into effect on 1 January 2015. IBIA board member Robin Meech, managing director of Marine & Energy, spoke on the theme: “Will there be sufficient lower sulphur fuel without scrubber and LNG?”. His short answer was: “No.” His longer conclusion was that there is a strong case to reassess the global cap. While several speakers at the Singapore Bunkering Conference (Sibcon), held three weeks before the IBIA event, had been enthusiastic about the prospects for LNG as a marine fuel, the consensus at Dubai seemed to be that fitting scrubbers would be the only alternative to using distillate fuel within the ECAs. Whether scrubbers would be the most economical option would depend on how much time ships spent within ECAs. Sibcon and the IBIA Convention took place shortly after UK-based classification society Lloyd’s Register (LR) released the full text of its LNG bunkering study LNG fuelled deep-sea shipping – Outlook for LNG bunker and fuelled newbuilding demand up to 2025. Speaking as Gastech 2012 was about to commence in London, Hector Sewell, LR’s Head of Marine Business Development, said that what was perhaps most interesting is the way that working on the report had also been a catalyst for a broader understanding of how many alternative fuels might be adopted by the shipping industry. He added: “We needed to develop an approach that would help us to get a clear sense of what LNG-as-fuel might mean for our clients. We have the in-depth capability to handle the technology and the risk issues associated with gas, but we wanted to be

IMO’s London headquarters

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able to help our clients understand what will be driving industry adoption. We were most interested in the deep-sea trades as these are responsible for most of the world’s tonnage, emissions and fuel bills.” The study found that widespread adoption of LNG-as-fuel will be driven by price, the growth of alternative fuels and the degree of global collaboration. Its base-case scenario predicted that, by 2025, there could be 653 deep-sea, LNG-fuelled ships in service, consuming 24 million tonnes of LNG annually. These ships are most likely to be containerships, cruise vessels or oil tankers. When the study modelled relatively cheap LNG – for example, priced at 25% lower than current market prices – the projected number of LNG-fuelled ships tripled to approximately 1,960 units in 2025. If the cost of LNG increased 25% against current prices, hardly any new LNG-powered tonnage was projected to hit the water. “LNG is unlikely to simply replace heavy fuel oil. We will see specific niches – such as in Norway – embrace LNG in small-scale applications,” Sewell said. “Adoption in the deep-sea trades is a different affair; there are different drivers and we are also likely to see other fuels and technologies emerge as options. Despite the excitement [about LNG as fuel], there has yet to be an order for deep-sea, large-engined, LNG-fuelled ships. The most likely first movers could be the big containership operators, which are able to bunker at two ports at either end of a liner trade route, such as in Rotterdam and Singapore or Shanghai. This might take years – or it may happen tomorrow.” LR’s senior market analyst Latifat Ajala, who built the dynamic demand model for the study, said: “Yes, price is a key. But it’s going to be all about collaboration. There has to be a group of stakeholders who want it to happen. Political will and commercial ambition combined with environmental objectives and regulations have driven the modest take-up so far. There is no global market for LNG bunkers, so local or regional initiatives, investment, environmental and fiscal policy all have a part to play. Shipowners who are serious about using LNG as bunker fuel may need to cut their own supply deals and lock in prices for years ahead. It’s going to be really interesting to see what happens.” Sewell said: “We can help the industry manage the technical risks and support new concepts throughout the life of their assets – that’s what we do. We now have a clearer picture as we deepen discussions with clients on how and where we will be applying that ability.” Global ferry operators’ association Interferry also held its annual meeting in Dubai, just before IBIA’s event. Mike Corrigan, president and CEO of Canada’s BC Ferries, told Interferry members that LNG was a “foregone conclusion” for company newbuilds – an average of one per year is planned over the next 15 years – because it was 50-70% cheaper than the ultra low-sulphur diesel currently in use at an annual cost of more than $120 million. Natural gas was competitively priced in western Canada due to an oversupply and the storage infrastructure already existed. However, although the company was keen to convert many of its existing 35 vessels, it had shelved an initial project because the initially estimated cost of $12 million had risen to $18 million and the payback period doubled to 10 years. In addition, the fleet was already fully utilised so it was logistically challenging to take a ship out of service. “We continue to work with suppliers and manufacturers to reduce the time-line risk and drive down the design spiral to the point where we are comfortable,” Corrigan concluded. Also at the Interferry meeting, Christos Chryssakis, senior innovation researcher at DNV, said biodiesel could be blended with

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environment (continued)

diesel to meet low-sulphur requirements – providing a more readily available alternative to the 300 million tonnes per year of distillates that would be needed globally by 2025. Maersk Line and the US Navy had already tested biofuels but a change in regulations was required to allow their use on ships. Meanwhile, Daniel Povel, risk assessment team leader at Germanischer Lloyd, described a zero emissions ferry design concept for Scandlines that combined liquid hydrogen and fuel cell/ battery systems. The solution might be competitive if marine gas oil reached a price of $2,000 per tonne – but that compared with a current price of $900 per tonne and a peak of $1,300 in 2008. Interferry members had gathered in Dubai knowing that they had achieved a major objective at IMO. At its September meeting, the UN agency’s Marine Environment Protection Committee (MEPC) had agreed to proceed with a sector-specific methodology for establishing energy efficiency requirements for ro-ro cargo and ro-pax vessels. The Energy Efficiency Design Index (EEDI) requirements for most other ship types – due in force from 2013 – had been

Innovative design

Wärtsilä Ship Design has developed a highly efficient aframax tanker design that it says offers solutions for current and pending emissions legislation. The single screw crude oil tanker features a CFD (Computational Fluid Dynamics) optimised hull to provide less resistance with higher propulsion efficiency. The propulsion system is based upon the high performance, 2-stroke Wärtsilä X62 main engine. This electronically controlled, common-rail engine has an extra long stroke and low rpm. It also has a minimised physical width to allow a slimmer aft body design, which further benefits the propulsion efficiency. For emissions compliance, an integrated Wärtsilä exhaust gas

agreed during a previous session, when an extended time-line was approved for ro-ro ferries due to the extensive variation of ships within this segment. Interferry had worked closely with flag states and other industry bodies in an informal working group, which assessed seven different proposals for a fair and sustainable EEDI formula that did not penalise the specialised power requirements of ro-ro operations. A proposal by Germany, Sweden and the European shipbuilders association CESA was supported by Interferry as meeting these requirements and was recognised by the IMO as the best way forward. The proposal incorporates ship design features into the efficiency formula, which otherwise typically focuses on the amount of installed power in relation to the vessel’s size and speed. The complex ro-ro ferry segment regarded this as too simplistic an approach – notably because many ferries are one-off, bespoke designs for a particular route, rather than one vessel in a large series.

scrubber has been placed in the funnel. Main engine, auxiliary engines and auxiliary boilers are all connected to the integrated scrubber. The scrubber effectively reduces sulphur oxide (SOx) emissions, and meets the 0.1 percent sulphur limit even with HFO (Heavy Fuel Oil) having a sulphur content of 3.5%. A Wärtsilä SCR (Selective Catalytic Reduction) system has been placed before the turbocharger turbine for the main engine. The SCR is a post combustion nitrogen oxides (NOx) abatement system that permits optimised combustion, in terms of efficiency, while reducing NOx emissions by more than 90%. The abatement equipment is tuned with the main and auxiliary engines for effective operations across the complete load range and IMO Tier III requirements can be met.

Wartsila Tanker

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environment

News round-up All the latest environmental news.

Shipping ‘must be 95% de-carbonised by 2050’

Prominent environmental campaigner Jonathon Porritt, from the Sustainable Shipping initiative, told the recent International Chamber of Shipping conference that the various targets for CO2 reduction that shipping was currently struggling towards would eventually prove “irrelevant”. He said that the industry would have to be 95% de-carbonised by 2050 as part of global efforts to prevent global warming reaching dangerous levels. He said: “The age of easy oil is over. Crude prices have shifted fundamentally, with increasing volatility and uncertainty. The view that there could be a production peak or even decline as early as 2020 is entering the mainstream.” He added that volatile oil prices and insecure supply would present a significant challenge to shipping and the wider economy. Porritt warned that, as climate change gathered pace, there would be increased pressure for shipping to be included in regional and global regimes to reduce greenhouse gas emissions. He cautioned, too, that price and regulatory uncertainty could undermine investment decision making. He said that strong leadership was required to prevent uncertainty leading to inaction. EU reinforces sulphur rules

An EU Parliament vote in September confirmed that the 0.1% sulphur limit be implemented in 2015 in the northern European ECAs while the IMO 0.5% limit will be enforced in 2020 (and not 2025) in all EU territorial waters. A further reduction to 0.10% within territorial waters is possible. To comply with these limits ships must either use low sulphur fuels or abatement technologies, such as scrubbers. Rapporteur Satu Hassi’s report was approved by 606 votes to 55, with three abstentions. She said: “Highly polluting shipping fuels have a serious impact on the environment, but this is also the most important health reform of this parliamentary mandate. With air pollution from shipping expected to outstrip land-based emissions by 2020, urgent remedial action is needed.” FTA warns on Sulphur Directive

of marine fuels from 1% to 0.1% within the Northern European and Baltic Emission Control Areas in 2015 could cause a modal shift from sea to road freight. Green plaudit for MOL

The UK-based Carbon Disclosure Project (CDP) has commended major Japanese shipowner Mitsui OSK Lines as one of the leading companies in the disclosure of greenhouse gas emissions and strategies for climate change, based on high scores in CDP’s analysis of its approaches to information disclosure. MOL says: “In accordance with the environmental strategy in the midterm management plan “Gear Up! MOL”, the company has promoted activities to offer solutions with a lower environmental burden, including the next-generation vessel concept “Sempaku ISHIN”. MOL’s commitment to protecting the environment and aggressive disclosure of environmental information played a key role in this selection.” Climate fund fuel consumption link?

The International Chamber of Shipping (ICS) represented global shipowners at the United Nations (UNFCCC) Climate Change Conference in Doha (COP 18) and said that Market Based Measures (MBMs) to fund climate change action could be linked to fuel consumption. At an event in Doha, hosted by the UN International Maritime Organization (IMO), ICS Director of External Relations, Simon Bennett made it clear that additional Market Based Measures (MBMs) are controversial amongst shipowners. “Some governments appear to be more interested in how much money can be raised from shipping, rather than the emissions reductions that this might deliver. Just because we lack a strong political constituency, we should not be treated as a cash cow,” said Bennett. He said that the majority of ICS members see a mechanism linked to fuel consumption, which as an interim step might involve monitoring and verification of fuel consumption, as being far preferable to emissions trading schemes or any other MBM which risks serious market distortion or damage to the level playing field of uniform global regulation which shipping needs to operate efficiently.

The UK’s Freight Transport Association (FTA) Sulphur Directive has warned that the reduction of sulphur content in the sulphur content

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INTERVIEW

A man for all seasons

Captain Cliff Brand

IBIA’s new chief executive Cliff Brand tells David Hughes how he sees the opportunities and challenges of his new job running.

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fter just one week in his new post, IBIA’s new chief executive, Captain Cliff Brand, was off on a plane to the association’s 20th Anniversary Convention at Dubai. I caught up with him once it was all over and there was a bit of a lull in activity for several days as we killed time before setting off for the airport. Brand took up his new appointment on 24 October, replacing IBIA board member and maritime arbitrator Trevor Harrison, who had been part-time Acting Chief Executive. From his opening address to his final speech at the end of the conference, Brand has stressed that he wanted to meet as many members and to listen to their views.

So, not a complete stranger to the industry, then. What does he think of the convention? “The past few days have been very good. I have managed to meet a large number of members and have the feedback I have had has been entirely positive.” He adds: “Most people have wanted to know what I plan to do. At the moment, I am just concentrating on hearing the views of members. “I do have ideas, though. It would be unfair to say that IBIA is just about running a great Convention and a brilliant annual dinner every year. I know we do other things, but I want to raise its profile among the membership and the wider shipping industry. I also want IBIA to do more.”

Outsider

I asked Brand what he thought of the bunkering industry, coming to it as an outsider. “Actually,” he says, “I have had lot to do with bunkering in my posts running ports, at Gibraltar and Harwich. Gibraltar is, of course, a major bunkering port and I had a specialist bunkering superintendent reporting to me. “Although from a port perspective, I got to know about how bunkering worked and, especially, became aware of quality issues, I was also very aware of the safety aspects. While in Gibraltar, I issued an M Notice, requiring samples to be taken on the barge, not the receiving vessel, because of the risks involved in surveyor climbing up a pilot ladder.”

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Newsletter

During the convention, Brand mentioned the possibility of issuing a newsletter. He says: “I don’t know whether a newsletter as such is the best solution. Possibly bulletins as issues arise would be more effective. But I am determined to improve communications with members. “A trader association must offer its members value for money. One part of this is representing them in industry and wider forums, such as IMO. IBIA has already done much valuable work in this regard,” he says. “One particular example was the amendments to MARPOL

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On more than one occasion during the convention, Brand mentioned that, from his time as harbour master at Gibraltar, he was aware of “underhand practices” that can occur in the bunkering industry. So should IBIA membership involve some form of commitment to high standards? Should IBIA seek to exclude companies that engage in sharp practices. Brand says that this is something that needs to be assessed. How adherence to standards could be achieved in practice would need addressing. But “in principle it is right” that IBIA membership should signify high ethical and professional standards. Expanding IBIA geographically is important, according to Brand, who will shortly be making his first flight out to Singapore to visit both IBIA’s office based there and also to the local branch and its members. Members’ input

Input from members will be important, Brand says, as he puts together a business plan for the next four to five years. He adds: “Obviously the board will also be very involved in this process. I am looking forward to the challenges of the post. “I think my experience suits this role. I have broad maritime experience, including 12 years in the Merchant Navy, progressing to master of AHTS and other specialist vessels in the offshore oil and gas industry. I have also run two major ports. “For me,” he says, “it is about taking on new challenges. I like to think I can succeed in my role. That is why I took it on. “So far, the responses have been very welcoming and I am keen to really get started.” Brand addresses delegates at the recent convention

relating to ship-to-ship transfers of oil. As originally drafted, this would have stopped most bunkering operations. IBIA worked effectively with other parties at IMO to achieve a good result for the industry.” Brand continues: “I am no stranger to IMO and am looking forward to sitting in during relevant debates. And it is important here that we work closely with the International Chamber of Shipping and other industry organisations of issues of common concern.” While representation is very important, Brand says that IBIA needs to offer more services to its members. “Perhaps most importantly, we should be a source of information to members. We should have more on the website, but also be able to respond to questions. It may in time be necessary to have a research assistant within the secretariat. “I will be looking closely at what services members would like and what we can offer. It might be time to revive the mediation and arbitration service, for example. Also, I would definitely want to increase our involvement in education and the provision of courses. How we actually deliver needs further consideration and could involve working together with other parties.” Keeping in touch

Returning to his main theme, he adds: “Before we start providing more services we need to know what the members want. One way of keeping in close touch with the membership is to have regional branches. That is currently the case in Singapore and South Africa.” “Our Singapore branch operates very well, while we may be looking to extend the scope of the South African branch to cover the rest of sub-Saharan Africa. During the past few days, several members have suggested forming a Middle East branch and that is something we will look at seriously.”

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Delegates discussed a range of issues

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blending

Hazard perception

The use of quality, hazardous materials in the blending process and new environmental legislation are just some of the issues that have been raised this year, reports Sandra Speares.

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he advent of the North American emission control area is just one challenge to be faced on the blending front. Concerns have been expressed on low density and viscosity values for RMG 380 grade fuel which, it has been suggested may be the result of suppliers experimenting with the blending process and introducing new components so as to meet the new low sulphur fuel requirements. With the introduction of the North American emission control area from 1 August this year, the pressure has been on owners and operators seeking low sulphur bunkers in the US. There have been suggestions that the advent of the North American ECA is pushing fuel suppliers to try new blending products to meet the 1% sulphur limit, which could, in turn, lead to low-quality or inappropriate cutter stock being used, or problems like cat fines and engine damage emerging. According to a FOBAS technical bulleting released in August, it had tested a number of samples of residual fuels, bunkered from different US ports, which exhibited very low viscosity and density values for the ordered RMG 380 grade fuel. “Tested viscosities ranged from 8 cSt to 88 cSt at 50 ºC, while the density values were 910.0 to 953.5 kg/m³, which are considerably lower than those normally encountered for RMG 380 grade fuels,” FOBAS said. All fuels tested met the 1% sulphur content limit, but FOBAS said that “this uncharacteristically low-viscosity/low-density fuel trend may be an indication that with the introduction of this ECA – SOx, some local fuel suppliers are trying unconventional blend components to meet the demand for the LSFO. “If your ships are planning to bunker LSFO from US ports we suggest that the supplier is asked to provide a certificate of quality of the particular stem to ensure the viscosity and density characteristics of the fuel are known at the time of bunkering. Additionally, attention

30

should be given to the collection of the fully representative bunker drip sample,” FOBAS said. “At the time of bunkering, it is critical that shipowners and operators are provided with a BDN or certificate of quality of a particular fuel stem to ensure the right measure of density and viscosity characteristics are reported to the ship in order for proper onboard fuel management to be implemented by the crew onboard.” “For the treatment of such fuels, tested density should be used for the selection of gravity disc (if applicable). Furthermore, it should be ensured that viscosity controller is working correctly on auto viscosity control mode in order to maintain correct injection viscosity at the engine inlet and to avoid any over heating of such fuels, especially during the changeover to and from LSFO,” it concluded. Potential dangers

The potential dangers of bunker fuel blending with hazardous substances were demonstrated earlier in the year when the Dutch marine police investigated 30 vessels to check that they had the correct documentation. In 12 instances the documentation is understood to have been forged. A study by scientific institute CE Delft last year showed some oceangoing vessels were bunkered by fuel oil contaminated with hazardous waste materials. The concern is that bunker tankers are blending waste material with heavy fuel oil to avoid having to pay for the disposal of waste material. The rising cost of bunker fuel obviously has a critical role to play for owners and operators alike and the blending process has become more complex in order to accommodate the demands of owners seeking a high quality, fit for purpose and good value product. While fuel blends will have to be in line with quality standards like ISO 8217, they will also have to meet the demands of new

World Bunkering Winter 2012


green legislation on emissions and SoX and NoX and particulate matter content. For example, fatty acid methyl ester, or FAME, may have adverse consequences when used in ship engines. It is not allowed to be used for marine engines according to ISO 8217:2010 and there are concerns that marine fuel may be contaminated with FAME in port, although the process may happen in all innocence. Commenting on the current outlook and the past year, Steve Bee of Intertek Lintec Shipcare Services says: “As we rapidly approach the end of 2012, reflection will again show another eventful year of activity and change within the shipping industry. We began on 1 January with a reduction in the global sulphur cap down to 3.5%, which quietly came upon us with relatively little commotion, but certainly continued the relentless momentum towards lower emissions from the world’s cleanest mode of transportation. Greater emphasis

“The year progressed with continuing low freight rates and increasing fuel prices, leading to a greater emphasis on slow-steaming and other cost-reduction, efficiency-enhancing analysis, all adding to the financial and operational pressures being exerted upon shipping companies. “August saw further change with the enforcement of the North American ECA, along with the release of the latest revision of the marine fuel quality standard, ISO8217:2012,” Bee continued. “The latest and largest ECA certainly appeared to have an impact upon global fuel quality, with Intertek Lintec Shipcare Services witnessing a shift from 20.5% off-specification fuel samples in Q1 to 23% in Q2. Since 2006 such spikes in off-specification fuel appear

to be a common factor both pre and post-ECA implementation, with increasing fuel-blending requirements adding to the problem. Increasing cases of chemical contamination of fuel, both residual and now even within distillates, is drawing greater attention to the components used within such blending operations and the many potential reactions and consequential effects these may have upon fuel quality and operational performance. “The drive for cleaner fuels, away from the traditional residual grades, continues with distillates and MGO being joined by LNG as a proposed alternative. Yet while refining capacity and investment may thwart the former, lack of infrastructure, investment and operational confidence appear to be a possible hindrance to the latter. In the meantime, heavy fuel oil simply awaits the impending advance of yet lower emissions legislation, threatening its existence, while hoping for wider acceptance of abatement technologies to prolong its useful life. “So will 2013 lead us closer, to a single or multi-level solution to the emissions conundrum? Will we see continuing improvements in efficiency and operational excellence? Will rates, trade and the overall market begin to head in a more positive direction? “If not 2013 New Year’s resolutions, these issues will certainly be high on shipping’s ‘wish-list’. But with high and growing attendances, plus positive interest, at this year’s industry events such as Posidonia, SMM and SIBCON, to name but a few, shipping has shown a collective, vibrant and determined mood, within and between the majority of its companies, international bodies and individuals, to drive the shipping industry forward towards a better, cleaner and more prosperous future, with 2013 hopefully offering the next step in what should be its continuing evolution?” he concluded.

Tough times but industry in determined mood

World Bunkering Winter 2012

31


BARGE DESIGN

Trio take to the seas TOTAL Lubmarine’s three Chinese newbuildings enter service in Singapore.

F

rench-based marine lubricant supplier TOTAL Lubmarine has brought three new barges into operation at Singapore. The 700 dwt double-hulled newbuildings – Marine Champion, Marine Prosper and Marine Talent – were built by Ocean Leader Shipbuilding, Zhongshan, China. They have a cargo capacity of 860 cu m for bulk and packaged lubricants, and are fitted with state-of-the-art firefighting equipment. They will be operated by Lubmarine’s logistics partner, Singaporebased Ocean Tankers, which operates a diverse fleet of support vessels and is a specialist in ship-toship transfers. The twin screw vessels fly the Singapore flag Serge Dal Farra, Head of Marketing at Lubmarine, says: “The investment made in these barges confirms Lubmarine’s commitment to the very highest standards of safety and excellence in the best interests of its customers. “It also underlines our determination to provide the highest level of responsive service, and access to our innovative range of products, in one

32

of the world’s busiest and most strategically located ports.” He adds: “We are delighted to be working in Singapore with Ocean Tankers, which shares our commitment to safety and excellence. Lubmarine has a very strong presence in Asia through its network of supply and service centres. This will become even stronger following the introduction of the new barges in Singapore.” 700 dwt double-hulled newbuildings

World Bunkering Winter 2012


BArge design

Special delivery Waller Marine LNG and regasification articulated tug and barge design approved.

U

S-based classification society American Bureau of Shipping (ABS) has granted approval in principle (AIP) to an LNG and regasification articulated tug barge concept developed by Waller Marine Inc. The vessel has the ability to load LNG from existing LNG terminals, liquefaction facilities, or traditional LNG carriers and transport it to existing tanks, traditional LNG carriers, trucks, or to be operated as an LNG bunker barge. The barge is also equipped for regasification of LNG directly to a pipeline or to a power plant. An additional feature will be the use of natural gas as a fuel in the dual fuel engines of the tug to drive the tug-barge unit. ABS claims that the benefit of the LNG Articulated Tug and Barge Regas Vessel (ATB RV) is that it allows LNG to be moved and delivered more efficiently on a small-scale basis in locations where large LNG infrastructure would be cumbersome, costly, and time consuming. The barge will be fitted with independent Type C LNG tanks. To make most efficient use of the hull volume and maximise the cargocarrying capacity of the barge, bi-lobe tanks of maximum width are positioned along the barge’s centreline. The cargo containment

system is split into four longitudinally located independent tanks, with each tank supported by a simple structure that isolates the tanks from hull loads. Great resource

According to Waller Marine, these tanks will be constructed of either 9% nickel steel or Stainless Steel AISI 304L to contain the cargo at a minimum temperature of -163°C. ABS says it has worked with Waller from the inception of this project and has been the primary certification body in carrying out reviews, including conducting a program review. “ABS has been a great resource in developing the LNG ATB RV product,” says Waller Marine Vice President, Gas Solutions Bill Hutchins. “By conducting multiple meetings – including a HAZID [hazard identification] – ABS has helped us to ensure safety and regulatory aspects have been appropriately addressed.” “ABS has worked closely with Waller Marine through the development of the LNG ATB RV,” says Roy Bleiberg, ABS Director of Engineering, Americas Division. “We are pleased to be part of a project with the potential to improve the environmental impact of hydrocarbon emissions. Since AIP was granted, Waller Marine has moved into the detail design phase with a goal of creating multiple variations for clients around the world.

Waller Marine’s new LNG tug and barge concept could be used for bunkering operations

World Bunkering Winter 2012

33


+1 713 407 3695 APAC +65 6777 3944 EMEA +44 1325 390180 E-MAIL marine.services@intertek.com WEB www.intertek.com/marine AMER

Every profitable voyage depends on bunker fuel quality In today’s competitive global shipping industry, staying in business means staying on schedule. Poor-quality bunker fuel represents one of the biggest threats to keeping your schedule and profitability intact.

Intertek ShipCare provides fast, accurate testing for bunker fuel quality through our Lintec operation, helping avoid costly repairs and downtime. Intertek has provided testing services to the marine industry for over 125 years, with the expertise and industry knowledge needed to protect your valuable assets.


testing

Abnormal loads DNVPS’s Global Technical Manager Charlotte Røjgaard warns of the increased presence of “abnormal

Charlotte Røjgaard

components” in bunker fuel.

E

xperience from previous Emission Control Areas (ECAs) shows that when sulphur becomes the primary blend target, the suppliers use new, exotic blend stocks to blend product to meet the specifications. The result is increased average cat fines, higher average density, instability issues, change in ignition/combustion properties and potential chemical contamination. This trend is borne out by the latest findings from the North American ECA which came into force on 1 August 2012. DNV Petroleum Services (DNVPS) issues bunker alerts to both its customers and the industry to warn them against potential harmful fuels that are being supplied from certain areas within given periods. From June until October 2012, DNVPS issued 10 bunker alerts on the USA, mapping the impact of the latest regulations on fuel quality. Although providing a better protection against harmful fuel, the adoption of ISO8217:2010/2012 has been slow, with less than 10% take-up rate for fuels tested by DNVPS against these revisions of the specification. There can be various reasons for this, such as long-term charter party contracts specifying ISO8217:2005, that the cargo/ trader/broker/supplier side of the market is unwilling to guarantee the quality or even a concern about costs. However, analysing data on RMG380 grades, we see that the fuels supplied to ISO8217:2010/2012 are similar to the fuels supplied to ISO8217:2005, so there should be no reason for the increased premium in the majority of these cases. The fuel supply industry is moving from “the seven sisters” towards an independent/trader-based supply. Whereas fuels used to originate from a refinery based on their products, today the suppliers prepare the fuel based on (unregulated) blend stocks that may have been traded numerous times. The risk of abnormal components entering the supply chain and eventually ending in the final product is thus much higher than before.

World Bunkering Winter 2012

In the absence of a standardised industry method to test for these abnormal components, as well as detailed studies to investigate the impact of these components on the ship installation and engines, the easiest way to avoid the dilemmas and challenges related to unusual components is to keep the abnormal components out of the fuel in the first place. As such, the suppliers need to do their part to minimise the challenges and ensure that good quality, fit for use product is being delivered in the market.

High potassium warning

DNV Petroleum Service warned of high potassium fuels in low sulphur fuels in Houston and surrounding US ports, in an alert issued in October. It tested eight samples with excessive potassium (K) content. The samples represent low sulphur HFO deliveries in late September and early October taken from bunker deliveries made by two suppliers. The potassium content of the tested samples ranged from 93 mg/kg to 140 mg/kg (as determined by IP501) and averaged 124 mg/kg. Although not a parameter specified in ISO8217:2005/2012, DNVPS says that potassium at the tested levels can lead to increased post-combustion deposits. It adds: “Operational experience suggests a link between bunkers with elevated potassium and deposit on and corrosion of turbocharger nozzle rings. Also, potassium is known to have a harmful effect on Selective Catalytic Reactor units. DNVPS recommends taking samples before and after the fuel treatment plant to gauge the fuel oil quality at the engine inlet. This will help in any subsequent assessment of increased engine wear and damages, and in resolving fuel quality disputes.

35


RISK MANAGEMENT

Risky business

Managing risk is becoming an ever-more important subject on the shipping agenda, not least against a backdrop of volatile oil prices and geopolitical turmoil.

V

essel operating costs, of which bunkers make up an important part, show no sign of falling, with poor freight rates that look unlikely to bounce back, at least in the short term. The latest Moore Stephens operating cost survey suggested that vessel operating costs are expected to rise by 3% in both 2012 and 2013. Lube expenditure and crew costs are the categories most likely to produce the highest levels of increase. The survey is based on responses from key players in the international shipping industry, predominantly shipowners and managers in Europe and Asia. As was the case 12 months ago, those responses identified lubricants as the cost category likely to increase most significantly – by 2.9% and 2.8% in 2012 and 2013 respectively. “With crude oil prices hardening, lube costs will go up,” said one respondent. Another observed: “Fuel and lube suppliers are very aware that there is an oversupply of tonnage on the market, and take advantage of that in their dealings with owners.” Another said: “There is ongoing pressure to reduce operating costs by means of improving vessel fuel efficiency and, in practice, there might be a gap between expectations and what can be achieved as fuel and lube costs are likely to increase at a steady pace.” It was also noted “There is no alternative to lube oil and costs are already very high, making it very difficult to operate a ship.” Several respondents expressed concern about overtonnaging. “The market has been very shaky in 2012 and will continue to be so next year because of the oversupply of tonnage and the shortage of motivated and qualified crews,” noted one, adding: “Below-breakeven voyages are being undertaken in order to avoid sending ships into lay-up or being sold at very low prices.” Another pointed out: “The shipping markets will only get more difficult, as a result of overcapacity.”

World Bunkering Winter 2012

Meanwhile, another predicted: “Due to the over-supply of ships, we face a major crisis, as well as an increase in the amount of laid-up tonnage.” Moore Stephens shipping partner Richard Greiner says: “Ship operating costs increased by an average of 2.1% across all the main ship types in 2011 and it is unsurprising that our latest survey anticipates that costs will rise by a greater margin in both 2012 and 2013. Although they will be difficult for owners, operators and managers to absorb in a struggling economic environment and a depressed freight market, these increases still represent a continuation of less volatile cost movements than those we saw just a few years ago. “Once again, lubes and crew costs are predicted to increase most significantly and it was concerns in respect of these that dominated the comments made by respondents to the survey. Given projected increases in the price of oil and the entry into force next year of the Maritime Labour Convention 2006, it would be a surprise if the same were not true of next year’s survey.” Forward curves

Geopolitical risk is just one facet of risk management, not least with the crisis in the Euro-zone and the on-going political problems with Iran and Syria. According to Paul Waine of Platts, the oil price is still extremely volatile. Platts has analysed not just the spot price over the past six months, but the way the forward curves have progressed over the past six months. This is an area that all risk managers should be looking at, Waine says, but very often they don’t look at the development of the forward curve. The chart (see illustration p39) shows six forward curves from the end of March 2012 to 12 October 2012. This shows how January 2013 prices have changed over that period, Waine says. The high for 13 January is just below $190 per barrel of Brent crude, the low is

37


THE PREMIER BUNKER EVENT FOR THE MIDDLE EAST MARKET THE EIGHTH INTERNATIONAL

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The Al Diar Siji Hotel, Fujairah, UAE

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26 MARCH 2013 Official Opening & Keynote Addresses Sessions:

WELCOME ADDRESS Dr Mohd Saeed Al Kindi Chairman, FUJCON Steering Committee & MD, Fujairah Petroleum Products, UAE

KEYNOTE ADDRESS Dr Ali Obaid Al-Yabhouni CEO, ADNATCO & NGSCO, President, UAE Shipping Assn (UAESA) & Governor for OPEC, UAE

1. Global Bunkering Market Developments/ Milestones in Fujairah’s Developments

KEYNOTE ADDRESS Mr Apostolos Rizakos Managing Director, Aegean Marine Petroleum SA, New York

KEYNOTE ADDRESS Dr Fereidun Fesharaki Chairman, FACTS Global Energy Ltd (invited)

FUJAIRAH PETROLEUM PRODUCTS LLC

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Mr Lars Pedersen Deputy Secretary General, BIMCO, UK

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Mr Ara Barsamian President, Refinery Automation Institute LLC, USA

Mr Mark Lewis Managing Director, Energy Market Consultants (UK) Ltd, UK

Mr Jan Egtved Knudsen Director, Fuel Risk Management, Chemoil Energy Ltd, UK

Mr Sigurd Some Jenssen Director, Exhaust Gas Cleaning, Wartsila Environmental Solutions, Norway

Mr Gunnar Kjeldsen Regional Manager for ME, DNV Petroleum Services, UAE

Mr Koshy Panicker Oil Terminal Manager, Port of Fujairah, UAE

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be able to bear costs better, but might have to carry more uncovered risk, he says, and might have to pay the cost of the clearing, leaving less working capital for other parts of the business. They might also have to fund the additional working capital requirement through bank borrowing, at a time when banks are not in a position to lend cheaply. A lot of companies, Waine says, are of the view that this may not have been necessary for the energy sector. He cites the example of the collapse of Enron, which, depite being one of the largest bankruptcies in history, “nothing happened in the energy sector other than the losses that people suffered. The lights still stayed and the gas still flowed.” Firms are also becoming more aware of the direct effects of the Dodd Frank rules on their business, although these were aimed at the financial sector. That attitude may not be felt so strongly in the EU, where energy markets infrastructure and new regulations are also developing, Waine says. He says there have been representations by European countries and international bodies vis a vis the US urging not to go too fast and to keep in step when implementing changes. There are concerns that the European economies are not capable of taking on new costs at the present time. As far as risk management is concerned, the shipping and bunkering sector is at the heart of the world economy, Waine continues. First of all, there is volatility with oil prices and therefore demand will respond to this. Second, there are some large macroeconomic events and regulations that might turn out not to be the best way of solving the past crisis. The Platts valuation hub risk management consulting team is now doing a lot of Range

work with companies that have energy price risk exposure, whether in their readiness for Dodd Frank requirements, or because of increased concerns over risk management practices generally. Quarterly outlook

According to Global Risk Management’s October quarterly outlook on the oil market, it estimates an “increase in oil prices over the next year. Two out of three factors are bullish – fundamentals due to the risk of supply disruption, financials due to the risk of inflation.” The dark horse, the report suggests, is bio fuel “which was introduced primarily for environmental reasons, but now seems to be polluting more than conventional fuel. This could spur demand for lighter products in a situation with low inventories. Geopolitics are set as neutral for oil prices – with a risk of a military escalation in the Strait of Hormuz which would immediately affect oil prices to the upside.” The report comments: “The supplydemand situation appears to be walking a tightrope. With the highest ever demand, fears of demand destruction appear to be overrated. “Currently, things are balanced even with the export missing from Iran. However, that is only the case because OPEC is producing way more than the internally agreed quotas “While OECD demand has continued to deteriorate, it has done so at a very slow pace. “Furthermore, the future factor to watch is non-OECD demand overtaking total OECD consumption. Emerging markets’ appetite for oil has not eased, even though the financial crisis is not over yet.” 27.6

Series1 Series2 Series3 Series4 Series5 Series6

41000 41030 41061 41091 41122 41153 41183 41214 41244 41275 41306 41334 41365 41395 41426 41456 41487 41518 41548 41579 41609 41640 41671 41699 41730 41760 41791 41821 41852 41883 41913 41944 41974 42005 42036 42064 42095 42125 42156 42186 42217

$91.26. In 14 January the high price is down, but the low price has not changed substantially, narrowing the range to under $20. The 13 January highest price for the series is $103.04 and the lowest is $89.49, narrowing the range again. Virtually all the forward curves are high at the front and slope downwards though the curve. Normally when curves are downward sloping, this means that there are supply concerns in the near term, while there are not any supply constraints. The other reason could be geopolitical events. In that period there have been tensions around Iran and also Syria. The other theme that is impacting on the situation is the economic position globally, particularly in the Euro-zone. From a shipping company perspective, the trade from China is also important. Waine says he believes there are positive areas of the world that can be identified. “It may be that a lot of us are getting used to austerity. Commentators are saying that growth isn’t everything, which is probably something that we would have never heard four or five years ago.” Boom times are no longer here and not everyone is avoiding the bust, Waine says. Even in Singapore, which has been more resilient than some centres, there is considerable concern about the position vis a vis the Euro-zone, he says. Another area that is of concern to risk managers is the implementation of the Dodd Frank Act, Waine says. The start is very close for US companies involving OTC clearing and reporting of transactions that are not OTC cleared and there is a tight time line for reporting derivatives and recording them, he says. A lot of energy companies in the US have been expressing their concerns about the cost of hedging, he says, because of the requirement to put up working capital to 140 meet margin at a higher level than previously. 120 The fact that loans had been previously on 100 a bilateral basis, which could be used again by 80 the recipient to meet margin requirements rather 60 than through a clearing house, was putting a real 40 working capital penalty on derivatives activity, 20 Waine explains. 0 There is also concern March that bank costs are higher 2012 because there are fewer players. Companies with strong balance sheets will

World Bunkering Winter 2012

October 2012

Brent crude January 2013 forward prices

39


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GEoGraphical focus: north america

Clean break

Tougher emission regulation came into force on 1 August this year as the new North American emission control area became a reality, as Sandra Speares reports. Plus: results, cold ironing, non-compliance, green fuel.

W

ith the advent of emission control areas covering the US, Canada and the US Caribbean Sea, covering coastal waters off Puerto Rico and the US Virgin Islands, the question remains whether supply will meet demand and refineries keep pace

with requirements. On the back of regulatory requirements, demands for distillates alone are expected to increase and shipping will need to compete with other industries to obtain supplies. Concerns are bound to remain in the aftermath of Hurricane Sandy, which caused widespread disruption to supplies. Secretary of Homeland Security Janet Napolitano announced an expansion of the temporary, blanket waiver of the Jones Act on 3 November, to facilitate the transportation of feedstocks, blending components and additives used to produce fuels. A temporary, blanket waiver of the Jones Act had been announced the previous day to allow additional oil tankers coming from the Gulf of Mexico to enter north-eastern ports, to provide additional fuel resources to the region. The waiver was expanded to additional ships, increasing the access to fuel in the storm damaged region. The Environmental Protection Agency exercised its authority under the Clean Air Act to temporarily waive certain federal gasoline requirements for gas sold and distributed in more than a dozen states. The aim of the waiver was to ensure an adequate supply of fuels in the impacted states. New York port authority also waived certain fees to ease the situation. Mixed results

Meanwhile, there were mixed results for companies operating in the US fuel market. Global fuel logistics company World Fuel Services – which is principally engaged in the marketing, sale and distribution of aviation, marine and land fuel products and related services – reported third quarter net income of $51.5 million or

42

$0.72 diluted earnings per share compared to $52.7 million or $0.74 diluted earnings per share in the third quarter of 2011. “Our market expertise and value-added service offerings continue to differentiate World Fuel as a solid counterparty to our customers and suppliers worldwide,” Michael Kasbar, president and chief executive officer of World Fuel Services said when he announced the results this month. “We were pleased to complete the CarterEnergy acquisition and look to continue to grow our business across all of our segments organically and through further strategic investments.” Valero Energy Corporation has announced third quarter results showing operating income was $1.3 billion versus $2 billion of operating income in the third quarter of 2011. The decrease in operating income was primarily due to lower refining throughput margins in the US Gulf Coast, Mid-Continent, and West Coast, which were partially offset by significantly higher refining throughput margins in the North Atlantic region. In addition, throughput volumes at the St Charles, Meraux and Memphis refineries were negatively impacted by the effects of Hurricane Isaac and unplanned maintenance on the Meraux crude unit. A decline in retail and ethanol margins also contributed to the decrease in operating income. “Even with lower margins than last year, we reported solid financial results,” said Valero chairman and CEO Bill Klesse. “During the third quarter, we elected to reorganise the Aruba refinery into a crude oil and refined products terminal, did major-reliability work at the Meraux refinery and continued to pursue the separation of our retail business. The new Port Arthur hydrocracker is expected to be operational in December and the new St Charles hydrocracker remains on schedule to be operational in the second quarter of 2013.” Press reports suggest that Valero may be planning a sale of two of its Californian refineries – the Benicia refinery in San Francisco, which has a 132,000 barrel-per-day (bpd) capacity, and the 78,000 bpd Wilmington refinery in Los Angeles.

World Bunkering Winter 2012


This November also saw Kirby Corporation complete its purchase of 13 barges and seven tugboats from Allied Transportation Company, a subsidiary of Allied Marine Industries, and two affiliated companies. The fleet of offshore barges and tugboats participates in the coastal transportation of petrochemicals, as well as dry sugar products, in the Northeast, Atlantic and Gulf Coast regions of the US. The purchase price was $116 million in cash, before post-closing adjustments, including $10 million that will be paid contingent on developments with the sugar provisions in the US Farm Bill. The purchase was financed using Kirby’s revolving credit facility.  Ninety percent of the tank barges are under term contracts with large petrochemical customers, the company says . In announcing its third quarter results, Horizon Lines said that fuel prices are projected to remain at historically high levels, averaging $700 per ton in the fourth quarter and $690-$695 per ton for the full year. A statement noted: “The company expects cash flow from operations and available cash will be adequate to meet liquidity needs over the next 12 months, and projects total liquidity to approximate $40 million at the end of the current fiscal year.” Cold ironing

Meanwhile the Port of San Diego has been undergoing a consultation process to introduce cold ironing in the port at its Tenth Avenue Marine Terminal. This would allow vessels such as container ships and refrigerated cargo ships to plug in and use electrical power from  San Diego Gas & Electric, rather than run off their own diesel engines while at berth. The Port has prepared a Draft Mitigated Negative Declaration for the shore power project, in accordance with the California Environmental Quality Act. The proposed project would allow modifications necessary to install shore power equipment at three berths located at the Tenth Avenue Marine Terminal. Initially, there will only be the capability to power one vessel at a time. The Port’s main tenant at the terminal, Dole Fresh Fruit Company, recently signed a new long-term lease. Under the terms of the lease agreement, the Port and Dole agreed to work together on these infrastructure improvements. The Port is responsible for installing the

land-side shore power infrastructure and Dole will pay for the vesselside improvements. Non-compliance drops

According to Jeff Lantz, the US Coast Guard’s director of commercial regulations and standards, cases of non-compliant bunker fuel are falling. Incidents dropped from 22 in 2010 to 18 last year and amounted to eight when he made his presentation to the Singapore International Bunkering Conference (SIBCON) in October. The figures took into account the latest drop in the worldwide sulphur cap to 3.5% and the North American ECA cap of 1%. Green fuel

Cruise ships operating in the US have evidently been facing pressure due to the new environmental regulations. In research presented at a recent meeting of the American Chemical Society, scientists described development of a new fuel mixture to ease the major air pollution and cost problems facing cruise ships, oil tankers and container ships. George Harakas and colleagues from the Maine Maritime Academy and SeaChange Group have developed a fuel by adding two ingredients to low sulphur diesel to produce “Bunker Green” fuel, a member of the Eco-Hybrid family of fuels. One ingredient was glycerol, a thick, colourless liquid widely used in foods, medicines and other products. Glycerol is a by-product of biodiesel production, making it a cost-effective, carbon-neutral and domestically sustainable fuel, the developers claim. “Blending glycerol and diesel fuel is literally like trying to mix oil and water. The use of a surfactant, a class of chemicals similar to ingredients that boost the cleaning power of laundry detergents, was used to solve that problem,” the ACS explained. The inventors say that laboratory tests at the Marine Engine Testing and Emissions Laboratory at the Maine Maritime Academy demonstrated that Bunker Green fuel produced 15% lower emissions of soot-like particulates and 26% less nitrogen oxide pollutants. Harakas concluded that Bunker Green fuel could help the shipping industry reduce air pollution to meet IMO regulations, especially for older ships.

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World Bunkering Winter 2012

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GEoGraphical focus: Caribbean and Central America

Island hopping

The bunkering industry in the Caribbean and Central America is getting ready to cope with increased demand, as Sandra Speares reports.

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ith the on-going work to expand the Panama Canal – the completion of which is now scheduled for first quarter 2015 – there have been a number of investments in the region to take advantage of the expected increase in traffic. At the same time, the demands of the bunker industry in Central and South America will be expected to differ from those within the ambit of the North American ECA because of the differing demands for low sulphur fuel oil. Those outside the ECA, will be able to continue to use 3.5% sulphur content fuels for the next few years, in compliance with new environmental regulations that came into force at the beginning of this year. This may offer a degree of flexibility, but it is clear that sulphur content varies considerably for fuels sourced in Central and South America. Construction projects relating to the expansion of the Panama Canal are continuing in spite of possible delays to finalisation of the project, which was originally projected for next year. Glasgow-based marine safety consultancy, Safety at Sea, has recently completed its first port project, for the Melones Oil Terminal, (MOT) in Panama. MOT is a 2.1 million barrel-capacity tank farm facility due to open before the end of 2012 on the Islas Melones, a greenfield development around eight nautical miles from the Pacific end of the Panama Canal. Safety at Sea provided a marine safety assessment covering marine procedures and operational limits around the newly constructed terminal. The project encompassed the modelling of vessel manoeuvrability in the waters approaching the transfer and storage terminal and devising the initial stages of a Vessel Traffic Management System. Safety at Sea also prepared a plan to ensure MOT’s International Ship and Port Facility Security Code Compliance. Luis Guarin, Safety at Sea director for safety engineering, says:

World Bunkering Winter 2012

“This is the first time we have been able to make our marine safety and navigation expertise available directly to a port customer. The merger of Safety at Sea and Brookes Bell last year brought considerable master mariner and port experience to our offering. Being called in to verify the marine-related aspects of this major development confirms the way cross-fertilising in-house expertise has significantly broadened our scope.” He adds: “We combined the modelling, simulation, design and consultancy capabilities, evolved over a number of years, with in-house expertise at Brookes Bell to offer an innovative package of services that signals our ability to address port development issues at an early stage.” MOT, which will mainly cater for local bunkering requirements, is situated on an island within the approaches to the Panama Canal. As part of its traffic management review, Safety at Sea assessed how tanker and barge operations would interact with both through-Canal traffic and around anchorage sites in the area, where up to 100 vessels can be waiting at any time. Traffic management

Safety at Sea established traffic management rules and drafted an outline specification of navigational aid equipment that the terminal might require. The company also used its proprietary software to undertake simulations to better understand manoeuvring for berthing and un-berthing tankers in a range of weather conditions in both laden and ballast conditions, as well as requirements for tug and pilot boats. It used three models from its extensive library to cover a variety of ship types and operational conditions. Meanwhile Decal, whose core business is the management of coastal terminals for oil and chemical products and gas for third parties, is completing the expansion of its Taboguilla Island Terminal, located in the Pacific side of the Panama Canal. With an investment

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of $65 million, it will almost double the storage capacity to a total of 2.24 million barrels. This new expansion received a first cargo with 60,000 barrels of LSFO early in November, marking the beginning of operations in the new facilities, which will allow handling heavier products, improve the pump loading rates and increase the barges loading capacity from the present two to a maximum of four at a time, Decal says. Ventrin Petroleum is also understood to be supplying low sulphur fuel through its Trinidad base which meets new ECA requirements. Bridge building

Meanwhhile, the construction contract to build a bridge on the Atlantic side of the canal was awarded to Vinci Construction Grands Projets in October at a cost of just under $366 million. Aside from refinery projects in the US, Valero subsidiary Valero Refining Company Aruba has announced plans to convert its Aruba refinery to a refined products terminal. “We believe that Aruba has the assets to compete as a world-scale crude and refined products terminal,” said Valero chairman and chief executive Bill Klesse. “With both deepwater berths and smaller berths, the terminal will have the flexibility to load the very largest crude ships. In addition, the scale and mixture of tankage will permit commercially attractive storage opportunities for our customers. Aruba’s proximity to growing markets and its business-friendly political environment make it an ideal location for our new terminal operations.” Terminal activities will, however, require a considerably smaller workforce. The reorganisation and reduction in workforce is expected to be complete before the end of the year. Valero will continue to supply gasoline, diesel and fuel oil to the island, as well as engage in third-party terminal services. Further investment in Aruba with

facility improvements and dock and tankage upgrades is planned, the company says. Valero suspended refining operations at the plant in March and has maintained the refinery in a state that would allow a restart if Valero is successful in finding an alternative for the refinery prior to the transition to terminal operations “We will continue to work with Prime Minister Eman and his government in this effort,” Klesse said. “Our discussions with interested parties, including those facilitated by the government of Aruba, will continue and, if successful, may result in the suspension of the workforce reduction. We greatly appreciate the continued efforts and support from the prime minister and his government.” The Nevis Island administration, meanwhile, has been discussing plans with Canadian Global Investment on a C$400 million fuel storage facility on the Caribbean island. Discussions have been ongoing since March this year. If the fuel storage facility gets the green light after the environmental impact assessment has taken place, it is expected to create 200 to 300 jobs in the construction phase and permanent jobs for around 150. Canadian Global has said that the new facility should reduce energy and transportation costs. The company has the rights to the Pembroke Estates land in Nevis where the facility will be located. American Tank and Vessel are the Canadian firm’s partner to build the tank storage facility. Residents of the Caribbean island of Nevis raised concerns about the potential for fuel spills at a public meeting on the proposed fuel storage facility to be built on the island. The facility will consist of two six million barrel storage tanks on 101 acres of land. Canadian Global is also understood to be considering introducing LNG on the island. Construction of the new facility will begin once the necessary approvals have been granted.

Melones Oil Terminal, Panama

World Bunkering Winter 2012

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Overcoming the financial, practical & technical inhibitors to LNG fuelled shipping success 18 - 21 February 2013

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• Uncover critical intelligence on the keys to commercial success from pioneering early movers such as G.C.M. Deen Shipping, Hansa Shipping and Reederei Harmstorf

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Pre Event Workshops: 18 February 2013 A) Early Adopters Practical Workshop: Developing And Maximising An “Early Mover” Advantage B) Late Adopters Practical Workshop: Developing A Business Case And Time Frame For Adoption Of LNG Fuelled Shipping

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Krzysztof Kozdron Managing Director Schulte Marine Concepts

Jan Oivind Svardal Vice President, Project Development Grieg Shipping AS

Peter Blomberg Director, Special Projects Skangass AS

Marcel Tijhuis Senior Business Developer Gasunie

Wolfgang Hintzsche Marine Director German Shipowners’ Association

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GEoGraphical focus: south america

Low riders

Because South American countries are outside the North American emission control area, availability of low sulphur fuels has been variable across the region, as Sandra Speares reports.

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he ability to provide low sulphur products in South America and, in particular, key markets like Brazil and the purity of those bunker supplies, have been attracting a lot of attention. As with other markets, blending in order to meet low sulphur requirements to supply the North American emission control area (ECA) have been an issue, with concerns about quality of the components. Vigilance, not to mention due diligence, has become an increasingly important feature of client/supplier relations. The UK P&I Club’s latest Risk Focus bulletin highlights the issue of sudden loss of power, a problem highlighted by incidents during and after the switching to lower sulphur fuels that are now mandated in certain coastal regions. In the bulletin, the club highlights causes of sudden loss of power and proposes mitigating procedures that ships’ crew should adopt. “There is additionally some evidence that compliance with the low sulphur fuel regulations and changing from one grade of fuel to another may have exacerbated these problems, “the Club warned. As with other areas of the globe, the quality of cutter stock used in order to comply with ISO standards is just one of the problems with poor-quality components likely to lead to the presence of catalytic fines, and consequent engine damage and insurance issues. A number of organisations, including FOBAS and ExxonMobil subsidiary IMT Marine Services, have warned of the dangers of cat fines, instances of which appear to be on the increase. There have also been concerns about whether younger seafarers worldwide know enough about fuel handling, quality and bunkering procedures. As far as South America is concerned, recent reports suggest that Chile may be one of the countries in the region that has the highest average level of cat fines.

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While South American countries are outside the ECA, average sulphur levels in fuel vary widely across the region, with press reports that Argentina comes out on top with an average sulphur content of 0.54% – well below the ECA level. Company moves

OW Bunker launched a new operation in Brazil last year as part of a strategy that has involved developing the Panamian and Uruquay markets for physical operations. Chile is also one of the South American markets where OW has a presence. Meanwhile, Aegean’s memorandum of understanding signed earlier this year means not only that the company can access the Chinese market, but China Changjiang Bunker (Sinopec) a Chinese state-owned enterprise jointly owned by SINOPEC. And SINOTRANS & CSC can access Aegean’s international network, including Central and South America. Under the terms of the agreement, CCBC will utilise its position as one of China’s largest bunkering companies to provide comprehensive marine fuel services on behalf of Aegean’s customers in strategic Chinese ports, including all Changjiang River ports and certain coastal ports. Aegean will be responsible for the supply and delivery of marine fuels to CCBC’s customers in Aegean’s network, currently covering 19 countries throughout North America, South America, Central America, Europe, Africa and the Middle East. Bunkers International along with its joint venture partners Australian bunkering and Vanoil have, meanwhile, launched a new double-hulled barge, Bocas Del Carare, in the port of Buena Ventura, Colombia. “Buena Ventura is Colombia’s largest volume port, but it has long suffered from the lack of bunker barges,” said John Canal, CEO of Bunkers International. The Bocas Del Carare has a 1000 tonne capacity. When we combine it with our other two barges of 650 tonne and

400 tonne, we now have the capacity to deliver in higher volumes to vessels calling in Buena Ventura that are going trans-Asia and to North America.” The new barge has dual product capacity and supports both HSFO and LSFO. The Bocas Del Carare construction was completed earlier this year and the barge is fully licensed to deliver in Buena Ventura. Bocas Del Carare already in service. Bunkers International has also introduced IFO 380 cst LSFO, with a typical 0.85 – 0.90 max Sulphur in Buena Ventura. The product has a viscosity of 380 cst, low metals, and a good CCAI. The company says it expects this LSFO “to be competitive with all West Coast options”. “We are very excited to be able to deliver this product in volume to help meet 2012 ECA requirements. This great new product is not only very low sulphur, but also meets all other specifications of ISO 8217: 2005 (E) and 2010, providing a high-quality product with a viscosity more in line with what most vessels are set up to use,” Canal added. GAC, meanwhile, has been expanding its presence in Brazil with the opening of a new office at the Brazilian port of Santos. It is the third office in Brazil, joining bases with Rio de Janeiro and Sao Paulo. Santos is South America’s busiest port, ranking 39th worldwide in terms of container traffic, and can accommodate up to 50 vessels simultaneously. Supplying bunkers is one of the services GAC provides through its Brazilian network. “The opening of GAC Santos clearly shows that we are well on track as strong players in this market,” says Rodrigo Demarco, GAC Brazil’s managing director. “At all three Brazilian offices, we have teams of seasoned business veterans with a wealth of experience and expertise, combined with the reach and resources of more than 300 GAC offices around the world. That means our customers can rest assured that we can deliver their strategy locally and globally.

Santosd is South America’s busiest port

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World Bunkering Winter 2012


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GEoGraphical focus: africa

Looking ahead – with optimism Chair of IBIA’s Southern African branch’s Executive Committee Shanaaz Bennett and fellow member Haydn Lockhart Barker report on the progress made by the branch in the past year.

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ver the past year, our Executive Committee has consisted of nine members. They represent a cross section of players in the bunker industry, ranging from an oil company, bunker traders, a maritime lawyer and a barge operator. Despite the many challenges faced by the shipping industry globally, which also affect Southern Africa, we remain optimistic. Our focus is certainly on “Looking Ahead”. There is no doubt that this has been a challenging year. This applies to the activities of both IBIA Southern Africa and the regional bunker business in general. Our branch secretary Colin Nicholson was hospitalised in March for three months. This was a huge setback, with all activities coming to a halt while he recovered from his illness. We are happy to report that he is back on track. Looking back on this year, one can say that the South African bunker companies were left holding the bag from the 2011 refinery outages that lasted half the year, further eroding the confidence of shippers to refuel in South Africa. An industry study shows that, since 1997, annual Durban bunker sales have dropped from about 3.5 million tonnes a year to a disappointing low of 1.2 million tonnes in 2012. This decline has caused many to ponder the feasibility of supplying bunkers in South African ports and the local bunker industry’s future. Thirteen multinational bunker companies operate in South Africa, creating employment and contributing to the tax base of the economy. The port of Durban, already faced with the same global competitiveness challenges other ports face, chose to lift the subsidies for bunker-only calls and the knock-on effects of the decision have been astounding. Offshore bunker supply in West Africa has proliferated, while Port Louis, Mauritius, has emerged as a viable port call option.

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The decline of the South African bunker industry has had a tremendous knock-on effect on the local economy and on job creation in the country’s main port cities. The experiences of Gibraltar and Singapore show how government policies promoting bunkers-only calls can have a significant beneficial effect on their local economies, with the hotel industry, ship chandlery, ship repair, and airline industries in particular gaining from the increased business generated. In mid-November 2012, South Africa’s National Port Authority proposed a bunker levy of US$2 per tonne in Durban for 2013-2018 and this seems to have been the impetus that the local participants in the bunker industry needed to get into action. Members of IBIA Southern Africa, as part of their charter of association, have agreed to take up the challenge facing the local industry by raising the global industry’s concerns of high port calling costs and unreliability of fuel oil supply of South African ports. Undoubtedly, we as bunker players perform an increasingly important economic role in the international shipping industry and we believe strongly that South Africa should regain its place as a reliable and cost effective bunkers-only call option for global shipping companies. IBIA Southern Africa will take a leading role in lobbying the government on these issues and we will report back to the global IBIA community regularly on the progress of our efforts. With a newly appointed Exco with sub committees to fight an ongoing battle and, of course, with the full support of IBIA International, we will do our best to take on the challenges of 2013 with new energy, to create a platform for all in shipping in Africa, to bring together every aspect of this business and sit around one table to take on the many challenges we face as a industry.

World Bunkering Winter 2012


GEoGraphical focus: africa

Looking west

While South Africa’s bunker ports have seen their volumes drop dramatically, offshore West Africa appears to be undergoing a resurgence.

T

here is evidence that West Africa bunker ports have become much more active, with the likes of international supplier Aegean Marine Petroleum Network announcing earlier this year that its 6,270 dwt newbuilding Symi would be deployed to the company’s market in West Africa. However, one problem facing shipping off West Africa is piracy. The International Maritime Bureau (IMB) says piracy in the Gulf of Guinea is becoming increasingly dangerous (34 incidents from January to September 2012, up from 30 last year) and has pushed westward from Benin to neighbouring Togo. IMB says attacks are often planned, violent and aimed at stealing refined oil products that can be easily sold on the open market. To cover their tracks once the vessel is hijacked, pirates damage the communication equipment and, at times, even the navigation equipment. IMB director Pottengal Mukundan says: “Not all navies in the Gulf of Guinea have the resources to fight piracy far out at sea, so criminal gangs shift to other areas. The Nigerian Navy must be commended, however, on its reactions to a number of incidents where its presence was instrumental in rescuing vessels. It is particularly encouraging that the Nigerian authorities have managed to capture a number of pirate gangs.” Abass Atanda Ajiboye-Salami of Nigerian-based supplier SMAP Energy tells World Bunkering that he thinks the piracy situation has improved recently, due to the intervention of the Nigerian authorities. Capt Ajiboye-Salami’s company was formed one-and-a-half years ago and is a bunker broker and supplier. It currently operates one 4,000 litre capacity barge for supplying offshore. SMAP Energy is planning to acquire larger tanker capable of supplying IFO to international vessels. There are currently about 10 physical suppliers with barges in Nigeria. The key issue facing the Nigerian bunker industry, according to

World Bunkering Winter 2012

Capt Ajiboye-Salami, is the need for government to give bunkering companies allocations from refineries. Meanwhile, suppliers within Nigerian waters and at the country’s ports now have to pay a port levy, which came into force on 1 September. The levy was brought in under the country’s Marine Environment Management (Sea Protection Levy) Regulation 2012 and is seen as a way for raising funds for environmental protection projects. The levy is based on the gross tonnage of all foreign-flagged vessels, while local ships will be required to pay an annual fee. Foreign vessels are subject to a rate of US$0.10 per gt for vessels of up to 1,000 gt, $0.15 per gt up to 10,000 gt, $0.20 per gt for vessels up to 100,000 gt and $0.30 per for larger vessels.

New bunkering event

Maritime Week Africa is a brand new maritime event aimed at highlighting Africa’s increasingly prominent role in the shipping and offshore industries. This event will be launched in January 2013 in Durban, Africa’s biggest port and gateway to Africa’s east coast. Although focusing on the crucially important heavy lift and project cargo sectors bunkering issues will be prominent in the discussions. The final session will consider how African ports can become globally more competitive. It will cover innovation, funding, investment and structural development for port and terminal operators, and will take a look at how the bunker sector might be accommodated in the plans. In particular, it will look at major private terminal expansion opportunities within South Africa, Mozambique and Mauritius. For more information, visit: http://petrospot.com/ events/2013/201301_MWAfrica/profile.asp

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GEoGraphical focus: AFRICA

Building bridges

Africa’s newest port, Tanger-Med, provides a much-needed link between Africa and Europe.

A

crossroads between Africa, Europe and the Middle East at the South Bank of the Strait of Gibraltar, in front of the Mediterranean inbound shipping lane, the new port of Tanger-Med is situated between the old port of Tangiers and Ceuta. Its exceptional geographical location, at the meeting point of the Mediterranean and the Atlantic, provides a direct access to the major east-west sea routes with zero deviation. With just 14km separating Africa and Europe, Tanger-Med port has become a sea bridge between the two continents. This strategic location holds the promise that its two anchorage areas combined, Alcazar and Fnideq, are set to emerge as a major bunkering hub for shipping passing through Strait of Gibraltar. With a capacity of three million containers, which will be increased to eight million by 2016, this deepwater port is designed to accommodate the latest generation of container ships, making it possible to serve the global activity of trans-shipment and receive the traffic connected with import-export activities. In 2010, the Tanger-Med port complex, which aims to become the largest trans-shipment platform in the Mediterranean, handled overall traffic of 23 million tonnes, with over 2m TEU. Commercial activity started in July 2007 with the opening of Tanger-Med 1, the first container terminal. Since then, the ro-ro terminal, bulk terminal, car carrier terminal and oil terminal have come into full operation Of particular relevance to the port’s bunkering aspirations, an oil tank farm of 220,000m3, designed to international standards, is dedicated to marine fuels and marine gasoil. This facility has been built specifically to meet demand for bunkers. Two oil jetties, one capable of taking vessels of up to 120,000 dwt and the other vessels of up to 40,000 dwt, are available for the importing of product

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and the loading of bunker barges. The whole operation works on a 24/7 basis to deliver bunkers to ISO 8217: 2010. The terminal can accept fuels with a viscosity up to 600/700cts in and out, Independent Inspectors are available. Around 100,000 ships a year pass through the Strait of Gibraltar, but only about 20,000 are call at the nearby ports for bunkers. Not taking into consideration the ferries, the local ships and the vessels already calling, more than 40,000 vessels crossing the strait can call the Tanger-Med anchorage areas for bunkers, which is “zero deviation” to the shipping lane. Tanger-Med’s anchorage areas of Tanger-Med are monitored by the Tanger-Med authority and have plenty of space available, good holding ground, no congestion and require zero deviation for vessels inbound to the Mediterranean. The available oil storage is more than capable of supporting the expected, high demand. The investment in Tanger-Med and its bunkering facilities has been considerable and the various participants in the project believe that the shipping industry will use the new bunkering hub. Over 80% of the supply of bunkers in the Strait of Gibralatr is already undertaken at anchorage by barge so the Tanger-Med anchorages will not require any operational change and will offer shipowners a real alternative. To encourage bunkering, crew changes and similar short calls, the Tanger-Med Port Authority does not charge for short calls.. Since 2009, global bunker supplier Aegean Marine Petroleum has supplied bunkers by barge within the port and at the two anchorages. High-sulphur fuels and low-sulphur fuels are available to supply ships going to the European ECA area or the US ECA, with the quantity of low sulphur sold increasing every year.

World Bunkering Winter 2012


Review: Sibcon

Success in Singapore The bi-annual Sibcon event once again pulled in speakers, delegates and exhibitors from around the world.

A

s with its predecessors, the 17th Singapore International Bunkering Conference and Exhibition must be judged a success on any reasonable criteria. The attendance was certainly impressive, with something like 1,600 delegates. Like the previous, 2010 Sibcon, this year’s event was at Resorts World on Sentosa Island and the venue was one of the keys to the event’s success, more than capable of handling the numbers in the conference hall and with a substantial exhibition. Maritime Singapore also performed well, with several initiatives that are setting the pace globally. A welcome address by the minister for transport Lui Tuck Yew focused on two Maritime and Port Authority (MPA) of Singapore initiatives. It is introducing an information sheet on licensed bunker suppliers and an industry guide for the use of mass flow metering systems. Perhaps of equal importance were two other MPA moves mentioned by the minister: a study on frothed bunkers and a hotline to help manage bunker disputes. Lui said that MPA would publish an information sheet on licensed bunker suppliers in the Port of Singapore in its efforts to allow shipowners to make more informed decisions in appointing bunker suppliers. This information sheet is intended to enhance transparency across the bunkering supply chain by providing details on sales performance, technical performance and other value-added propositions. The other initiative was an industry guide for the use of mass flow metering systems. The MPA hopes to encourage more bunker players to adopt mass flow meters so as to promote the development of a Singapore Standard for Mass Flow Metering System in the future. That was a theme explored in depth on the final afternoon when the chairman of the Technical Committee for Bunkering Working Group convenor Seah Khen Hee moderated a Thursday afternoon session specifically on flow meters. That session highlighted not only the considerable movement that has taken place to towards market acceptance of flow meters

World Bunkering Winter 2012

but also the considerable amount of effort that needs to go into a switch to flowmeters. Mr Seah stressed that using flowmeters is not a case of ‘plug in and play’. But he also made clear the advantages of a switch to the use of flowmeters, primarily the certainty of having accurate quantity measurements. It was mentioned during the discussion that, during recent typical stem test conventional measuring and using a flow meter resulted in a discrepancy of less than two tonnes. As the use of flow meters increases, the number of quantity disputes should decrease greatly. On the other hand, sulphur content and other quality issues are coming to the fore now could well spur an increase in disputes. So the decision by MPA to establish a bunkering assistance hotline has got to be good for the port’s reputation. Cappuccino effect

Also on the subject of reputation, the move to ask the National Metrology Centre to conduct an in-depth study on frothed bunkers (also commonly referred to as the ‘cappuccino effect’), was timely. While everybody in the industry has heard of cappuccino bunkers, there has been little hard evidence of it happening. In May, however, mutual liability insurer the UK P&I Club issued a circular saying it had come to its attention that “some bunker deliveries at Singapore have contained excessive amounts of air”. As a result, the quantity of fuel delivered and received was significantly overstated. That circular caused more than a little controversy. Now commissioning an independent scientific study on frothing shows that MPA is prepared to grasp the nettle on this issue rather leave it to fester. It is worth saying, too, though, that if frothed bunkers are a real problem, there is no reason to believe that the issue is particularly a Singapore one. A number of industry insiders made the point during Sibcon that the possibility of having disputes over frothing could be greatly reduced if tank stripping, during which some air will get sucked in, should either be avoided or the stem stopped and ullages checked before stripping takes place.

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Sibcon was also used for MPA’s third Green Pledge signing ceremony, with 13 additional companies signing and bringing to a total of 40 the number of organisations that have promised to promote “clean and green shipping in Singapore”. This is part of the overall Maritime Singapore Green Initiative, which is bringing in a number of environmental measures. The Green Ship Programme targets Singapore-flagged ships and encourages the use of efficient ship designs that reduce fuel consumption and carbon dioxide emissions. So far 28 ships have qualified. The Green Port Programme rewards ships that use type-approved abatement/scrubber technology, or bunkers with a sulphur content of less than 1%, with a 15% cut in port dues. By the end of last month, a total of 369 vessels had registered in the programme and 742 vessel calls had been charged the reduced port dues.

By contrast, the ECA limits will cost $1.95 million a vessel, a figure only overtaken by the expense of the Ballast Water Management (BMW) Convention, put by Capt Subramanian at $2.2 million a vessel. The use of LNG as an alternative to distillate was given considerable prominence. On the first day, Keppel Singmarine’s senior general manager and director Tan Cheng Hui outlined the advanced design work Keppel was undertaking on LNG-powered tugs and bunker barges. The after lunch slot on the second day was given over to a discussion session on “LNG – revolution in waiting?” Again, there was considerable enthusiasm about the prospects for LNG. Among the classification societies Det Norske Veritas (DNV) and Germanischer Lloyd are in the forefront of LNG development, and that was apparent at Sibcon.

Staying ahead

Fuel trends

While other ports around the world have similar schemes, highlighting Singapore’s last week certainly helped promote the general impression that Singapore is determined to stay ahead in the bunkering business. There were many issues covered during the two-days, but the issue of the impending 0.10% sulphur limit within the Emission Control Areas from 1 January 2015 was never far away The likely impact of the new limit was emphasised by the Vice President Fleet Management of major Malaysian owner MISC, Rajalingam Subramanian. He looked at the various new pieces of legislation affecting shipping. ILO’s Maritime Labour Convention (MLC) 2006 will cost about US$40,000 a vessel; the Manila Amendments (2010) to the International Convention on Standards of Training, Certification and Watch-keeping for Seafarers, $1200 for officers and $800/ratings; and the Energy Efficiency Design Index and Ship Energy Efficiency Management Plan (SEEMP) $3,500 a vessel.

Khorshed Alam, vice president GL-Futureship, gave an in-depth presentation on Fuel Consumption Trends beyond 2015. He made it clear that there were many uncertainties and that scrubbers were likely to have a role, but overall he clearly expected LNG use to increase and to even see LNG retrofits of vessels operating primarily within ECAs. It fell to Lloyd’s Register’s (LR) senior marine market analyst Latifat Ajala to present a more cautious view, stressing the challenges of establishing a global ING infrastructure. (An LR study on LNG is reported in detail on page 25.) Returning to current challenges, Sibcon finished, as has long been the practice, with an oil response exercise. This involved conference participants going out to sea for a half-day demonstration on preventing and managing oil spills. As ever, Sibcon was much more than just a technical meeting. It was an opportunity both for networking and to renew old friendships.

© Maritime and Port Authority of Singapore After the the conference discussions were over, Sibcon delegates had the chance to go out on the water and view Singapore’s oil spill response plans in operation

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World Bunkering Winter 2012


russian update

Rosneft takes lead in quality

David Hughes reports on an important new development.

A

Rosneft Marine-associated company has made history with a quality management initiative for the first time in the Russian bunker industry. Singapore-based Cross Keys Group, a business consulting firm for marine and energy clients, has recently completed a quality management system (QMS) for the bunker supply chain for Rosneft Marine and its affiliated company RN-Bunker. Cross Keys Group acted as an advisory partner to the companies and initiated the process two years ago to ensure that Rosneft’s QMS for the bunker supply chain is accurately drafted, documented, managed and implemented across the supply chain network. To meet the global best practice requirements for bunker supply in Russia, RN-Bunker signed an agreement for a QMS project in order to accredit the QMS for the bunker supply chain after implementing and running the system in all its bunker supply processes for six months.

Cross Keys Group director Oleg Micevic said: “RN-Bunker’s vision of introducing seamless standardised procedures in Russian ports will deliver a relationship of trust with bunker industry stakeholders, ensuring compliant, reliable and consistent bunker deliveries. “We are delighted to be working with RN-Bunker, Rosneft Marine, Lloyd’s Register FOBAS and Saybolt on the QMS for the bunker supply chain project. We are pleased to have facilitated our expertise in managing and bringing together diverse companies to lay the stepping-stone of the first national quality management standard in Russia.” With the growing demand of compliant high quality fuel, RN-Bunker says that it is looking forward to expanding its core strengths in new areas through operational excellence in bunker supply activities. The company believes that the QMS for its supply chain will provide greater assurance to bunker buyers of the reliability and quality of bunkering services in Russia. It will also enable them to better monitor and manage the quality of their bunker products.

Consistent control

Rosneft Marine implemented the QMS across the RN-Bunker’s Russian supply chain network to establish a consistent control over the quality of bunker fuel supply. Lloyd’s Register FOBAS, Singapore, provided technical advisory services to RN-Bunker to help it ensure a formal, structured process in carrying out bunkering activities, taking into consideration safety, health and environmental issues, as well as proposing improvements to procedures and requirements for bunker transfer in a quality managed supply chain. In addition, major inspection, monitoring, verification and analytical services company Saybolt provided accurate and speedy on-site inspections of relevant documents and procedures in the port of Nakhodka, Russia, to facilitate the QMS process locally.

World Bunkering Winter 2012

Standardised platform

A RN-Bunker spokesperson said: “By implementing QMS for the bunker supply chain in Russia, we aim to set up a standardised platform of transparency and accountability throughout the entire bunkering process, from procurement to delivery. RN-Bunker intends to further strengthen the trust and confidence of its shareholders across the global arena.” He added: “Lloyd’s Register FOBAS expertise in implementing the QMS for the bunker supply chain with suppliers in other parts of the world will prove to be vital in mitigating quality and quantity delivery risks to our customers. “With the prices of marine fuel continuing to soar, tightening shipping regulations and operational challenges, the future of this sector

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Tranzit DV Trade House Co., LTD 13, Uborevicha street, Vladivostok, 690091, Russia Tel: +7 (423) 249-11-99 Fax: +7 (423) 243-29-94 E-mail: group@tranzitdv.ru Marine Logistics Korea LTD. #1821 Gwanghwamun Officia, Sinmunno 1-ga, Jongno-gu, Seoul, Korea. zip code (110-999). Tel: 02-722-1123 02-722-1108 02-722-1136 Fax: 02-722-1160 Mobile: 01096906878 Skype: flex_19812. Yahoo ID: mllkno1 E-mail: lee@tranzitdv.ru Web: www.eng.tranzitdv.ru Marine Logistics Co., Ltd Office No. 18B-18F, One Capital Place, No. 18 Luard Road, Wanchai, Hong Kong Tel: (852) 2865-0381, Fax: (852) 2865-0189 E-mail: marine.logistics@gmail.com

Full range of premium quality bunker fuel For every type of engine Fuel oil compliant with ISO 8217:2010 Client-oriented service and flexible schemes of cooperation Own bunkering fleet

www.eng.tranzitdv.ru


russian update

depends on how suppliers evaluate and overcome these roadblocks and turn them into business opportunities.” The Lloyd’s Register FOBAS consultancy involvement in the QMS was led by Douglas Raitt, Global FOBAS Manager, based in Singapore. Raitt said: “RN-Bunker’s efforts to establish an unbroken chain of control over the quality of bunker fuel supplied in its ports of operation holds a bright future. RN Bunker’s move to synergise and roll out standard traceable and well-documented bunker operations across the board will further enhance the quality of its bunker supply and give its customers greater assurance. “The key to managing bunker supplies is having a well-documented process: a process that is clear, accountable and professional, providing buyers with the confidence that they need when procuring fuel from a marine fuel supplier.“ Saybolt Russia’s deputy director Eastern Branch Andrey Khaytarov said: “We are delighted to be the on-site surveyor for RN-Bunker in this project. This landmark initiative holds a promising future for the Russian bunkering market in times to come. RN–Bunker and Saybolt are both committed to demonstrate the highest level of services, which will further elevate the confidence of customers with an assurance of reliability and qualDouglas Raitt ity in the Russian bunkering services.”

Rosneft snaps up Murmansk terminal

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osneft has bought a residual fuel terminal in Murmansk from United Construction Corporation (UCC), Russian newspaper Commersant Daily has reported. The terminal is located within Ship Repair Factory No. 35’s site. Commersant Daily estimates the purchase price to be about $30 million. The terminal was built about seven years ago, but lost money and operations stopped. The seller has already proposed several scenarios for the further development of the facility. The main proposal that has been put forward is to use a large tanker for alongside storage and then transfer to smaller vessels. Increase in throughput

Grace Grazul, Sales Manager (Rosneft Marine UK) Leonid P. Moiseev, Ambassador Extraordinary and Plenipotentiary of the Russian Federation to the Republic of Singapore Vladimir Brezhnev, Director (Rosneft Marine UK) Yuri Khaitarov, Executive Director (Rosneft Marine, Beijing office) Lu Sha, Sales Manager (Rosneft Marine, Beijing office)

World Bunkering Winter 2012

Another possible scenario is the construction of a new 500,000 tonne oil storage facility. The proposed Rb1.5 million investment would increase annual throughput to between three million and six million tonnes by 2013-2015, and subsequently to 18 million tonnes. Rosneft already owns other assets in Murmansk port. In 1996 the large tanker Belokamenka was chartered and used as a storage facility in one of ice-free harbours in Kola Bay. This vessel was not used to its full capacity. In 2010 only 7.5 million tonnes were handled against a theoretical maximum throughput of about 12 million tonnes. Speculation

The vessel’s charter will end in 2016 and some analysts believe this was why Rosneft bought the terminal. There is also speculation that Rosneft will use the Murmansk terminal as a base for launching new Arctic projects. The other obvious use is for heavy fuel oil exports.

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Forum Ltd. Bunker trader: Aleksey Miloradov Phone: +7 (812) 449-65-91 Mobile: +7 (921) 757-11-33 E-mail: trade@forumbunkering.ru Yahoo ID: aleksey.miloradov www.forumbunkering.ru

Physical supplier of LSFO, HSFO and MGO in the port of Saint-Petersburg


russian update

Steering through troubled waters

Olga Bogacheva

Olga Bogacheva talks to Vitaliy Kovalev, president of the Russian Association of Marine and River Bunkering Suppliers, about at impending problems for the Russian bunker industry with new regulations coming into force in 2015 – and possible solutions.

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he Russian Association of Marine and River Bunkering Suppliers (SRO) has written to Russia’s prime minister, Dmitriy Medvedev about the negative impact of MARPOL 73/78 restrictions on Russia’s shipping industry, ports and bunkering industry after new regulations come into force in 2015. The appeal to Medvedev says that in the view of industry experts, Russia’s oil industry will not be able to produce a sufficient amount of low-sulphur residual fuel to meet the market demand. The letter says that switching the country’s fleet distillate fuel is too expensive. Analysts’ forecasts predict a sharp drop in bunkering services in Russian ports in 2015, up to 40% year on year, which, SRO warns, will hit trade hard. To prevent the collapse of the bunker industry, the Association has proposed that the government establish special working groups to recommend effective measures by the country federal government, particularly concerning the construction of LNG terminals and measures to ensure equal access to port infrastructure for bunker suppliers. Meanwhile, a deputy in Russia’s parliament, the Duma, has introduced amendments to the Tax Code of the Russian Federation to the Duma Committee for Budget and Taxes. Andrey Kolesnik has proposed

World Bunkering Winter 2012

exemption from taxation for new sea-going, short sea and inland waterways vessels. The proposed amendments are intended to reduce costs for companies investing in the modernisation of their fleet. According to its proposer, the initiative is aimed at helping the country’s shipowners while Russia becomes integrated into the global economy. With these issues in mind, I recently interviewed Vitaliy Kovale, president of the Russian Association of Marine and River Bunkering Suppliers, who was behind the recent appeal to Medvedev. How many bunkering companies operate at the Russian market now? Are there any problems with availability of fuel? Is demand and supply of bunkers balanced? Vitaliy Kovalev

VK: There are about 60 bunkering companies in Russia today. Small companies emerge every summer. They work during the season and make just several deliveries. Currently, there is no shortage in oil products. Demand and supply are well balanced. Sales growth depends on port location and the local market. In the north-west of Russia, for example, bunkering sales are growing by about 10% a year. In 2011, Far Eastern ports achieved record-breaking growth, up four-fold on 2010.

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Are independent suppliers capable to compete with vertically integrated oil companies (VIOC)?

VK: The bunker and road fuel markets are similar in this respect. Despite efforts made by the Russian government to strengthen competition and ensure equal availability of resources by expanding of exchange and electronic trade the companies with their own oil production and processing facilities still enjoy advantages in the market. VIOCs possess huge financial and oil resources and efficient management. The market leaders today are Gaspromneft Marine Bunker and LUKOIL Bunker. RN-Bunker is chasing the leaders while independent operators grow slowly. The independents form their own supply chains and have achieved significant shares at several ports. What is the ratio of residual to diesel consumption in Russia? Will new environmental restrictions change it in the mid-term?

VK: The total Russian market including inland waterways was about 9 million tonnes in 2011. Of that, 70% was residual, the remaining 30% diesel fuel. Most of the residual supplied is high-sulphur fuel (up

St Petersburg. Is there a bright future for Russian bunkering?

World Bunkering Winter 2012

to 3.5%) due to market demand. But Baltic ports (St Petersburg, UstLuga, Vysotsk, Primorsk and Kaliningrad) differ in this respect. Here, a significant amount of low-sulphur residual (sulphur content below 1.0%) is supplied, up to 70% of the total sales. A certain amount of low-sulphur fuel is also supplied in the Far East. It is important to note that, currently, low-sulphur residual is not manufactured in significant volumes in Russia. There is no evidence that the situation will change in the medium term. An expensive technique, hydro-treating, is needed to change the product quality. It is more practical to produce diesel fuel from straight-run residual with normal sulphur content. But it is still unclear if shipowners are ready to buy it. Currently, the diesel fuel is more expensive than residual, and diesel’s price will increase due to growing demand. It is difficult to predict future residual-diesel ratio now because we can’t estimate the total output of light fuel after 2015 and consumption of motor vehicles and other industries. There are three possible scenarios of world bunkering market development after 2015: switching to distillates (gas oil and diesel fuel); removal of engine emissions with special equipment (scrubbers); and switching to LNG. What is your opinion about the probability of those scenarios?

VK: The first scenario – switching to distillates – demands minimal investment, but increases costs for shipowners due to high prices. A tonne of diesel costs approximately $300 more than residual. It should be also taken in consideration that, in future, restrictions will also include nitrogen content in fuel. Thus, the shipowner will soon be forced to spend additional funds to modernise fuel systems shortly. As to the second choice – installing scrubbers – it is still unclear if scrubbers are able to solve the problem. On one hand, those systems allow shipowners to use residual with any sulphur content and treat emissions to meet MARPOL requirements. However, on the other hand, the performance of equipment offered on the market today still falls short of what is needed.

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NAYADA 13 years of safety, 

quality and reliability

Flat 5, 3A, Portovaya Street, Nakhodka Russia, 692900 Tel/Fax: +7 4236 629779, 679113 E-mail: bunker@nayada.biz, nayada@nayada.biz Website: www.nayada.biz

VLADIVOSTOK BRANCH: Room 412, 10a, Okeanskiy Prospect Vladivostok Russia,690091 Tel/Fax: +7 423 230 2606 E-mail:nayada@vl.ru, vl@nayada.biz


russian update

Available systems are expensive (2 to 9 million euros each) and bulky. The weight of one scrubber is about 500 tonnes. Its installation reduces vessel net loading capacity and profitability. The additional weight may also affect vessel stability. Scrubbers are not appropriate for certain ship types including passenger fleet. But the technologies are continually improving and it is possible that suitable scrubber systems appear on the market soon. Demand and prices for bunkering fuel depend on ship owners; suppliers can only follow their decisions. It is most likely that the following will happen: first, demand for diesel fuel will grow along with further development of emission treatment technologies and construction of LNG supply infrastructure. Later, after 2025, diesel consumption will gradually reduce, with the shipping industry switching to LNG and scrubbers. It is hard to predict changes in transportation costs after 2025, but I can quote one of the speakers at our annual Forum in Saint Petersburg: the difference between residual and diesel fuel costs is about $3 million annually for a medium-size vessel. That is serious. LNG is already being used as bunkering fuel in certain areas. Is that likely in Russia?

VK: The situation is quite favourable as far as price are concerned. We estimate that the LNG price for domestic use (about $180 per tonne) is acceptable to shipowners. But the industry is still not ready to supply LNG. The infrastructure is not in place. Any development of LNG bunkering services in Russia in the medium-term future looks unlikely. There are no coastal LNG storage tanks or facilities for pumping LNG to vessels. Legal requirements on the location of such facilities are extremely strict. LNG bunkering will have to take place at special berths and so cannot take place during cargo operations. This means bunkering will considerably to in-port time. And there are no special LNG berths yet. There are also no LNG bunkering vessels. The list of equipment certified for bunkering operations doesn’t include a single pump type suitable for LNG pumping. The cost of necessary ship modernisation and operational risks are very high. We can’t even estimate how much the necessary LNG infrastructure will cost. This means that bunkering companies can’t afford to expand their services and offer LNG supplies. The only exception may be the bunkering arms of VIOCs, if they can get financing from their parent companies. The Association of Russian Marine and River Bunkering Suppliers recently appealed to Russia’s prime minister, Dmitriy Medvedev, to initiate measures stimulating bunkering industry development. What were you asking for?

World Bunkering Winter 2012

VK: “Problem-2015” was the key discussion at our annual Petersburg Forum in last June. Professionals came to the conclusion that state measures are essential to prevent a 40% drop of bunkering sales and eliminate the danger of complete collapse of the industry which employs about 100,000 people. Our Forum adopted a resolution on this problem to be presented to Dmitriy Medvedev. We also prepared analytical data and proposed measures to avoid a negative impact in future. The bunkering business contributes 0.3-0.5% to Russian gross domestic product. And it is even more important – cheap and highquality fuel is one of the main factors making Russian ports attractive from an economical point of view. If nothing is done, the whole Russian shipping industry will suffer. I should mention that certain preconditions exist already. For example, technical regulations “Requirements to motor and A-gas, diesel and marine fuel, fuel for jet engines and residual”, coming into force on 1 January 2013, don’t include sulphur content restrictions (0.1% from 2015) for marine fuel intended for consumption in the ECAs. The Russian Transport Ministry has made several attempts to adopt amendments to this regulations to meet MARPOL 73/78 requirements, but has not succeeded so far. These amendments are a part of international regulations and have to be approved by all countries – members of the Commonwealth of Independent States (CIS) Custom Union. Kazakhstan and Belarus have no ports in the Baltic and Northern basins and so are not interested in approving sulphur content limits for marine fuel. Our association is a self-regulated organisation representing the whole industry and we have to become involved in this process. What measures have you proposed?

VK: The first thing is that a working group should be formed by the Russian government to work out measures to prevent the decline of the shipping industry in 2015. This group should: • Work on laws and technical regulations guiding LNG handling in Russian ports • Propose measures facilitating modernisation of Russian vessels for LNG use and modernisation of tankers intended for LNG supplies • Facilitate construction of LNG storage port terminals and other infrastructure and provide equal access to those facilities to all bunkering market operators • Provide all operators of bunkering market equal access to marine terminals owned by Transnefteproduct after 2015 to ensure a reduction of costs of light fuel (including diesel fuel). We hope our initiatives will attract attention of our government.

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Offices in Rostov-on-Don, Taganrog, Yeisk and port Kavkaz Eight of own bunkering barges complying with loading and supply regulations Our own storage facilities, giving flexible bunker delivery options Our own terminal at the port Temryuk, providing safe fuel loading on tankers of up to 5000 DWTs Fuel deliveries compliant with MARPOL and SOLAS regulations.

For more information, contact: Rostov-on-Don Tel: +7 (863) 242-44-86 +7 (863) 242-44-87 +7 (863) 242-44-88 E-mail: rostov@ybunker.com Yeisk Tel: +7 (86132) 2-60-64 E-mail:yeisk@ybunker.com Port Kavkaz Tel: + 7 (86148) 4-43-47 E-mail: kavkaz@ybunker.com

www.ybunker.com


News round-up All the latest reports from Russia. Olya port to be key hub for ME and Asia

The first meeting of a Russian-Iranian working group on financial and banking co-operation was held in Astrakhan in September. The group focused on the modernisation of Astrakhan region’s Olya commercial port due to its key position on international trading routes. Olya lies at the Caspian Sea crossroads of a north-south corridor connecting Europe with Central Asia and an east-west corridor connecting Central Asia and China with Europe. Olya port is to be reconstructed in two stages. First, a new cargo handling area will be built near Olya town. Construction of a second cargo handling area will begin later, some 4km to the south. The real development of Olya port began in 2006 after privatisation. The port opened in 1997, but only had three berths. Under private management, the number of berths has increased to 14. The latest project is mainly aimed at attracting new cargo traffic and developing the infrastructure to handle cargo currently transported on other routes. Construction of a new ferry terminal is almost complete. When the terminal is operational, Olya will be the only port offering a ferry service to Iran and Turkmenistan. Ferry services to Azerbaijan and Kazakhstan are expected to be announced soon. The terminal can handle unit loads, packaged cargo and containers. Olya also has a grain terminal with an annual capacity of 500,000 tonnes and construction of a sunflower oil terminal is underway. There will be tanks for the accumulation of shipload lots equipped with heating systems to ensure year-round operations. Construction of a new complex to accept bulk fertilisers and package them prior to export to Iran is underway. Construction of a new bulk terminal, with an annual capacity of 750,000 tonnes, will begin in 2013. Coke, ore and cast iron will be handled there. The first stage of this terminal is expected to start operations at the end of 2014. LNG bunkering initiative

Gasprom deputy chairman Alexander Medvedev and Summa Group president Alexander Vinokurov have signed a memorandum of understanding on LNG bunkering for seagoing ships, including the Summa Group’s fleet. Initially, Gasprom and Summa Group are looking at co-operating in North and Baltic Seas. As well as LNG bunkering for the Summa Group fleet, the two companies are considering infrastructure projects, in particular the construction of LNG storage facilities. This co-operation may be further expanded to the Black and Mediterranean basins and the Pacific region, where Summa Group owns terminals and operates several vessels. “Strict emission restrictions in Northern and Baltic basins coming in force in 2015 give a strong impulse to switch to alternative fuel. Natural gas meets all requirements to ship engine emissions without installation of expensive filters and offers better prices than low-sulphur fuel. Technologies for LNG vessels, LNG ship engines, for fuel storage are well-known and available. Co-operation with Summa Group provides good perspectives,” Medvedev said. “The combined efforts of Summa Group, infrastructure operator, and Gasprom, global producer of natural gas, ensure success for this

World Bunkering Winter 2012

ground-breaking project. I’m sure of its long-term positive impact on the environmental footprint of sea transportation – and not only in our country. This initiative promises to set a new industry standard,” Vinokurov said. Summa Group is a holding company with diversified activities. It manages assets in port logistics, engineering, construction, telecommunications, and oil and gas industry. The company has branches in almost 40 Russian regions and abroad, and employs more than 10,000 people. The founder and the shareholder of the company is Ziyavudin Magomedov. Ust-Luga port now one of Russia’s top five

Ust-Luga port in the Gulf of Finland doubled its turnover in the first half of 2012, compared to the corresponding period in 2011, and became one of the five top Russian ports. Oil throughput tripled to 5.9 million tonnes. Trans-shipment grew 130%, to 7.3 million tonnes, while general cargo throughput reached 662,366 tonnes, 145% up on the first half of 2011. In August, the Russian government published its draft order to expand Ust-Luga port. The document, signed by Russian prime minister Dmitriy Medvedev authorises the building of a new terminal, the infrastructure to handle 1.5 million tonnes of LNG and 2.5million tonnes of light oil and harbour support vessel base. Lukoil-Bunker increases sales

Lukoil-Bunker increased fuel sales in Saint Petersburg port by 1.5% compared to 2011, to 149,120 tonnes. 87% was heavy oil products and 13% light fuel. In addition, Lukoil-Bunker sold 64,000 tonnes of fuel in Ust-Luga port – where the market is developing rapidly – during the three summer months. Low-sulphur residual with sulphur content below 1.0% accounted for 47% of total sales. In total, Lukoil-Bunker’s sales of bunkers at the two key Baltic ports reached 213,120 tonnes during summer of 2012.

Pella shipyard in Leningrad is building a series of SKPO-100 multifunction port service vessels. The first two vessels will be completed in 2013. Entered with the Russian Maritime Register of Shipping, they will be Ice Class 3 and are intended for used for bunkering, collection of oily waste, sewage, collection of dry garbage and food waste, oil spill removal and other miscellaneous tasks.

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legal news

Caught in a Catch-22 The Detention of vessels in the Netherlands for off-spec bunkers

puts the industry in an impossible position, as Carel J H van Lynden of AKD law offices, Rotterdam, reports.

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ith the new ISO8217 specifications and compulsory lower sulphur content in fuel oils, refineries must increasingly produce “cleaner” products, for example under the 2010 ISO8217 specifications. Authorities worldwide, including those in the Netherlands, are focusing more than ever before on the environment. Upon delivery of fuel to a vessel, the physical supplier will issue a bunker delivery note (BDN) to its buyer. In respect of the sulphur content, this is a mandatory requirement under Annex VI of MARPOL. Buyers and owners will not usually burn the fuel until after the samples taken at delivery have been examined. Upon testing those samples it may appear that the fuel delivered is off-spec, because certain parameters have not been met. This means that the buyers could seek recourse against the suppliers. But could it also give rise to action against the vessel for having on board or using fuel which is not compliant with applicable standards and legislation? A distinction should be made as to whether the non-compliance relates to statutory/public law provisions, or to contractual provisions. In the case of a breach of public law, an environmental or criminal offence might be involved. So far as non-compliance with the provisions in respect of sulphur content is concerned, public law is indeed involved. It is prohibited to use fuel with a sulphur content over the maximum allowable level. Under Dutch law, this requirement has been implemented in local legislation. This legislation applies to Dutch vessels and to all other vessels while in Dutch territorial waters. An intentional breach of this legislation is a criminal offence punishable by a maximum of six years’ imprisonment and a maximum fine of euros 78,000. When

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there is no intent, the offence is punishable by a maximum of one year’s imprisonment and a maximum fine of euros 19,500. Where the accused is a company, the directors and the actual perpetrator (master, officers) are criminally liable as well. Does this mean, then, that the mere presence on board of fuel with an excessively high sulphur content is prohibited and punishable as well? Yes, it may. The import and export of “waste” is subject to a system of permits. Where MARPOL and its local implementation rules sanction its use (as opposed to the presence on board), the import or export of waste is governed by EC Regulation 1013/2006 of the European Parliament and Council. Moreover, having a fuel with an excessively high sulphur content in the bunker tanks may also be interpreted as intent to use that fuel. The vessel cannot be impounded for these reasons. But the owners, operators and/or master could be prosecuted. The fuel could be qualified as non-compliant and even as waste. In that event, the authorities, in a worst-case scenario, might also impound the fuel and require it to be discharged and processed by a waste disposal collector. Following a Dutch local court decision, in a case where a noncompliant parcel was discharged from a seagoing vessel for the purpose of being blended on land, the Dutch authorities took the view that fuel, which is off-spec in the sense of non-compliance with contractual provisions such as the ISO8217 standards, is to be considered waste. As a consequence, Dutch waste law regulations would apply. Until recently, off-spec bunkers were taken back and blended up to specification. Under the applicable Dutch legislation, however, waste may only be treated by a licensed waste collector. When there is the suspicion of a violation of the waste collect regulations,

World Bunkering Winter 2012


the relevant cargo may be impounded by the authorities; the same may apply when there is no permit to import or export waste. Although this does not constitute an impounding of the vessel, the vessel is de facto being immobilised until the parcel has been discharged by, and sold to, a waste collector. Co-operation in the delivery of such “waste” to a non-licensed receiver is also a criminal offence for which the owner/operator of the vessel is at risk of being prosecuted. Buyers and owners are caught in a Catch-22 situation. When supplied fuel appears to have an excessively high sulphur content, it cannot simply be given back to the supplier or blended on board, for fear of it (and therefore the vessel) being impounded. Nor can it be used for fear of breach of MARPOL regulations and neither can it be transported out of the country for blending elsewhere for fear of carrying it without a permit. All of this revolves around the interpretation of “waste“. A Dutch court has now asked the EU court to decide when a product is to be considered waste. Let us hope that the EU court makes a more pragmatic and realistic distinction between a product that is waste and a product that is not fully compliant with specification, but which nevertheless gives rise to a situation that can be easily rectified.

Costly error

A shipowner who had to divert to another port when making a bunker call recently because of an error by the port agent had his port costs paid by the agent, International Transport Intermediaries Club (ITIC) reports. In the latest issue of its Claims Review, ITIC International Transport Intermediaries Club (ITIC) has emphasised how avoidable errors can prove expensive for ship agents. In case in question the shipowner appointed a port agent for a bunker call by their vessel. The agent failed to complete the required customs formalities in time to book the berth, a mistake which went unnoticed until the vessel was approaching the port. After being notified by the agent of the mistake, the shipowner decided to divert the vessel to another port around 500 km north of the original port as the bunker berth at the first port was not due to become free for another five days. The ship agent also operated within the second port and the bunkering proceeded without incident. When the time came to settle invoices totalling US$26,000 from the various service providers in the second port, the owners refused to pay, claiming that these additional costs had been incurred as a result of not being able to call at the original port. The costs were in fact the normal charges relating to bunker calls, such as tugs, security charges and pilotage, and would have been payable by the owners in any event, even if the vessel had been able to call at the original port. However, the vessel had been delayed by two days and it had incurred estimated costs that exceeded this amount for fuel and other services, as a result of having to travel 500 km to the second port. Rather than enter into a dispute with the owners, the ship agent paid the port costs for the bunker call, and was reimbursed by ITIC.

Rotterdam, a Catch-22 situation awaits the unlucky owner

World Bunkering Winter 2012

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equipment & services

Dream screen

Damien King

FIS claims its Bunker Screen brings fuel oil swap trading into the digital age. Plus: Martek Marine’s MariNOx Evolution.

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ondon-based brokers of freight and commodity derivatives Freight Investor Services has launched a live bunker fuel pricing service that, it says, for the first time makes bunker hedging practical for its biggest users. According to FIS: “Firm bids and offers, updated in real time for six months of bunker forward curve will provide unrivalled degree of price transparency and liquidity.” The FIS Bunker Screen automatically collates prices from multiple market-makers and provides firm bids and offers in tight spreads along six months of the forward curve. Screen prices move with the market, reflecting up-to-the-minute changes in prices of the three key bunker fuel contracts: Singapore 180CST, Singapore 380CST and Rotterdam 3.5% Sulphur Barges. Indicative prices on these three contracts for a further three quarters and four calendar years are also available. Indicative prices can also be provided on the US Gulf Coast 3.0% contract. The first trades were made on the two live contracts, Singapore 180cst and Rotterdam 3.5% Sulphur Barges. Oslo-based Torvald Klaveness sold the December 2012 contract on Rotterdam 3.5% Sulphur Barges, while Dubai-based Panacore lifted an offer on the March 2013 Singapore 180cst contract. Both trades were made against the market makers providing live, firm prices to the FIS Bunker screen. New concept

Damien King, Bunker Broker with FIS, says: “The FIS Bunker Screen is what the fuel oil swaps market has been waiting for. It is a completely new concept that puts an unprecedented level of market access in the hands of users. And because FIS offers swap contracts in lot sizes of one tonne upwards, we think that it will appeal to shipowners and charterers who need to hedge, but until now haven’t been as well-served by the market as they should have been.” Bunker fuel prices are fed into the FIS screen automatically and cash-settled swaps can be executed directly on screen, with straight through processing to clearing at SGX, NOS and CME and by voice clearing at ICE. End-users of fuel oil and bunker blends – notably shipowners and

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charterers – have traditionally struggled to hedge the comparatively small volumes to which they are exposed at realistic price levels. Because the FIS Bunker Screen provides constantly updated prices in the most liquid markets, users can use it to buy or sell swaps exactly equivalent to their physical exposure. Another of the firms bunker brokers, Ali Ersen, says: “When a shipowner knows they are performing a given voyage or charter, they can use the screen to hedge their fuel like-for-like in the volume that they need. That trade can be made with or without the assistance of the broker and they can monitor the price changes in real time through the course of the contract, adjusting their position as necessary. Trading on the screen requires an FIS broking agreement and a clearing account with the providers noted above. Readers can find out more about the FIS Bunker screen at: www.thecleartrade.com/fis/. Emissions monitoring system orders

Marine equipment manufacturer Martek Marine has received a series of large orders for its MariNOx Evolution on-board emissions monitoring and engine efficiency system with Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries. The company says that, among the seven orders is the world’s largest and most complicated emissions monitoring system ever to measure SOx, NOx, CO2, CH4, NO2, THC, H2S, Benzene and N20. MariNOx Evolution is designed to enable simple and automated Marine Equipment Directive (MED) certified compliance with the MEPC 177(58) NOx Technical Code 2008, as well as MARPOL Annex VI and MEPC 103(49). Its maker says that MariNOx Evolution is the simplest, quickest and lowest cost system to install for shipyards because all engines are monitored via a single sample line without the need to install a complex dilution arrangement requiring dry air supplies at each engine.

World Bunkering Winter 2012


Book review

Fuel for thought Nigel Draffin’s new book focuses on the

complicated relationship between ships’ engines and the marine fuels that power them.

Nigel Draffin

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BIA chairman Nigel Draffin says he believes that “a ship’s engine room is a place of refuge for engineers, but a place of mysteries to most others”. The engine room could be a little less mysterious for the rest of us once we have read Draffin’s latest book, Bunker Fuel for Marine Engines – a Technical Introduction. “My intention is to explain what goes on in the engine room, how the machinery works and integrates with the ship’s functions and why the way we source, supply, treat and use fuel is so significant for the efficient, economic and environmentally acceptable operation of ships,” he says. Complete with an extensive glossary and full of photographs and technical illustrations, the book has been hailed by the highly respected industry veteran of Exxon and DNV Petroleum Services, Dr Rudolph Kassinger, as “a comprehensive sequel to John Lamb’s seminal treatise Petroleum and its Combustion in Diesel Engines”. That book was first published in December 1955 and is long out of print. According to Dr Kassinger in his foreword to Bunker Fuel for Marine Engines, Lamb’s book “now has a worthy successor”. According to Draffin, his new book provides the reader with a solid introduction to a subject that every supplier or user of marine fuels would do well to understand. He takes the reader on a technical tour around the equipment that will be found there, from main and auxiliary engines to generators, refrigerating plant and other fuel-using machines. For many readers, this highly illustrated book “is a chance to look underneath the hood and, perhaps for the first time, to recognise what makes this equipment work and why some fuel problems are more significant than others”.

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Draffin takes the reader through the complete process of burning fuel onboard, from storage of fuel to dealing with the exhaust, before looking at the different types of diesel engine and their specific fuel requirements. He also looks at gas turbines, fuel cells and developments in shore power, and covers boilers, fuel and accommodation heating and incinerators, before also looking at waste heat recovery systems. Fuel types and bunker quality standards are also laid out for the reader, as are blending, storage and onboard fuel treatment, where the work of separators, purifiers, clarifiers, decanters, homogenisers, filters and other engine room kit is explained. Fuel heating, pumps, fuel measurement and storage are amply covered, as are an engine’s sensitivity to fuel qualities. Importantly, the book looks at emissions and how they might be controlled and also at unconventional fuels such as biodiesel, shale oil, liquefied and compressed natural gas, liquefied petroleum gas and even coal. The book’s publisher, Petrospot, has also just brought out the second edition of Draffin’s first book, An Introduction to Bunkering, which Petrospot says is “the only book in the world so far to have included the updated ISO 8217:2012 specification”.

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Review: BIMCO

Do-it-yourself SEEMP

BIMCO has brought out a manual that can be used as a ship’s official Ship Energy Efficiency Management Plan (SEEMP).

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hipping industry organisation BIMCO’s latest publication might not necessarily fill the classification societies and many consultants currently selling Ship Energy Efficiency Management Plan (SEEMP) services to owners with joy. It has published a manual that can be used as a ship’s official SEEMP, The ‘The Step-by-Step SEEMP Manual’, published in association with Fathom, has been developed to enable shipowners to plan, manage and document the energy efficiency performance of their ships. BIMCO claims its manual is “a cost effective and simple way to ensure compliance with impending regulation whilst giving the potential for real benefits to be gained from the implementation of the plan”. SEEMP, designed by the IMO to encourage best practices for the fuel efficient operation of ships, is a requirement for all owners and operators of ships over 400 gross tonnage to detail measures that are being implemented to reduce fuel consumption and thus lower greenhouse gases and other emissions. SEEMP regulations become mandatory from January 2013. IMO describes SEEMP as an operational measure that establishes a mechanism to improve the energy efficiency of a ship in a costeffective manner. It adds that the SEEMP also provides an approach for shipping companies to manage ship and fleet efficiency performance over time using, for example, the Energy Efficiency Operational Indicator (EEOI) as a monitoring tool. The UN specialist agency has itself has issued guidance on the development of the SEEMP for new and existing ships, which incorporates best practices for fuel-efficient ship operation, as well as guidelines for voluntary use of the EEOI for new and existing ships (MEPC.1/Circ.684). The EEOI enables operators to measure the fuel efficiency of a

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ship in operation and to gauge the effect of any changes in operation, for example improved voyage planning or more frequent propeller cleaning, or introduction of technical measures such as waste heat recovery systems or a new propeller. The SEEMP itself leads the ship operator to consider new technologies and practices when seeking to optimise the performance of a ship at each stage of the plan. Nevertheless, the new BIMCO publication is likely to be gratefully snapped by the many shipowners who have not got around to considering SEEMP yet. Lars Robert Pedersen, Deputy Secretary General, BIMCO, commented: “BIMCO supported the SEEMP regulation to enable shipowners to better optimise their energy consumption. We do not believe, however, there is necessarily any need to pay substantial amounts to third parties to prepare SEEMPs. The ‘Step-by-Step SEEMP Manual’ gives shipowners and operators a one-stop solution that allows them to easily create ship-specific plans in-house. It is our view that a simple SEEMP implemented effectively is better than a complicated document that may not be followed.” The easy-to-use manual includes clear templates on an accompanying CD that can be populated and then printed off to make up a ship-specific SEEMP programme. These are placed at the front of the professionally presented hard-backed binder and this acts as the official SEEMP. In reality, the classification societies and specialist consultants working on SEEMPs for companies probably have little to fear. Many companies will want the reassurance of experts, while the sheer number of vessels needing SEEMPs means that many owners will probably be spending the Christmas and New Year holidays rushing out plans.

World Bunkering Winter 2012


Company News

Rosneft Marine Strengthening its presence in the Baltic and Black Sea, as well as in China

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osneft Marine has continued to expand rapidly since it was established in London in 2010. A subsidiary of Rosneft Oil Company, Rosneft Marine has now set up a new office in Beijing while expanding the number of ports that it services in Russia. The company officially opened its second office this May in Beijing, China to service its growing Asian client base. Staffed with a multilingual team, the new office aims to support its regional customers with ease of communication and greater access to premium-quality marine fuel in the Far East. In addition to expanding Rosneft’s presence in Asia, this move allows the company to provide specialised services to regional clients without any compromise on its existing offering to the global and European markets. The formation of this second office in Asia also comes at a time when environmental concerns are changing the landscape of international shipping.

Increasing demand Demand for low-sulphur fuel oils is expected to increase following the introduction of Emission Control Areas in North America, particularly for vessels travelling from Asia to the West Coast of the US. The company intends to work closely with regional ship operators who have US-bound vessels to supply them with ECAcompliant low sulphur fuels of the highest quality at attractive prices. An integral part of its strategy for the China office will be to establish long-term partnerships with customers. The company hopes to collaborate with customers particularly on the basis of long-term formula contracts, as it is one of the few suppliers able to guarantee a reliable and consistent supply of high-quality fuel in the region. As part of a plan to strengthen its presence in the Baltic and the Black Sea, Rosneft Marine extended its bunker supply network to include the western ports of Ust-Luga, Kaliningrad and Novorossiysk in April this year. The servicing of additional ports brings greater ease of access to Rosneft’s high-quality marine fuel in a wider range of bunkering locations to customers.

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Rosneft Marine’s sister company RN Bunker is the logistics and domestic marketing arm of Rosneft’s bunkering business. It has just taken delivery of a new bunker tanker in the port of St. Petersburg under the terms of a 10-year time-charter agreement. The RN Polaris is a 6,800 metric tonne-capacity tanker that is also registered as an ice-class vessel. It will be operating in St Petersburg, Ust-Luga and other parts of the Russian end of the Gulf of Finland.

Raising standards In order to further the company’s commitment to unparalleled assurance of quantity and quality, Rosneft Marine, together with its RN Bunker, is currently in the process of establishing Rosneft’s first full-quality management standard for its bunker supply chain in the port of Nakhodka (NQMBS). Standardising Rosneft’s bunker supply process ensures a reliable, consistent supply of premium marine fuel that is second to none in the market. Rosneft Marine aims to have a similar implementation of standards across its entire bunker supply network in the future and will continue to seek expansion in other parts of the world with the aim of providing global clients with superior, localised service while still delivering premium quality fuel in Russian ports.

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Company News

Transit-DV Extending opportunities in Far Eastern bunkering

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he development of the Far Eastern bunkering market demands new decisions. And the opening of the oil marine terminal and anchor station in Slavyanka harbour by Transit-DV has become one of them. Launched jointly with Vostokbunker JSC, the marine terminal provides shipowners with a range of benefits: all paperwork related to vessel call is carried out within the terminal’s ship agency department and the vessel’s technical and product supply is carried out by the terminal’s ship chandler. Therefore, the ship agency service guarantees the safety and security of all vessel calls to Primorye port. This new terminal is located in the sea port of Slavyanka and is the southernmost terminal in the Far East. It also enjoys a number of undeniable benefits compared to other terminals: geographical position, mooring depth, 300m berth length and its own tanker fleet, enabling large volumes of bunkering – all these factors allow ship owners to save time and more.

Igor Polchenko, president, Tranzit-DV

Unique service

The purchase of two tug-boats – Vityaz and Poseidon – has allowed a unique logistic service provision. The tugboats’ main function is forwarding and exporting vessels for bunkering. This service will decrease shipowners’ costs considerably, as well as provide safe navigation for vessels throughout the sea waters of the Russian Federation. The close proximity to countries such as China, Japan and Korea increases the turnover between Russia and these countries. A joint project with JSC Femri on a mooring transit station launch within the Slavyanka port area, developed and agreed with the Posyet port master, has become the first step in the further development of one of the Far Eastern ports.

natural gas) as well as refining and delivering, vessel bunkering and sea shipping. With its production capacities and skilled specialists, the company enables clients and partners to perform any operations requiring refining, storing and delivering oil products and bulk cargoes of any volume to any destination and by specified dates. The Hong Kong-registered Marine Logistic Company is the exclusive representative of Transit-DV in the Asia Pacific region.

Super-large vessels

Currently, the marine terminal has everything required for handling vessels with the relevant mooring depth and berth length. However, super-large vessel handling has meant extending the geographical boundaries, with the deployment of the dock-side water area. The project has meant the amendment of active legislation so that foreign vessels can make calls into Russian ports for bunkering only. Projects that have previously been considered impossible have become possible. A year ago, Transit-DV launched the project “Bunkering on Water” and now many foreign companies have started to forward their fleet into the water area of the Russian Far East for bunkering already, demonstrating a mutual interest in collaboration. About Tranzit-DV

Tranzit-DV is a holding company providing a wide range of services within the energy resources market (oil products, clinkers, coals,

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For more information, contact: 13 Uborevicha Street, Vladivostok, 690091, Russia Tel: +7 (423) 249-11-99 Fax: +7 (423) 248-11-28 E-mail: tranzit@tranzitdv.ru Website: www.eng.tranzitdv.ru

World Bunkering Winter 2012


Company News

Nayada Co. Ltd. - forging ahead in tough times

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ayada Co Ltd was incorporated in 1998 and is one of the oldest and soundest bunkering companies in the Far East of Russia. As well as the head office, which is located in Nakhodka Port, the company also has a branch in Vladivostok Port that opened in 2003. Nayada has been an IBIA member since 2007. The company has successfully worked in the Far Eastern region of Russia for more than 10 years, providing high-quality bunkering services for Russian and foreign shipowners and delivering bulk liquids on behalf of customers to all the ports in Primorsky region – Nakhodka, Vladivostok, Vostochny, Kozmino, Slavyanka, Posyet, Zarubino and Bolshoy Kamen. The average monthly volume of bunker oil sold totals 15,000-20,000 tons. Among the company’s long-established clients are well-known brokerage companies, such as World Fuel Services, Dan-Bunkering, Hanwa, Itochu Enex, KTB, Peninsula Petroleum, as well as large shipping companies, such as Nanjing Tanker Corporation, Maersk, STX Corporation and Hanaro Shipping. Nayada Co Ltd has long-term contracts to supply bunker oils with numerous petrochemicals companies. Among them are the largest Russian oil industry groups: NK Rosneft Joint Stock Company, Gazprom Neft Joint Stock Company and NK Alliance Joint Stock Company, that own oil processing plants and cargo terminals in largest ports in the Far East. As the geographical sphere of supply is constantly widening, this year the company added to its existing fleet by purchasing two tankers of 6,200 tons in total capacity. They are equipped with double freeboard and double bottom, and the construction permits the simultaneous carrying of five different types of cargoes, including those with low inflammation temperatures (below 60°C, eg gasoline, aviation kerosene, and diesel fuel). Their navigational area is unlimited and their ice class is enhanced, which is particularly important when taking into account the climate conditions in the far eastern region in winter. Currently, the company operates a fleet of six tankers, five of which are owned and one is leased. The total tonnage of the fleet is approximately 11,800 tons, which allows customers’ orders to be fulfilled for the supply of any quantity of bunker oil. All the company’s tankers have certified equipment for cargo measurements, taring, analysis and the storage of bunker oil samples, which correspond to all the necessary international requirements. In 2006, the company’s technical management department designed a technology for the serial manufacturing of admiralty fuel oil 0-5 (analogy of IFO-30), and in 2012 for the fuel IFO-80 and IFO-100 aboard the company’s tankers. Technical conditions have been registered and entered with the Federal Agency of Technical Regulation and Metrology and the Federal State Unitary Enterprise Standard. A sanitary and epidemiological inspection report from the Chief State Doctor of Sanitary and Epidemiological Service of the Russian Federation has also been issued. In addition to this, the company holds permission for using a conformity mark of the certification system GOST R (state standard of the Russian Federation) endorsed by the decree of State Standard of the Russian Federation No 50 dated 29 June 1998 (registration No 1333 dated 3 May 2006). Because of its long experience in the bunkering services market,

World Bunkering Winter 2012

its own fleet and modern technologies, Nayada Co Ltd guarantees a supply of high-quality fuel to all of its customers in the required quantity and on time. The company’s staff of more than 100 employees combines years of experience, knowledge and service, which in turn ensures that the company retains its leading position in the market. Nayada Co Ltd is a reliable and sound partner that has been offering high-quality organisation and service for thirteen years.

Flat 5, 3A, Portovaya Street, Nakhodka Russia, 692900 Tel/Fax: +7 4236 629779, 679113 E-mail: bunker@nayada.biz, nayada@nayada.biz Website: www.nayada.biz

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Company News

Forum Ltd.

LUKOIL BENELUX B.V.

Providing direct access to high-quality,

One of the key key players in ARA ports

low-sulphur fuel oil, 24/7

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ounded in 2011, Forum has proved to be a reliable supplier of bunker fuels in the port of Saint-Petersburg. The company provides clients with low-sulphur fuel oil produced at the Antipinsky refinery in Russia, an independent, modern refinery with monthly production capacity of 100,000 metric tons. Our main product is straight-run, low-sulphur fuel oil complying with ISO-F-RME, ISO-FRMG and Regulations 14 (1) and 18 (1) of MARPOL 73/78, Annex VI. We supply MGO (DMA) 0,1 sulphur from the leading refineries in Russia as well. Forum has contracts with leading shipping companies operating a fleet of double-hull barges to make the delivery process smooth and secure. Product trans-shipment is carried out at the most up-to-date terminals in the region. We know that quality is the cornerstone of the bunker business, so, in collaboration with world-acknowledged surveying companies, we ensure the highest quality of the products we deliver. All of our products are compliant with ISO 8217:2010(E) . Since its beginnings in 2011, Forum has earned the trust of customers and partners by supplying high-quality products at competitive prices and flexible payment terms. The company ensures a consistent supply of low sulphur fuel oil, thus working on a contract basis as well in the spot market. We provide our services for a vast number of major shipping companies, as well as traders 24 hours a day 7 days a week. Our competitive advantages are: • Direct access to high-quality, low-sulphur fuel oil • Products conforming with ISO8217:2010 (E) plus the later amendments • 24/7 services

For more information and bunker enquires contact: Forum Ltd. Office 306, Barochnaya str.10, b. 1, lit.A St Petersburg, 197110, Russia Bunker trader: Aleksey Miloradov Tel: +7 (812) 449-65-91 Mobile: +7 (921) 757-11-33 E-mail: trade@forumbunkering.ru www.forumbunkering.ru

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UKOIL Benelux B.V. is a prominent, reliable physical supplier of bunker fuels in the Amsterdam-Rotterdam-Antwerp (ARA) region. We are supported by the logistic and financial strengths of our parent company LITASCO SA in Geneva, Switzerland. LUKOIL Benelux B.V. is part of the Russian oil major Lukoil, which has widescale operations outside of Russia. Our clientele varies from the well-known large/medium shipping lines to other physical suppliers and trading companies. Our company has a market share of 10-15% in our home markets Rotterdam and Amsterdam. Starting from 1Q 2012, LUKOIL Benelux B.V. is also supplying bunker fuels in Antwerp from within the port area and from the other locations in ARA. We are also active in the Baltic, Black and Mediterranean Seas. Since 2005, LUKOIL Benelux B.V. and our Dutch partner Burando Holding have been jointly operating Service Terminal Rotterdam, which enables LITASCO SA and LUKOIL Benelux B.V. to store fuel oils and blend them to necessary specifications. Construction of the second, much bigger phase of the terminal was completed in March 2012. Having our own terminal and purchasing almost all of our bunker fuels from our parent company LITASCO SA gives us a competitive advantage in ARA’s saturated market and enables LUKOIL Benelux B.V. to design and implement flexible delivery strategies. We supply a wide range of products and grades-IFO 700, 500, 380, 180, 120 cst, bunker gasoil and can also make other products available at your request. We ensure quick, timely deliveries of our products to sea-going vessels with a fleet of five time-chartered barges with deadweight ranging from about 1,700 MT to 6,310 MT. Provided by our partner Burando Holding’s barge operating company FTS Hofftrans, they are all new double-hulled barges with greater bunkering capabilities. We can also hire other barges for spot deliveries in the range of about 1,700 MT up to 9,200 MT with both FTS Hofftrans and alternative reliable transport companies in ARA. Our team of bunker traders and operators has all it takes to be your reliable partner: experience, expertise and thorough knowledge of the bunker markets. They are friendly and available for your enquiries 24 hours per any day. LUKOIL Benelux B.V. will gladly look into your enquiries in ARA and any other regions in the world. We hope to do business with you soon.

For more information, contact: Wilhelminakade 85, Building “De Maastoren”, 36th Floor, 3072 AP Rotterdam, The Netherlands Post address: PO Box 24065, 3007 DB Rotterdam, The Netherlands Tel: +31 10 264 27 00 E-mail: bunkers@lukoil.nl

World Bunkering Winter 2012


Company News

Portugal fuel stop

Unicom Holding S.A.

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ased at Lisbon, Galp Energia Group, is able to offer fuel supply services to all ships visiting this warm and pleasant country. Galp Energia has professional bunkers team provide its customers with high-quality fuels and services, and the highest safety standards in all its bunker activity and the company’s bunkering products fulfil the ISO 8217: 2010 specification in all grades. To help achieve customers’ targets on the environment, the company can supply low-sulphur fuels at several ports, with the port of Lisbon being the main port for low-sulphur fuel. Optimising its logistics resources and storage capabilities Galp Energia is able to provide high-quality services and products, including a wide variety of marine distillates. Galp Energia is the main bunker supplier in Portugal, and provides bunker services using its two barges with capacities of 5,800 tonnes and 3,000 tonnes each. A 5,800 dwt double-hull barge, Bahia Tres, began operations in 2010 to support the company’s business in the ports of Sines and Setúbal, meeting all the important aspects for safety and protecting the environment. It is equipped with anti-pollution measurers and is covered by European Maritime Safety Agency regulations in the Atlantic Ocean and Mediterranean Sea. Always aware that its customers’ main concern is product cost, the company offers competitive prices without compromising product or service quality. Visiting Portugal and being supplied by Galp Energia will always be a good decision for regular customers, used to working with a professional team. We are the only refinery in Portugal and operate refineries at Sines and Matosinhos. We have an extensive product range that includes gasoline, diesel fuel, jet fuel, fuel oil, LPG, bitumen and several aromatic products. Our refining business is responsible for the supply of oil products to our retail, wholesale and LPG marketing divisions, competitors and foreign customers, as well as for the operation of our refining and logistics assets. We hold a significant position in the Portuguese crude oil products storage market. Our two refineries in Portugal together represent 20% of the Iberian refining capacity, and collectively account for the majority of Portugal’s annual domestic petroleum product requirements. We are investing approximately €1.4 billion to upgrade and improve the efficiency of our refineries, representing €1 billion for Sines and €0.4 billion for Matosinhos.

nicom Holding entered the Romanian bunkering market in 1999, with the establishment of a dedicated bunkering department. Since then we have developed rapidly, gaining the knowledge and experience necessary to become the undisputed leading bunker supplier in Romania. Originally known as Unicom Bunkering, we traded under this name from 2005 to the end of 2010 when, following a merger, we were re-launched as the bunkering department of Unicom Holding. Despite this change in name, our goal has remained the same - to provide our customers with the best possible bunkering services and to develop strong and mutually profitable partnerships. We bunker at the Romanian Black Sea ports of Constanta, Agigea, Midia and Mangalia, and also at the Romanian Danube river ports of Galati, Tulcea, Braila and Drobeta Turnu Severin. At the maritime ports we deliver a full range of high-sulphur fuel oil products, from IFO-30 to IFO-380, as well as low and high-sulphur distillates. The fuel oil is delivered to ships by barge, while the gas oil can be supplied either by barge or by truck. Barge deliveries are made by our M/T “Unicom 3”. We also own the oil barge “Deltaoil”, but this is mainly used as a storage unit for fuel oil, giving us increased flexibility for dealing with large orders or short timescales. At the Danube River ports we supply only low sulphur gasoil, ULSD 10 ppm inclusive, ex-pipe, using our barge “Unicom 1”, or by truck. Presently we deliver high quality oil products that are compliant with the ISO 8217:2005 specifications, but we are soon to apply the ISO 8217:2010 standards. All our bunker deliveries are professionally managed by our experienced staff, in full accordance with the relevant legal requirements. Apart from supplying bunkers and providing our help and expertise, we have also started to offer transport services by carrying oil products for our clients on the Danube River. Currently we do this via our M/T “Astrid”, but are planning to extend our fleet in the near future. Our staff are available 24-hours a day and are ready to put their experience, expertise and knowledge at your service.

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For further information contact: Galp Energia SA Tel: +3512 1724 0637/654 Fax: +3512 1724 2957 E-mail: bunkers@galpenergia.com www.galpenergia.com

World Bunkering Winter 2012

Tel: +40 21 233 27 70 Fax: +40 21 233 27 69 General E-mail: office.bunkering@unicom-group.ro Website: http://www.unicom-group.ro/holding Mr. Bogdan BURGUI – Bunker Sales Manager (maritime sales) Mob: +40.741.383.412 E-mail: bogdan.burgui@unicom-group.ro Mr. Marc BOBEICO – Bunker Sales Manager (river sales) Mob: +40.741.362.023 E-mail: marc.bobeico@unicom-group.ro

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Company News

OMV PETROL OFISI

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MV Petrol Ofisi A.S., one of the largest listed industrial companies in Turkey, is built on 71 years of experience with 975 employees. OMV Petrol Ofisi is Turkey’s leading fuel products distribution and lubricants company with 2,276 filling stations, 1 lubricant plant, 10 fuel and 3 LPG filling terminals, Marmara Ereglisi terminal (joint venture), 25 airport supply units and over 1 million m³ storage capacity. With a broad dealership network the company operates Turkey’s most extensive retail fuel sales network system. OMV Petrol Ofisi is a major physical bunker and lubricant supplier at all Turkish ports. As well as being a physical supplier at Turkey, company provides a global trading service with our extensive supplier network all over the world. Petrol Ofisi Marine team with its expert staff trained in marine sector and its high performance fuel and lubricants offers specialized and customer focused services for the shipping companies using the market knowledge, marine expertise and purchasing power. Being proud of offering high quality marine fuels with its huge logistical support and marine experienced team whom are reachable on 7 days and 24 hours, Petrol Ofisi Marine Team establishes long lasting relationships with its clients and help them to minimize their bunker expenses by implementing of an effective fuel purchasing management.

Tel: +90 212 329 15 55 Fax: +90 212 329 17 01 E-mail: marine.sales@poas.com.tr

Gazpromneft Marine Bunker, Ltd: market leadership is our goal

G

azpromneft Marine Bunker, Ltd, a subsidiary of JSC Gazprom Neft, was founded in October 2007 for the year-round supply of petroleum products – fuel oil, marine fuel and lubricants – for sea and river transport. The company has five offices and two subsidiary companies: Gazpromneft Terminal Spb provides the timely transfer of fuel and marine fuel all year round. Gazpromneft Shipping manages a fleet of seven bunkering vessels Gazpromneft East, Gazpromneft West, Gazpromneft Nord, Gazpromneft Zuid, Gazpromneft Zuid-West, Gazpromneft Nord-West and Gazpromneft Zuid-Ist, which operate in the ports of St. Petersburg, Novorossisk, Kaliningrad, Murmansk and Ust-Luga. In 2011, Gazpromneft Marine Bunker, Ltd bought two new tankers Gazpromneft Zuid-West (constructed in 2004) for operations in the Black Sea port of Novorossisk, and Gazpromneft Nord-West (constructed in 2011), which operates in Ust-Luga. Both tankers meet all the international regulations. Gazpromneft Marine Bunker, Ltd is represented in the main sea ports of service in Russia, and is constantly expanding its geography. In August, Gazpromneft Marine Bunker, Ltd carried out the first bunkering on Sakhalin island, at Port Korsakov. • The main sea ports of operations: Arkhangelsk, port Caucasus, Kaliningrad, Kozmino, Murmansk, Nakhodka, Novorossiysk, Primorsk, St. Petersburg, Sakhalin Island, Taman, Tuapse, Ust-Luga, Vladivostok, Vostochny. • The main river ports of operations: Astrakhan, Nizhny Novgorod, Olya, Samara, Sheksna, Volgograd. • The international ports of operations: Constanta, Klaipeda, Riga, Rostock, Tallinn. The main strategic goal of Gazpromneft Marine Bunker, Ltd is to enter the international bunkering markets of Europe and Asia. The first step in this direction was made at the end of 2010, when the first international bunker service was provided in the port of Istanbul. About 85% of the company’s services are provided to foreign shipowners. Gazpromneft Marine Bunker, Ltd has contracts with major international shipping companies and traders operating in the ports of Russia. Among Russian clients are major sea and river shipping companies, as well as fishing companies. Gazpromneft Marine Bunker, Ltd provides its clients with a wide range of high quality marine fuels, mainly produced at Gazpromneft’s subsidiary, the Omsk Oil Refinery. From April 2010 a low-sulphur (less than 1%) TAS-380 marine fuel has been produced, which has made Gazpromneft Marine Bunker, Ltd a major bunkering company in the low-sulphur fuel oil market.

Since its foundation, the company has tripled its operations, delivering 900,000 tonnes of fuel in 2008 and more then 2 million tonnes in 2011. Today, Gazpromneft Marine Bunker, Ltd is one of the leaders in the Russian bunker market, with an 18.5% share. Vasiliyevsky Island, 3rd line, 62A, St. Petersburg, Russia, 199178 Tel: +7 (812) 449 49 70 Fax: +7 (812) 449 49 71 E-mail: bunkers@spb.gazprom-neft.ru

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World Bunkering Winter 2012


World Bunkering SPRING 2013 issue Special Features: Traders We look at the role of the trader in an increasingly difficult market. What does the future hold for the smaller trader as the cost of bunkers continue to rise

Fuel Quantity The first official stem with the volume measured by a flowmeter has been carried out in Singapore. How quickly will using flowmeters become standard practice? Or will the ullage tape be with us for years yet?

IT Information technology is becoming increasingly prominent as ship operators looks to reduce costs. We look at what is on offer.

Geographical Focus: Northern Europe Indian Subcontinent UAE

Previews IBIA Annual Dinner 3rd Annual LNG Fuelled Shipping Summit LNG Fuel Forum Bunkering in Europe FUJCON International Bunker Conference Sea Asia

Russian Update News, Views and Analysis

Regular Features Interview, Industry News, Environment, Testing, Risk Management, Legal News, Equipment and Services, Diary.


DiARY

Looking ahead 2013 21 - 22 January

18 February

European Oil Storage

IBIA Annual Dinner

28-31 January

7-8 March

Maritime Week Africa

Marine Propusion Conference

30-31 January

18-20 March

6th Vessel Efficiency and Fuel Management Summit

CMA 2013

London UK www.wplgroup.com/aci/conferences/eu-mbf6.asp

Stamford Connecticut US www.shipping2013.com

18 February

26 – 27 March

Amsterdam The Netherlands conf_registrations@platts.com

Durban South Africa http://petrospot.com/events/2013/201301_ MWAfrica/profile.asp

19th IBIA Annual Dinner Grosvenor House London, UK www.ibia.net

18-21 February LNG-Fuelled Shipping Hamburg Germany www.lng-fuelledshipping.com

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London UK www.ibia.net/content.cfm?page_id=135

London UK www.rivieramm.com/events/annual-marine-propulsion-conference-2013-43/event-home-602

FUJCON 2013

Fujairah UAE www.cconnection.org/conference/FUJCON/2013/ Fujcon2013Home.html

4-7 June Nor-Shipping

Oslo Norway messe.no/en/nor-shipping/

World Bunkering Winter 2012


GLOBAL BUNKER SUPPLIERS AND TRADERS

Peninsula Petroleum is a major physical bunker and lubricant supplier operating from the ports of Gibraltar, Ceuta, the Canary Islands, Panama, Athens and Singapore. As a physical supplier and a worldwide trader with annual sales in excess of 7,000,000 tonnes, we have the resources and capabilities to guarantee the highest quality products and first-class customer care at all times. With offices in London, Gibraltar, Geneva, Monaco, Las Palmas, Tønsberg, Athens, Dubai, Singapore, Shanghai, Tokyo, Seoul, Vladivostok, Houston, Panama and Montevideo our highly skilled staff, which includes more than 15 nationalities, is ideally placed to make the most of their vast experience and expertise. Available 24 hours a day, 7 days a week, 365 days a year, we provide professional, cost-effective ways of meeting marine fuel needs, swiftly and efficiently – anywhere in the world. LONDON Tel: +44 (0) 207 766 3999 TØNSBERG Tel: +47 333 40 100

GIBRALTAR Tel: +350 200 52641

ATHENS Tel: +30 210 4287800 - 1

SEOUL Tel: +82 10 7144 6479

GENEVA Tel: +41 22 322 9600

DUBAI Tel: +971 4 4458435

VLADIVOSTOK Tel: +7 902 521 8045

MONACO Tel: +377 6439 14340

SINGAPORE Tel: +65 6238 6621

HOUSTON Tel: +1 713 850 7728

LAS PALMAS Tel: +34 928 246 066

SHANGHAI Tel: +86 21 5386 8866

PANAMA Tel: +507 264-0293

WWW.PENINSULAPETROLEUM.COM

TOKYO Tel: +81 90 4019 9025

MONTEVIDEO Tel: +598 2903 3450


World Bunkering - Winter 2012