global regulations –the complexity - fastmarkets risi · 2020 gasoil demand increasing globally...
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Copyright © 2017 World Fuel Services Corporation. Proprietary & Confidential. All Rights Reserved.
Global Regulations – The Complexity
PPI Transport Symposium, September 16-18, 2019 – Tarragona, Spain
John Stirling, WFS Director Marine
Copyright © 2016 World Fuel Services Corporation. Proprietary & Confidential. All Rights Reserved.
WFS at a GlanceHeadquarters: Miami Florida, USA
Founded
The Strong Counterparty you require.
External AuditorsPricewaterhouseCoopers
LLP
5K+ $5.7B$1.8BShareholders
EquityGlobal Professionals Total Assets
$1.88B INT$39.7B2018 Revenue Market Capitalization NYSE Stock Symbol
(Fortune 500)
1984
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Copyright © 2016 World Fuel Services Corporation. Proprietary & Confidential. All Rights Reserved.
Our Marine BusinessSecure supply, quality lubricants, and complete Marine solutions
• 2020 Solutions• Claims management• Contract & spot options• Fuel management• Market reports & analysis• Operational support• Technical quality control• Yacht solutions• Credit & financing• Price risk management• Transaction management
• 23.7 million MT sold• 88,000+ transactions• 1,200+ ports
Data as of January 1, 2019 6
• 5.6 billion gallons sold• 1,000+ distribution locations• 1.64 million+ fuel transactions
• 8.2 billion gallons sold• 3,500+ service locations, including 2,900+ airports• 3.43+ million fuel transactions annually
Aviation BusinessLand Business
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MARPOL Annex VI : How long have we known?
4
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Max 0.50% Sulphur, 1 Jan 2020 - Confirmation
Thursday 27th October 2016, London
Concerns from MEPC 70
MEPC 70/5/24 ISO response
Stability Blend stocks
Flash point Availability
Light distillate? Land quality
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Have the rules changed?
“Dr Emily Shuckburgh’s early morning presentation shook us to the core.”
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Source : Splash247.com
BUT, still no consensus...
MEPC 70 - The attitude certainly did
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What will be the mix in 2020?MGO/ULSFO/VLSFO/HSFO+Scrubber/LNG – lots of jargon
Courtesy Robin Meech
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Distillate, Gasoline and LSFO at expense of HFO
Gasoil demand to spike sharply in one year Where will it come from?
VLSFO will see a rise in demand BP estimates more than 50% of volume will be VLSFO
But….Exxon has indicated VLSFO will not be distillate (only) based
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Middle distillate demand increasing even without 2020
Gasoil demand increasing globally due to urbanisation/economic growth
US distillate demand highest since 2008 Inventories are close to five year low Prices would tighten anyway even if no 2020-changeover
Marine has to fight for distillate Go head to head with land (geographically)?
2020 changeover makes the outlook much worse, especially for Europe/Asia
Complex refiners will run even harder as simple refineries struggle. Source: PIRA Oil outlook
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2020 – The Seven Seas? - 7Cs
10
Choices
Challenges
Complexity
Compatibility
Cost
Compliance
Consequences
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Which Solution is best to comply with Sulphur legislation?
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Depends on various factors: Age of ship Trading pattern Time spent in Emission Control Area (ECA) Price differential
No single solution fits all ships! Crew training
Crew retention? Experience gathering Reap the benefits!
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Geographical solutions – capacities and segregation
ULSFO DM
DistillatesDMB/DMC7% FAME
DistillatesDMB/DMC
HSFO
DMA - 7% FAME
(RM/DM)
FAME FREE DMA (RM/DM)
ULSFO RM
LNG OthersContamination?...a challenge!...both onboard the vessel and supply side
...Plus distillate pour point!
VLSFO RMVLSFO DM
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The Choices..... Complex for both the supply side and the customer side
13
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What may happen post 2020
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Just some of the key points: How will shippers meet the new regulations?
What will be the mix HFO/MGO?
What will be the uptake of VLSFO (0.50%) Sulphur bunkers?
How will the quality vary for VLSFO?
How will the changes affect different bunker hubs?
How will the change affect existing quality?
What is the alternative for the excess HSFO?
How will prices for HSFO, MGO 0.1 and MGO 0.5% develop?
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WFS Forward Curves – Singapore.
15
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VLSFO (0.50%) Fuels
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What’s changes are expected in the fuel quality?
Paraffinic VS Aromatic Same rules of thumb apply, but... More important to segregate
Minimize commingling onboard More important to educate!
Retain your people Wax Vs Stability Vs Compatibility
If you dont know the difference you cant get help If you dont know the difference you’ll do it again
More important to have accurate CoQ More varied viscosity
5cSt to 380 cSt
More focus on viscosity NO Minimum Viscosity
17
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All fuels : Compatibility MUST be checked every time!
18
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Distillate Fuels
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Do distillates have to be clear and bright?ISO 8217 DMB/DMC (or RMA10)
20
Good, old fashioned blends!
Cheaper than gas oil DMC was moved to fuel, RMA10 (blended fuel) Generally higher viscosity than gas oil
Higher temperatures in the system Remember the sediment!
TSE Compatibility
Unlike gas oils Asphaltenic sludge can fall out
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DMA (Gas oils) : are all very different…
21
Courtesy of VeriFuel
No color specification in marine gas oil (DMA) – visual appearance
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Cold properties : CP/CFPP/PP
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•Cloud point•Temperature at which dissolved particles precipitate and form a cloudy appearance
CP
•Cold filter plugging point•Lowest temperature at which the fuel will pass through a filter under specified conditions
CFPP
•Pour point•Lowest temperature at which the fuel will flowPP
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Biofuel Mandates - FAME
23
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Onboard the vessels – challenges?
24
(RM)heating
(DM)No heating
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MEPC 73 : Ship Implimentation Plan – SIPVoluntary...but.....
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Individual plan for every ship’s system Clean to compliance by 1st. Jan 2020
Draft guidence Only a skeleton!
Flush tanks? Multiple times? Additives? Seperators?
Manually clean? Set up a structured plan
Based on individual (ship) needs
It’s all about timing!
SIP will be scrutinised if ship is found non-compliant!
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Fines..what’s changed from 2015?
Enforcement – Is it possible to get consistecy?
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Sampling onboard? MARPOL Sample testing?EU Vs IMO?
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What’s important to remember?
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Complex fuel decisions! Individual solutions for individual ships Once you choose you option, difficult to change Invest in your people Heat your distillate tanks..... Heat your filters! Dark distillates are good
it doesnt have to be clear and bright, only compliant! Know your viscosity Compatibility is NOT guaranteed..and NEVER has been. Wax Vs Stability Vs Compatibility Enforcement?
Dollar cost? Reputation cost?
Availability/Price will become even more geographical Build your relationships!
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