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CLEAN LIVINGSHIPPING STEPS UP TO THE GREEN CHALLENGE
INSIDE:
BUNKER INSURANCE
WHR SYSTEMS
MONITORING TECHNOLOGY
CABOTAGE LAW
www.bunkerspot.com Volume 11 Number 1 February/March 2014
0706 bunkerspot v6i6.indd 2 02/12/2009 16:05
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Bunkerspot is an integrated news and intelligence service for the international bunker industry. The bi-monthly magazine and 24/7 electronic news service, www.bunkerspot.com, both provide highly specic information on all aspects of the marine fuels industry. An annual subscription to Bunkerspot (published in February, April, June, August, October and December), including unlimited access to the website www.bunkerspot.com, is UK£250/€280/US$400. ISSN 1741-6981. Copyright Petrospot Limited © 2014. All rights reserved. Published by Petrospot Limited, a dynamic independent publishing, training and events organisation, focused on providing information resources for the transportation, energy and maritime industries. Disclaimer: Bunkerspot is an editorially independent magazine and electronic news information service. The information contained in the magazine and website is presented in good faith. Opinions expressed are not necessarily those of Petrospot Limited, which does not guarantee the accuracy of the information contained in Bunkerspot. Nor does Petrospot accept responsibility for errors or omissions or their consequences. No part of Bunkerspot may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photographic, recorded or otherwise, without the prior written permission of the publisher. Visit www.petrospot.com
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Follow us onlineCLEAN LIVINGSHIPPING STEPS UP TO THE GREEN CHALLENGE
INSIDE:
BUNKER INSURANCE
WHR SYSTEMS
MONITORING TECHNOLOGY
CABOTAGE LAW
www.bunkerspot.com Volume 11 Number 1 February/March 2014
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3www.bunkerspot.comBunkerspot February/March 2014
Addax Energy SA (Oryx Bunkering Services)12, rue Michel-Servet, P.O. Box 404,
1211 Geneva 12, Switzerland
Tel: +41 (0)58 702 90 40 Fax: +41 (0)58 702 91 40 Email: [email protected]
Website: www.oryxenergies.com
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NEWS Financial outlook ............................................................................................................................... 8Europe ........................................................................................................................................... 10Americas ........................................................................................................................................ 20Asia Pacic .................................................................................................................................... 25Africa and Mideast .......................................................................................................................... 30
Features
LNG Focus
Shell is pioneering a collaborative model in the development of the marine LNG sector. Lesley Bankes-Hughes takes a closer look at this business strategy .............................................. 33Is LNG set to revolutionise the global marine fuels sector? Johan Algell considers the facts ........... 36
EGCS TechnologyThe order book for scrubbers is showing sustained growth. Don Gregory of EGCSA looks to the future ......................................................................................................................................... 38
EGCS technology is now gaining traction in the maritime sector. Sam Lowrey and Rebecca Byers talk to the technology developers and the end users ............................................ 40
Fuel Measurement
Charles Bogenberger of Emerson Process Management explores how Coriolis measurement technology is meeting the demands of a changing LNG market ...................................................... 45
Methanol
LNG may be creating a stir as a marine fuel, but there are other options. Sam Lowrey takes a closer look at methanol ................................................................................................................... 46
NOx Regulations
Sokrates Tolgos of MAN Diesel & Turbo tells Rebecca Byers that the maritime sector should wake up to impending NOx regulations ........................................................................................... 49
Waste Heat Recovery
Tomas Aminoff of Wärtsilä explains why WHR systems have still some way to go in terms of their economic viability .................................................................................................................... 52
Company Valuation
As the maritime industry begins to recover condence, M&A activity looks set to pick up. David Hobbs and Chris Thorpe outline the key methodologies in a company valuation................... 54
Cabotage
Melanie Wold reports on whether changing domestic and global markets could spell the end of current US cabotage laws ............................................................................................................... 58
Insurance
Michael Newman of International Energy Insurance Brokers offers a useful checklist of insurance protection options ....................................................................................................... 62
Legal Rulings
A landmark decision by the Netherlands Court of Appeal widens the scope of ship arrests and offers new hope for bunker suppliers chasing payments ................................................................. 64
Monitoring Technology
Dr Steve Dye of Parker Kittiwake explores next gen solutions to monitor engine wear .................... 66
Hydrogen SulphideIan Mylrea of Stanhope-Seta, and Chair of the Sulphide G-5 Hydrogen Task Group, reviews testing methods for hydrogen sulphide ........................................................................................... 68
Fuel Quantity
All may not be as it appears in bunker transfers. David Springett of SGS explains why ................... 70
Fuel QualityThe incidence of off-spec fuels rose dramatically in 2013. Michael Green of Intertek considers if this is an anomaly or a sign of things to come ............................................................................... 72
Scupper PlugAdelina Risler reviews the achievements of her late father, Alejandro, and looks ahead ................... 75
Networking ..................................................................................................................................... 76
Bunkerspotted ............................................................................................................................... 77
Conference Diary ............................................................................................................................ 78
page 38
page 52
page 62
Don Gregory reviews the growing order book for scrubbers – and flags up some regulatory hurdles
Tomas Aminoff explains why WHR systems have still some way to go in terms of their economic viability
Michael Newman offers a key checklist of bunker insurance options
bunkerspotted...Bunkerspot catches up with attendees at events in London…on page 77
contents
5www.bunkerspot.comBunkerspot February/March 2014
In the week that this issue of Bunkerspot went to press, Janet Yellen took over the reins at the US Federal Reserve.
The two events are hardly comparable, but both involved a conclusion – the despatch of a magazine to the printing presses and the end of the old order at the venerable US nancial institution – and a beginning – a new issue of Bunkerspot to populate and, potentially, a reappraisal and readjustment of US monetary policy.
Moving on swiftly from any more highly implausible comparisons between Bunkerspot and the behemoth that is the US banking system, the appointment of Yellen as chair of the Federal Reserve could have signicant implications for the global economy – and, by default, for the global maritime industry.
In the run-up to Yellen’s tenure, political and economic commentators had pointed to her ongoing support of quantitative easing and the general consensus was that she would maintain her dove-like stance when in ofce.
However, in the early days of January it came to light that, in mid-December, members of the Federal Open Market Committee had given their backing to a $10 billion scaling back in bond-buying to around $75 billion per month. US bond purchases have injected welcome liquidity into parched global markets and, in particular, have supported emerging and more volatile currency markets.
The news from the Fed inevitably resulted in market jitters, with a slide in currency values in emerging or recovering markets, such as Argentina, Turkey, Brazil and India.
Christine Lagarde, head of the Interna-tional Monetary Fund, told the World Economic Forum in Davos in late January that the US about-turn on bond purchases could destabilise these vulnerable markets and stymie their prospects for growth.
So, could the rst woman to hold the top position at the Fed be about to show her hawkish side? And how could this affect the perceived gradual recovery in the shipping sector?
As the ‘Financial Outlook’ in this issue
of Bunkerspot discusses, investment is beginning to ow into the stagnant maritime industry. ‘New’ money is coming in from private and public equity, bond issues and fund-raising programmes such as initial public offerings (IPOs). Banks, the traditional lenders to the sector, continue to keep a low prole as they seek to either exit the ‘toxic’ shipping market or at least ofoad signicant tranches of shipping loans on their books.
The new moneymen, however, are hungry and they are looking for sizeable returns on their investments. Should the hawks begin to congregate at the US Fed, then this ‘Parlement of Foules’ could turn its attention to a rise in interest rates. If this does happen, then the non-shipping ‘incomers’ could see more attractive returns elsewhere and shipping could catch a cold just as it begins to recover from its long malaise.
Another factor which will underpin shipping’s future prosperity is the sustained growth of China’s and India’s economies. Pushing up US interest rates could jeopardise the trade ows which are so central to shipping’s current and future prosperity.
Remaining with the economic outlook for the United States, many commen-tators are predicting that 2015 – if not this year – will see the oodgates open for US crude exports. Clearly, this can only be a matter of time but, when it happens, it will have a signicant impact on maritime trade.
Many column inches (and blogs!) have dwelt on the ‘nonsense’ of this continuing prohibition, and much attention has also been focused on whether the US Jones Act is a necessary form of protectionism or an anachronism. In this issue of Bunkerspot, our new North American correspondent, Melanie Wold, takes a closer look at the ongoing debate.
Tighter sulphur regulations are rushing towards us, but Sokrates Tolgas of MAN Diesel & Turbo also warns that the maritime sector must not turn a blind eye to upcoming nitrogen oxide (NOx) regulations.
In a number of ‘what to look for’ features,
Ian Mylrea of Stanhope-Seta outlines innovations in hydrogen sulphide detection, Dr Steve Dye of Parker Kittiwake discusses monitoring technologies for engine wear, and David Springett of SGS gives sound advice on how to spot common methods of obfuscating bunker delivery quantity measurements.
As M&A activity appears to be picking up in the bunker sector, Chris Thorpe and David Hobbs provide a very useful overview of business valuation method-ologies, while Michael Newman offers a well-structured checklist of key insurance considerations for bunker suppliers.
Liqueed natural gas (LNG) once again nds its way into the pages of Bunkerspot, with Johan Algell of Skangass reviewing the prospects for a global uptake of this marine fuel, and Shell outlining its collaborative approach in developing an LNG supply chain.
Sam Lowrey looks at the upside – and downside – of another alternative fuel, methanol, and he teams up with Rebecca Byers to investigate the growing uptake of exhaust gas cleaning technology.
Don Gregory of the EGCSA also reviews the growing order book for scrubbers and highlights some of the regulatory hurdles that still remain to be overcome ahead of 2015.
Tomas Aminoff of Wärtsilä also contributes expert insight into the pros and cons of waste heat cleaning systems.
Whilst shipping seems on the cusp of a revival in its fortunes, it is anybody’s guess what 2014 will bring for the industry. Regulation, national economic and scal policies, and lending strategies have put pressure on the sector during its recent downturn.
Shipowners, however, always talk about the seven-year shipping cycle. Given that 2009 was the year that shipping plunged into chaos, then 2015 by rights should bring this unhappy chapter to a close. What comes around, goes around?
Lesley Bankes-Hughes, Editor
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7www.bunkerspot.comBunkerspot February/March 2014
What is shipping condence? It depends on so many factors, it is almost impossible to quantify.
Shipowners run highly complex businesses but they are, perhaps more than any other commercial sector, at the mercy of macro and micro-economic pressures. And then let’s add environmental regulation into the mix.
In January, the accountancy firm Moore Stephens once again subjected shipping to its litmus test and declared that confidence levels in shipping had broadly risen to a three year high.
At a recent Marine Money conference
on shipping nance in London, Paul Dowell of Howe Robinson Shipbrokers also noted an impending recalibration between vessel supply and demand – a key marker for the nancial health of the shipping sector. Supply side adjustment may be ugly – newbuilds contracted only a few years ago but without the necessary ‘green’ credentials will be scrapped, and nance for those builds sits on the loan books of many a traditional shipping nance house.
Experts suggest that the second-hand market has fully bottomed out with options to buy currently very limited. An increase in newbuild costs is on the cards, but,
perhaps a crucial indicator of the future vessel market, ships are being priced on design rather than size – for traditional and ‘new’ nanciers, eco-design is the mantra.
Many shipping businesses are at rock bottom, and there are denitely signs that ‘vulture’ type investment is coming in to buy at distressed prices. Vessel prices are also at an historic low but some nance experts are suggesting that the time to buy for some vessel types has passed, with prices in 2014 looking to limp ahead of the bargain-basement values of 2013.
US money is coming to fund the changing dynamic, and the European banks
Financial outlook
12 month rolling price charts380 CST Fuel Oil
Marine Diesel Oil
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Houston 380Singapore 380Fujairah 380Rotterdam 380
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Houston 380Singapore 380Fujairah 380Rotterdam 380
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financial outlook
8 www.bunkerspot.com Bunkerspot February/March 2014
are not going to be able to support shipping as before. Only time will tell whether the knowledge of the shipping sector built up over many years by European lenders can be (protably) swept aside by the ‘new’ investors – these ‘fair weather’ lenders may not supply the continuity of support that the shipping sector has traditionally relied upon.
European banks are also having to cope with the Basel III mandate for higher capital requirements, whilst other, non-shipping, investors appear to be rushing into the sector – either buying into debt, buying high quality assets, and supporting bond issues and initial public offerings (IPOs). In terms of vessel acquisition, they are sourcing from shipyards, owners, and banks. Of the current vessel order book, some $115 billion (or 10% of the total order book) remains unfunded.
Private and public equity is providing nance, but perhaps not quite at the levels touted by some nancial commentators. A lot of US private equity is looking for distressed sales, and while the bond market may be giving private equity a run for its money, some seasoned commentators suggest that bank nancing is still available for the right deal.
Clearly, for non-shipping investors, yield is everything – and some players are suggesting that annualised yields of between 15%-20% can still be achieved. An enviable return indeed. However, US interest rates could move upwards, and private equity and the bond market may have little allegiance to the maritime sector – brighter, more lucrative options outside the sector could see a whole-scale defection to more fertile investment territory.
IPOs may continue to be a route for inward investment for a number of shipping companies in 2014 – but many investors are looking for offerings of at least 50% by a the company, and it is the larger deals of $300 million+ that will attract investor interest.
The recent nancing structure put in place to support Euronav’s $980 million purchase of the Maersk Tanker eet from Maersk Tankers Singapore may be an indicator of the type of deal to be seen over the next few years. As Paddy Rogers, CEO of Euronav commented: ‘It is our belief that effective access to capital markets will require tanker owning companies to become larger so as to provide sufcient scale and liquidity to meet the requirements of large institutional investors.’
With European banks taking time to reassess their lending strategies, the shipping sector could be the ‘puppet’ of investor sentiment. As the sector digs itself out of its economic doldrums, is this a welcome development?
Bunkerspot prices are compiled from the reports of the four brokers whose market reports have consistently proved the most reliable and accurate: Cockett Marine Oil Limited, LQM, Glander International Bunkering, and KPI Bridge Oil. Bunkerspot welcomes market reports from other sources for inclusion on its website www.bunkerspot.com
380 cstNovember December January
25-29 02-06 09-13 16-20 23-27 30-03 6-10 13-17
Rotterdam d 588 585 585 586 587 587 573 565
Gibraltar d 608 605 598 603 607 608 601 593
Piraeus d 615 608 604 606 607 607 601 598
Suez d 659 659 659 659 661 661 663 666
Fujairah d 618 610 609 610 612 612 610 622
Durban w n/a n/a n/a n/a n/a n/a n/a n/a
Tokyo d 646 646 646 646 646 646 646 646
Busan d 665 667 656 655 659 659 658 653
Hong Kong d 618 627 623 636 642 642 630 630
Singapore d 614 610 606 608 612 612 606 603
Los Angeles w 632 648 617 623 635 635 617 658
Houston w 589 601 599 600 605 605 590 580
New York w 609 602 606 606 607 607 597 585
Panama w 644 615 644 644 644 644 644 644
Santos d 613 613 613 605 606 606 601 595
Buenos Aires d 614 604 614 614 614 614 614 614
180 IFONovember December January
25-29 02-06 09-13 16-20 23-27 30-03 6-10 13-17
Rotterdam d 610 631 622 614 622 613 599 592
Gibraltar d 663 653 663 663 663 663 663 663
Piraeus d 650 645 639 644 640 641 756 630
Suez d 681 681 681 681 681 681 686 681
Fujairah d 646 646 646 641 641 641 647 646
Durban w 614 616 618 621 622 622 614 616
Tokyo d 656 656 656 656 656 656 656 656
Busan d 685 687 678 683 686 686 686 687
Hong Kong d 628 637 633 646 652 652 641 640
Singapore d 622 625 620 619 622 623 621 619
Los Angeles w 687 674 827 654 670 671 662 690
Houston w 655 674 670 658 674 675 665 652
New York w 641 647 645 652 654 654 650 636
Panama w 678 681 676 674 676 676 678 662
Santos d 635 635 635 630 928 928 622 616
Buenos Aires d 686 686 670 664 673 673 682 684
MDONovember December January
25-29 02-06 09-13 16-20 23-27 30-03 6-10 13-17
Rotterdam d 910 915 916 904 905 906 891 877
Gibraltar d 970 987 985 979 985 985 969 950
Piraeus d 970 974 970 954 965 965 939 935
Suez d 1056 1056 1056 1060 1066 1066 1064 1069
Fujairah d 992 991 991 996 996 996 992 996
Durban w 1054 1054 1052 1052 1059 1059 1044 1051
Tokyo d 923 923 923 923 923 923 923 923
Busan d 960 980 1040 964 970 970 965 945
Hong Kong d 926 938 944 951 955 955 942 949
Singapore d 946 954 951 938 945 945 915 901
Los Angeles w 1019 1023 1021 1006 1011 1011 987 955
Houston w 985 995 997 1002 1002 1002 990 973
New York w 980 989 977 976 984 984 977 975
Panama w 1036 1043 1045 1035 1042 1042 1029 1031
Santos d 1015 1015 1015 1005 1016 1016 1014 1015
Buenos Aires d 1145 1145 1145 1145 1145 1061 1141 1161
KEY: d – delivered • w – ex-wharf • n/a – not available • mdo – marine diesel oil
financial outlook
9www.bunkerspot.comBunkerspot February/March 2014
news in briefUNITED KINGDOM _________Key date in shipping calendarFollowing the success of the inaugural event in September, the date for the next London International Shipping Week (LISW) has been announced – it will take place between 7-11 September 2015.Sean Moloney, Co-Director of LISW organiser Shipping Innovation, said: ‘We are delighted to announce that London Interna-tional Shipping Week will again take place. Following the success of the inaugural event we consulted widely throughout the UK and international maritime sectors and are pleased that the decision to run the event in two years’ time has the total support of the shipping industry and government.’The rst London International Shipping Week attracted thousands of delegates to the UK capital to attend more than 70 maritime events, including a high-level Government reception at Lancaster House, a Downing Street summit, well-attended conferences and a gala dinner.Shipping Innovation is a joint venture between Petrospot and Elaborate Communications.
SWEDEN _________________New President for Concordia MaritimeConcordia Maritime AB has appointed Joakim (Kim) Ullman as its next President.Kim Ullman replaces Hans Norén, who has left the company after 10 years as President. Ullman will be leaving Stena LNG, where he became CEO in 2012.
FINLAND _________________Design detailsWärtsilä has been awarded a contract to design two liqueed natural gas (LNG) container Ro-Ro vessels to be built for Crowley Maritime Corporation.The company will be tasked with overseeing all stages of the design development. The vessels will use Wärtsilä Ship Design’s WSD CRV 2400 WB.This specic model will enable the ship to carry conventional 20-foot and 40-foot containers, as well as special 45-foot and 53-foot wide body high cube containers which were developed for the US market.When built, these will be among the very rst LNG-powered, US-agged container Ro-Ro ships. They will operate between Jacksonville, Florida and San Juan, Puerto Rico on a weekly rotational basis.
Setting targets on alternative fuelsEUROPE __________________________________________________
In December, the European Union (EU) Transport Council reached agreement on infrastructure targets and deadlines for the introduction of an alternative fuel supply chain across Europe.
In its ‘general approach’ document, the Council calls for the establishment of national policy frameworks for the market development of an alternative fuels infrastructure across all transport modes.
Member States must also set targets for minimum infrastructure development, including the provision of liqueed natural gas (LNG) lling stations at maritime and inland ports and shore-side electricity supply in maritime and inland ports – this latter target carries the
proviso that there must be demand and that costs do not outweigh the benets.
A statement issued by the EU noted that: ‘Giving full exibility for Member States to set their infrastructure targets and other deployment modalities in their own national policy frameworks should give Member States enough time to carry out comprehensive analyses of their situations, establish accurate gures and determine targets that will provide realistic signals to the market.’
The European Commission (EC) will publish the national targets, based on reports submitted by Member States, and it is intended that the minimum infrastructure should be in place by 2030.
Dual fuel ferry for Wadden Sea regionEUROPE __________________________________________________
A new passenger ferry operating near the Lower Saxon Wadden Sea national park will feature dual fuel propulsion to minimise exhaust gas emissions.
The ferry, built for Reederei Cassen Eils GmbH, will operate between Cuxhaven and Helgoland. The route will take the vessel close to the UNESCO World Heritage listed area, located in the south-eastern part of the North Sea.
The vessel, which is being built by shipyard Fr. Fassmer GmbH, will feature a full propulsion package supplied by Wärtsilä. It will operate primarily on liqueed natural gas (LNG), using two new-generation 9-cylinder Wärtsilä 20DF medium-speed dual fuel engines.
The engines offer an increased output of 5% and a reduction of 7% in fuel consumption in gas mode, compared to earlier versions of the engine.
In addition to the propulsion machinery, Wärtsilä will also supply its LNGPac fuel bunkering and supply system with related safety and automation systems. The scope of supply also includes a Wärtsilä system that uses the latent heat of LNG in the ship’s air conditioning systems to reduce the amount of electricity consumed in cooling compressors.
‘As the vessel must full the IMO regulations regarding sulphur oxide (SOx) and nitrogen oxide (NOx) emissions in the North Sea’s Emission Control Area (ECA), its operations need to be ecologically friendly with the lowest possible emissions. At the same time, perfect manoeuvrability and reliability are most important,’ said Dr Bernhard Brons, Chairman of Reederei Cassen Eils’ parent company AG EMS.
The ferry is scheduled for delivery in the rst half of 2015.
Terntank opts for dual-fuelled tankersDENMARK ________________________________________________
Two new liqueed natural gas (LNG)-powered tankers ordered by Terntank will be the rst to feature Wärtsilä 5RT-ex 50DF dual fuel engines.
The new engine is IMO Tier III emissions compliant in gas mode without the need for nitrogen oxide (NOx) abatement equipment. According to Wärtsilä, the engine will provide capital expenditure savings of between 15%-20% compared to other 2-stoke gas engine technologies currently on the market.
The chemical tankers are being built by AVIC Dingheng Shipbuilding Co. Ltd in China. The rst of the 15,000 deadweight tonne (DWT) vessels will be delivered to Terntank by February 2016, and the second by May 2016. The order with the Chinese shipyard includes an option for a further two vessels.
The tankers are being designed by Rolls-Royce, and include such features as optimised hulls in order to further increase fuel efciency.
news europe
10 www.bunkerspot.com Bunkerspot February/March 2014
news in briefEUROPE __________________Tribunal rules on MyFerry LinkIn December, the UK’s Competition Appeal Tribunal overturned the decision of the UK Competition Commission (CC) to prohibit Groupe Eurotunnel (GET) from operating a ferry business out of the Port of Dover.GET acquired three ferries and other assets from the failed SeaFrance ferry operation in mid-2012. In its bid for the vessels submitted to the Commercial Court of Paris, GET acted together with a workers’ cooperative formed by former SeaFrance employees. Other bids for the assets were submitted by P&O Ferries, Stena RoRo and DFDS/LD.The Court ruled in favour of the GET bid and a ferry service was launched between Calais and Dover under the MyFerryLink brand.However, the Competition Commission said that it believed that the addition of the SeaFrance operations to GET’s existing Channel Tunnel business would increase its market share to over half and that prices could rise as a result. The CC regulator then ruled that GET had a six-month period to sell its two largest ferries to a buyer approved by the competition authority.GET lodged an appeal against the CC’s decision and, following the ruling by the Competition Appeal Tribunal, the company said that it was ‘delighted at the decision…which upholds the existing levels of competition and enables Groupe Eurotunnel SA to continue to improve the range of services offered to customers and to pursue the activities of the cross-Channel operator, MyFerryLink.’
FINLAND _________________Fuel efcienciesWärtsilä has received an order to supply fuel efcient propulsion systems for six new chemical tankers for Stolt Tankers B.V.The company will provide the tankers, which are being built at the Hudong-Zhonghua Shipyard Group yard in China, with Wärtsilä RT-ex50 2-stroke engines, controllable pitch propellers with a tunnel gearbox and shaft generator, and oily water seperators.The vessels will be 185 metres (m) in length, with a total volume of 44,000 cubic metres (m3). Each tanker will attain IMO I and IMO III requirements.
Auxpac auxiliary engines unveiledFINLAND _________________________________________________
Wärtsilä has expanded its portfolio with the release of two new auxiliary engines. Both engines are pre-engineered gensets with a turbocharged 4-stroke engine having direct fuel injection and charge air cooling, and provide the electrical power onboard all types and sizes of ships.
The engines offer compliance with the IMO’s Tier II environmental regulations. Tier III compliance can be achieved with the addition of an exhaust treatment system.
The Wärtsilä Auxpac 16 is designed for merchant vessels (such as bulkers, tankers and smaller container vessels) with installed auxiliary power in the 500 kWe to 750 kWe per generating set range.
The second offering, the Wärtsilä Auxpac
32, is the auxiliary engine version of the Wärtsilä 32 family. It is aimed at the upper end of the merchant market, notably large container vessels with an auxiliary power need from approximately 2,500 kWe to 4,500 kWe per generating set.
The Auxpac 16 is the smallest Auxpac generating set in the portfolio. It has been developed in co-operation with the Shanghai Marine Diesel Engine Research Institute (SMDERI) in China and will be produced at the Wärtsilä Qiyao Diesel Company (WQDC) joint-venture company in China.
The Auxpac 32, meanwhile, will be produced in China at the Wärtsilä Yuchai Engine Company (WYEC) joint venture facilities.
Spliethoff selects PureSox systemEUROPE __________________________________________________
Alfa Laval has won a repeat order to supply its PureSOx exhaust gas cleaning system to Dutch shipowner Spliethoff.
The contract covers the supply of systems for ve vessels and these will be retrotted during 2014.
Alfa Laval delivered its rst PureSOx system to Spliethoff in 2012 and, since then, the system has logged more than 7,000 hours in compliance with International Maritime Organization (IMO) regulations for Emission Control Areas (ECA).
‘This repeat order for our scrubber technology conrms that it is an attractive and proven solution for the reduction of sulphur oxides (SOx), be it for retrots or for instal-lation aboard new vessels,’ commented Lars Renström, President and CEO of the Alfa Laval Group.
Alfa Laval will opened a new test and training centre in Aalborg, Denmark in January. This facility will be used to test boilers, scrubbers and heat exchangers for the marine and diesel sectors.
MAN moves to methanol propulsionNORWAY _________________________________________________
MAN Diesel & Turbo has conrmed that six new vessels which are under construction for Waterfront Shipping Company will able to run on methanol.
In July 2013, MAN Diesel & Turbo and Waterfront signed a Letter of Intent under which the ME-LGI engine would power the vessels. The engine expands the company’s dual fuel portfolio, enabling the use of more sustainable fuels such as methanol, ethanol and liqueed petroleum gas (LPG). The engines will eventually run on 95% methanol, ignited by 5% pilot oil.
Ole Grøne, Senior Vice President, Low Speed Promotion & Sales, MAN Diesel & Turbo, said: ‘This order represents a real market breakthrough for our Liquid Gas Injection engine and is the rst such, commercial project
that is not reliant on external funding. ‘The LGI engine is designed to handle
low-ash-point, low-sulphur fuels like LPG and methanol, etc. Consequently, its green credentials are striking, with emissions of sulphur being almost completely eliminated,’ added Grøne.
Grøne stated: ‘With increasing fuel prices and upcoming shipping regulations, we identied the need to develop an engine that can enable ships to run on alternative fuels with enhanced environmental benets. The ability of our ME-LGI engine to run on sulphur-free fuels offers great potential.’
The vessels are expected to be delivered to Waterfront in 2016.
• Sam Lowrey writes about methanol as a fuel option on page 46.
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11www.bunkerspot.comBunkerspot February/March 2014
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news in briefFINLAND _________________Geared for savingsWärtsilä has introduced an environmentally and economically efcient 2-speed marine gearbox.The gearbox is designed for vessels which have multiple operational modes or reduced transit speeds, such as RoPax ferries, offshore support vessels or tug boats. Following sea trials, it was found that a fuel consumption reduction of 8% can be achieved when compared with a single mechanical propulsion system.Reductions of up to 15% are expected to be achieved in the future, with a decrease in nitrogen oxide (NOx) and sulphur oxide (SOx) exhaust emissions also noted.An order for the new product has already been placed by the Rescue & Salvage Bureau of the People’s Republic of China’s Ministry of Transport following successful sea trials carried out at Huangpu shipyard.
UNITED KINGDOM _________Blyth terminal fundingLloyd’s Banking Group has awarded a £17 million ($28 million) funding package to Sea Bunkering to fund the construction of a new terminal at the Port of Blyth.The company will use the money to fund the development of a new storage facility, which will have an estimated capacity of 15 million litres of fuel. It is hoped that the hub will be used as a distribution centre to store fuel bought by the company, before being transported to other storage units in Thames, Heysham, Lerwick, Petershead and Aberdeen.To manage the increased capacity, Sea Bunkering, a trading division of the Geos Group, will also look to build capabilities to ship larger volumes of fuel to customers. Barry Newton, Managing Director of the Geos Group, said: ‘We have experienced rapid growth and the development of the storage terminal is the next step in our strategy to further increase our performance and capacity.’
ROMANIA ________________Port to portLukoil-Bulgaria Bunker has begun bunker supply operations at the Port of Midia. It is supplying fuel oil and marine diesel oil (MDO) from its own tanker, Navi. Lukoil-Bulgaria Bunker also supplies at the Port of Constanta.
Alfa Laval secures PureDry contractSWEDEN __________________________________________________
Alfa Laval has won an order to supply its PureDry waste fuel recovery system to a ‘leading global carrier company’.
The eet of 40 vessels will be equipped with the system in a deal which has an approximate value of SEK 40 million ($6.2 million). Delivery is expected in 2014 and 2015. The PureDry recovery technology recovers all useable fuel from a vessel’s waste fuel oil by using a combination of separation technologies. A new
high-speed centrifugal separator, which uses a solid bowl with a self-cleaning mechanism, enables a vessel which burns 100 metric tonnes (mt) of oil per day to potentially save around SEK 3 million ($465,00) in a year.
‘This is indeed a very signicant order for our unique Alfa Laval PureDry system that is reaching wide acceptance among shipowners,’ said Lars Renström, President and CEO of the Alfa Laval Group.
Contract inked for LNG hybrid bargeSLOVAKIA ________________________________________________
A Slovakia-based company will build the rst ever liqueed natural gas (LNG) hybrid barge after being awarded a contract by Hybrid Port Energy GmbH.
Shipbuilding and Machinery of Komárno will build the vessel following the signing of an order by Becker Marine Systems, a subsidiary of Hybrid Port Energy.
The 74-metre (m) long vessel will feature ve generator sets totalling 7.5 MW for 50/60 Hz operating solely on LNG. The generator sets
will be supplied by Zeppelin Power Systems. The order represents a world rst – marine-classied LNG-fuelled Caterpillar engines have never before been delivered to customers.
The barge and its engines will also be outfitted to supply combined heat and power to potential customers, offering an additional environmental benet. The barge will facilitate cold ironing by cruise ships at the Port of Hamburg and delivery is expected by mid-2014.
New focus on stagnant midstream refining sectorEUROPE __________________________________________________
Europe’s ailing rening sector has received a boost with the announcement that the Carlyle Group and Vitol Group are to invest in Varo Energy to create a new midstream energy business in north-west Europe.
Under the terms of the proposed transaction, Vitol and Carlyle International Energy Partners (CIEP) will each own 50% of an enlarged Varo Energy Group. AtlasInvest will sell its shareholding in Varo Energy to CIEP while Vitol will reduce its current stake to enable each party to own 50%.
In conjunction with CIEP’s investment into Varo Energy, Varo Energy will acquire from Vitol all shares in PT Holdings GmbH, the holding company for Petrotank Neutrale Tanklager GmbH, and all shares in Vitol Germany GmbH.
Varo Energy will also acquire, by means of a separate transaction, all shares currently held by OMV Deutschland GmbH in Bayernoil Rafneriegesellschaft GmbH, as well as certain downstream assets owned by OMV Deutschland GmbH.
After the completion of these transactions,
the Varo Energy business will encompass rening, wholesale distribution, and storage. The rening operation will have a capacity of 160,000 barrels per day.
Varo Energy’s assets will include the Cressier refinery in Switzerland, all the Petrotankstorage facilities throughout Germany, additional storage facilities in Switzerland, and – after the acquisition from OMV – also a 45% shareholding in the Bayernoil renery in Bavaria, Germany. The distribution business will continue to serve clients in Hamburg, Bavaria and along the Rhine, as well as throughout Switzerland.
This is the second investment by CIEP, a fund that focuses on oil and gas exploration and production, midstream, rening and marketing and oil eld services in Europe, Africa, Latin America and Asia.
Each of the transactions are subject to regulatory approvals and other customary closing conditions.
These transactions are expected to close during the rst half of 2014.
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Tel: +65 6344 1108 Fax: +65 6344 1128email: [email protected]
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13www.bunkerspot.comBunkerspot February/March 2014
news in briefBELGIUM _________________Shore power pilotThe European TEN-T programme is to provide just over €1.1 million ($1.5 million) in funding for studies and a pilot project to improve the provision of onshore power for inland navigation in the Belgian region of Flanders.The studies, which have been allocated funding from the 2012 TEN-T programme, will focus on the operation and payment system for shore power in Flanders. Market surveys and a cost benet analysis will be undertaken, as well as the design and operation of a single web application platform for accessing shore power services.In order to test some of the ndings, a pilot programme to install and adapt existing and new shore power supply will be undertaken at three different locations. The project is set for completion by December 2015.
TURKEY __________________Ciner Group selects X92 enginesWärtsilä has won an order to supply its Wärtsilä X92 main engine for four post-Panamax 9,000 twenty-foot equivalent (TEU) vessels to be built for the Ciner Group.According to Wärtsilä, the X92 engine was selected due to ‘its high efciency and environmental performance’. The engine features electronically-controlled common-rail technology which, through its exible fuel injection and exhaust valve operations, enables a reduction in fuel costs. It also includes enhanced control of exhaust emissions.This contract also includes an option for a fth vessel.
NETHERLANDS ____________Route-planningMeteo Consult and Amarcon have received a joint order to implement the SPOS Seakeeping program on a minimum of 110 Maersk Line container vessels.Meteo Consult will provide its SPOS software, with Seakeeping plug-in, to the vessels, allowing the user to dene vessel loading conditions and motion threshold values.The OCTOPUS-Onboard Amarcon provides monitoring and forecasting software solutions for performance and optimisation of sea-going vessels.
Shipping lenders continue to feel loan book pressuresGERMANY ________________________________________________
German shipping lenders have seen a rise in credit risks due to prolonged industry weakness, cautioned Moody’s Investor Services in mid-December last year.
In a credit focus report entitled, German Shipping Lenders: Rising Problem Loans May Prompt Net Losses at Some Banks, Moody’s warned that ‘struggling shipping companies have been nding it increasingly difcult to service their loans’.
As such, the agency predicted that eight German banking groups examined in the report are likely to see a continuing rise in non-performing shipping loans. At year-end 2012, it continued, these banks had lent a
total of €105 billion ($144 billion) to shipping companies. Almost three-quarters of these loans are in the three worst-hit segments in terms of overcapacity: container ships, tankers and bulkers.
The Moody’s report also highlighted that: ‘These exposures contain considerable risk, evidenced by record-high problem loans that reached 21% of all shipping loans at end-2012, up from an already-elevated 14% at end-2011’.
The agency claims that the continuing downturn within the sector has now started to lead banks to increase their loan-loss provisions.
EU commits funding for propulsion pilot projectEUROPE __________________________________________________
The European Union (EU) is to co-nance a pilot project to investigate a new vessel propulsion system.
The project aims to optimise bunker consumption and reduce exhaust gas emissions through the use of energy storage system (ESS) batteries for hybrid propulsion and the installation of wet-scrubber technology on two similar roll-on roll-off passenger (RoPax) ships.
The initiative, which will receive €6.4 million ($8.7 million) in EU funding, has been selected for funding under the 2012 TEN-T Multi-Annual Programme.
The project will focus on reducing vessels’ total energy demand and the next phase will look at the installation of the smallest possible scrubber conguration. Trials will take place on the high frequency maritime route between the ports of Puttgarden and Rødby.
Wärtsilä opens propulsion test facilityFINLAND _________________________________________________
Wärtsilä has opened a test facility for future propulsion products and technology in Tuusula, Finland.
The Wärtsilä Propulsion Test Centre will enable the company to enhance the development of new, high quality and environ-mentally sound propulsion products, whilst working alongside research institutes, univer-sities and suppliers. In particular, the test centre will be used for functional and endurance testing with an emphasis on mechanical power transfer.
The facility, which is capable of running on a 24/7 basis, has been established and funded by Wärtsilä with collaboration from VTT Technical Research Centre, which will also provide the resources for the centre’s operations.
Designed to accommodate thrusters up to around 2 mW in power, the centre also has a frequency converter with an electrical motor and generator, a specially designed gearbox and a hydraulic loading system.
Jaakko Eskola, President Ship Power and Senior Executive Vice President, Wärtsilä, commented on this latest initiative: ‘This investment in a full scale test facility for propulsion products is one of the key elements in our strategy for supporting and assisting our customers in lowering operating costs through higher propulsion efciency and lower maintenance expenses.
‘Having a technology development centre enables us to provide the best possible technical support for the propulsion needs of the entire marine sector,’ said Eskola.
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14 www.bunkerspot.com Bunkerspot February/March 2014
news in briefNETHERLANDS ____________GTL pilot at RotterdamThe Boskalis vessel, the SMIT Elbe, has become the rst tugboat in the Netherlands to be fuelled with Shell GTL.GTL (gas-to-liquids) is a liquid fuel made from natural gas converted into synthetic diesel. The fuel produces far fewer nitrogen oxide (NOx), sulphur oxide (SOx), and black smoke emissions than regular diesel.The SMIT Elbe, which operates at the Port of Rotterdam, will run on GTL for around six months to determine whether the fuel can achieve a signicant reduction in emissions without any adaptation of the vessel’s engines
EUROPE __________________Dual fuel PSV contractSiem Offshore has inked contracts with Remontowa Shipbuilding in Poland for the construction of four dual-fuelled Platform Supply Vessels (PSVs).The vessels will be of the VS 4411 DF design. Siem Offshore has currently two vessels of similar design under construction for delivery in 2014 and 2015, and these vessels are contracted long-term with TOTAL E&P NORGE AS and AS Norske Shell.The new PSVs will be capable of running on liqueed natural gas (LNG) or marine diesel oil (MDO). The vessels will be built to meet the highest requirements for operations on the Norwegian Continental Shelf and will also be suited for operations in other geographical areas. The vessels are slated for delivery between Q3 2015 and Q2 2016.
SPAIN ____________________Expansion ambitionsSpain’s energy and mines department has approved Vopak’s request to triple the capacity of its storage terminal at the Port of Algeciras.According to media reports, capacity at the facility, which provides storage for gasoline, bunker fuel, diesel and naphtha, could be increased by some 881,000 cubic metres (m3) and include the construction of 36 new tanks.Vopak is reported to have said that the project is still in a feasibility phase, and that no nal decisions have yet been taken about construction or potential size of the expansion programme.
Off-spec ruling hailed as a ‘triumph of common sense’EUROPE __________________________________________________
Recent guidance from the European Court of Justice (ECJ) ruling that off-spec oil does not have to be handled as waste has been hailed as a ‘triumph of common sense’ by Dutch law rm AKD.
The ECJ ruling followed a dispute by Shell Nederland and Shell Belgium against a prior ruling by the Dutch environmental authorities (ILENT).
The two Shell parties had intended to up-blend a parcel of diesel oil to specication for selling on. The fuel had previously been rejected by a Belgian client and ILENT had said that this oil should be treated as waste. AKD has said that the ECJ guidance ‘will be welcomed by all suppliers of fuel oils and bunkers’.
Carel van Lynden, a partner with the shipping and offshore team at AKD in Rotterdam, said: ‘This is a good decision for bunker suppliers. This case reverses the very strict interpretation which ILENT had placed on off-spec bunkers.
‘By insisting they were classed as waste they invoked all sorts of domestic and European Union (EU) regulations for their handling which imposed disastrous and totally unnecessary costs on the bunker industry.’
In its analysis of the EU court ruling, AKD said, ‘will have a major impact in the key North Europe bunker hub of Rotterdam where a lower Dutch court and subsequently ILENT had interpreted EU Regulations (259/93) which describe ‘waste’ as a substance or object …which the holder discards or intends or is required to discard literally with respect to off-spec bunkers.’
Van Lynden continued: ‘The problem is that when off-spec bunkers are dened as waste, all sorts of environmental regulations kick in. For storage, transportation, blending and recycling of waste prior permission from ILENT is required. Such permission will only be given to a licensed waste collector or processor.
A regular bunker supplier cannot take the bunkers back unless it has such licenses, which of course it has not. So the value of the off-spec bunkers to the supplier drops to nil, and extensive costs have to be incurred for debunkering and processing.’
AKD said in a statement:‘This literal interpretation of EU waste
regulations has resulted in odd situations. For instance, bunkers with an aluminium/silicon
content of 82 (80 being the 2005 industry standard) which were refused by a vessel could only be debunkered by a licensed waste collector. The normal practice in the Netherlands until then would be debunkering by the supplier, blending with a parcel with a lower aluminium/silicon content and resale on the market. There has even been a case where the master of a vessel wanted to reject high sulphur fuel because low sulphur had been ordered, and where, for the mere reason that the master wanted to “discard” the perfectly sound high sulphur fuel it was qualied as waste.
‘The European court came to the rescue of suppliers in December. In cases C-241/12 and 242/12, the court has ruled that such literal interpretation is wrong. The case concerned contamination of a parcel of ULSD with remnants of MTBE. As a consequence, the ashpoint became too high, and the ULSD was therefore off spec.
‘This was discovered when the parcel had been delivered to the buyer in Belgium. The buyer requested Shell to take the parcel back. Shell did that and re-transported the parcel to the Netherlands for up-blending to specication. ILENT found out and qualied the parcel as waste.
‘In subsequent proceedings before the court of Rotterdam, Shell argued that the qualication as waste was wrong because ILENT was misinterpreting the EU Regulations.
‘The Rotterdam court asked the European Court to give guidance. The European Court ruled that, in determining whether a substance is waste, one should take into account whether that substance is still of use to the holder. In the Shell case the parcel had no use for the Belgian buyer, but that was not decisive: the buyer handed the parcel back to Shell against repayment of the purchase price.
‘The buyer did not “discard” the parcel in the sense of the Regulation, i.e. a manner of discarding which is detrimental to the environment. The fact that the parcel retained a considerable value was of importance. Shell took the parcel back for the purpose of up-blending it to specication.
‘The European Court decided that the strict waste legislation does not apply to cases like this, where the parcel can easily be reconditioned and will be resold for a consid-erable value.’
news europe
15www.bunkerspot.comBunkerspot February/March 2014
2015 in a flash!The 35th International Bunker Conference2 – 4 April 2014, Copenhagen, Denmark
IBC, the world’s longest-running and most respected bunker conference, will continue down the road set out the past years. Get an update on what’s happening in the bunker industry and meet old and new friends at this great networking arena.
The most positive aspect of IBC 2013 was highly experienced/skilled speakers! The networking was really good - good opportunity to meet colleagues from the industry.
Søren Mikkelsen, Bunker Trader, A/S Dan-Bunkering Ltd., Denmark
www.bunkerconference.com
Kjeld AaboMAN Diesel & Turbo
Robin MeechMarine and Energy Consulting Limited
Chris Midgley Shell International Petroleum Company
Søren Christian MeyerOW Bunker
news in briefSPAIN ____________________CEPSA reduces CLH holdingCEPSA has agreed to sell a 5% interest in Compañía Logística de Hidrocarburos (CLH) to the private investment company, Ardian.Under the terms of the deal, CEPSA will retain a 9.15% stake in CLH and will keep two representatives on its board of directors.Pedro Miró, CEO of CEPSA, commented on the rationale for the deal: ‘CLH has always been an important investment for CEPSA. We are satised with our involvement and believe our holdings will be sufcient to full our objectives. CEPSA is focusing its efforts on the exploration and production area, and the company’s interests are adequately represented in the Spanish fuel storage and distribution company.’Banco Bilbao Vizcaya Argentaria (BBVA) Bank acted as advisor in the transaction.
RUSSIA ___________________Gazprom mulls LNG optionsGazprom is reported to be investigating the possibility of building a small fuel plant on the Baltic Sea which could produce liqueed natural gas (LNG) as a marine fuel. According to an ofcial source, the company is aiming to develop a plant with an annual capacity of up to 1 million tonnes by 2020.The company has previously announced plans to build an LNG plant at Vladivostok, adding to its existing plant on the island of Sakhalin.
RUSSIA ___________________Bunker giant buys upRussian bunker company Gazpromneft Marine Bunker has purchased all shares of the Novorossiysk Petrotransshipment Complex (NNK). Deloports Ltd announced in late December that it had sold 100% of the shares of NNK – a port terminal working with companies that provide bunkering services in Russia – to the Gazpromneft subsidiary.
GREECE __________________Top orderGreek rm Top Ships has placed an order for a new ‘eco’ ship with Hyundai Mipo Dockyard. The order for the 39,000 deadweight tonne (DWT) vessel is worth $35 million. The product/chemical tanker is scheduled for delivery by the third quarter of 2015.
Storage contract for hybrid LNG bargeGERMANY ________________________________________________
Chart Ferox has been awarded a contract to provide liqueed natural gas (LNG) fuel storage equipment for an LNG hybrid barge which will operate in Hamburg’s HafenCity.
The company received the contract award from Hybrid Port Energy (HPE), a subsidiary of Becker Marine Systems.
The LNG-Hybrid Barge is a project between HPE and cruise liner operators and will provide power to cruise liners – in this case, AIDA cruise liners – during their layovers at the Port of Hamburg, using LNG to signicantly reduce emissions in accordance with current
and future MARPOL regulations.Chart’s onboard LNG system comprises
two 40ft LNG ISO intermodal containers and a skid mounted gas processing unit (GPU), along with connecting equipment, controls, safety appliances and associated piping. LNG will be supplied in modular form using ISO containers swapped on a full-for-empty basis to eliminate the need for a dedicated bunkering station.
Equipment delivery and commissioning is scheduled for the second quarter of 2014.The LNG Hybrid Barge is expected to come into operation during the third quarter of 2014.
Schreiber departs the Bomin GroupGERMANY ________________________________________________
In December, differences of opinion regarding the future direction of the Bomin Group were cited as the reason for co-Managing Director Peter Schreiber’s departure from the company.
In a company statement, it was explained that the performance of the Bomin Group had fallen below expectations and Mabanaft, which acquired Bomin (formerly known as Bominot) in 2012, had therefore decided to reorganise the management.
The statement went on to say that the market environment in the bunkering business remains difcult, and Bomin Group’s performance ‘is still unsatisfactory’.
It noted that: ‘As Mabanaft continues to see great potential in bunkering, Bomin will from
now on focus on optimising the core business and further intensifying its customer orientation as well as the collaboration between Bomin and Mabanaft.’
Peter Schreiber had worked for Bomin for over 15 years. Julio Tellechea, Managing Director Mabanaft GmbH & Co. KG and a member of the Marquard & Bahls AG Executive Board, will manage the bunkering company’s business together with the present Managing Director Thomas Roller, until such time as a successor is appointed.
During the transitional stage, it is understood that Tellechea will also act as management spokesman in addition to serving as Managing Director.
OW Bunker secures new credit facilityDENMARK ________________________________________________
OW Bunker has signed a $700 million revolving credit facility.
The new facility, which was over 100% oversubscribed, will renance its current $450 million facility. It comprises two tranches – a 364-day and a 3-year multi-currency revolving credit facility. The arrangement was oversub-scribed by a total of 13 international banks and nancial institutions in a syndicate led by ING Bank NV.
OW Bunker says it sees the oversub-scription and the up to three-year commitment as a ‘strong sign of condence in its business model’.
‘Liquidity is vital to growth in the bunker industry. This facility further strengthens our nancial position and the additional liquidity it brings provides us with exibility to continue
growing the business, including launching additional physical distribution operations. Our integrated business model, strong balance sheet and global footprint are key competitive advantages,’ said OW Bunker CFO Morten Skou.
ING Bank N.V., Nordea and Rabobank International, acting as bookrunning mandated lead arrangers, were joined by 10 other nancial institutions in the general syndication. ABN AMRO Bank N.V., Danske Bank and Natixis joined as bookrunning mandated lead arrangers, while Commerzbank Aktienge-sellschaft, Crédit Agricole (Suisse) S.A., Deutsche Bank AG, Amsterdam branch, Fifth Third Bank, Société Générale, Standard Chartered Bank and UBS AG participated as mandated lead arrangers.
2015 in a flash!The 35th International Bunker Conference2 – 4 April 2014, Copenhagen, Denmark
IBC, the world’s longest-running and most respected bunker conference, will continue down the road set out the past years. Get an update on what’s happening in the bunker industry and meet old and new friends at this great networking arena.
The most positive aspect of IBC 2013 was highly experienced/skilled speakers! The networking was really good - good opportunity to meet colleagues from the industry.
Søren Mikkelsen, Bunker Trader, A/S Dan-Bunkering Ltd., Denmark
www.bunkerconference.com
Kjeld AaboMAN Diesel & Turbo
Robin MeechMarine and Energy Consulting Limited
Chris Midgley Shell International Petroleum Company
Søren Christian MeyerOW Bunker
news europe
17www.bunkerspot.comBunkerspot February/March 2014
news in briefGIBRALTAR _______________Storage optionsThe way that Gibraltar handles its fuel storage may be on the brink of change, as it looks set to develop modern storage facilities onshore.Currently, the Rock relies on oating storage when supplying vessels. However, it has been reported that the Gibraltar government is committed to use the Detached Mole as a bunkering location in the bay.It has been suggested that this move is in response to the increasing storage capacity being put in place at the port’s major competitors at Algeciras and Tangiers.
EUROPE __________________New era for waste tariffsEuropean ports have introduced new waste fees and charges for ocean-going vessels under the Port Waste Plan for the North Sea Canal Area – vessels using marine gasoil (MGO), marine diesel oil (MDO) and liqueed natural gas (LNG) as a bunker fuel can apply for a reduced waste fee.The new tariff structure, which came into effect on 1 January, was agreed by the ports of Amsterdam, Rotterdam, Zeeland Seaports, Ghent and Zeebrugge, under the chairmanship of Amsterdam.The revised fees have initially been introduced by the ports in the North Sea Canal Area, Ghent and Zeeland Seaports. Implementation at Antwerp and Rotterdam will follow throughout 2014 and no later than 1 January 2015. Other Dutch ports are also considering participation in the scheme, and Bremen and Hamburg in Germany have also shown interest.The introduction of a reduced fee for environmentally friendly vessels is also one of the new elements of the tariff system, and a list of vessels with an environmental declaration will be published soon.
NORWAY _________________Key appointment at DNV GLDNV GL has announced the appointment of Elisabeth Tørstad as CEO of the group’s oil and gas business. Tørstad, formerly DNV GL’s chief technology ofcer, has signicant industry and management experience. She took on the role from January 2014, and works at the company’s oil and gas headquarters in Oslo.
Tornio terminal earmarked for LNGFINLAND _________________________________________________
Wärtsilä has signed a turnkey contract to supply a liqueed natural gas (LNG) receiving terminal to be built in Tornio – the facility could eventually supply LNG to ships.
The contract, valued at some €100 million ($136 million), has been signed with Manga LNG Oy, a joint venture between Finnish companies Outokumpu Group, Ruukki Metals Oy, Gasum Oy and EPV Energy Ltd. The deal is conditional on receipt of investment support
and Manga LNG Oy’s contracts with other parties, including the gas suppliers.
The main user of the LNG from the terminal will be the Outokumpu Tornio steel mill but other consumers in the region will also be served. According to a statement from Wärtsilä, the terminal may at some point supply LNG to vessels, such as the new icebreaker planned to operate in the Tornio and Bay of Bothnia region.
Transport groups call for advanced emissions monitoringEUROPE __________________________________________________
A new study claims that owners and operators of large ships could save up to €9 million ($12.3 million) each year, through advanced emissions monitoring of large ships calling at European ports.
The claim has been made in a report published by sustainable transport groups Transport & Environment (T&E) and Seas at Risk.
The report says that the lower operations costs of using automated systems – such as fuel ow meters or continuous emissions monitoring – would create the savings.
Electronic collection and reporting of data would cut out the requirement for man hours, it adds, and verication costs by third parties would be ‘signicantly’ reduced through the accuracy and veriability of the data.
The report, carried out by consultancy CE Delft, concludes that these advanced monitoring systems also have the potential to enable fuel savings, and therefore lower emissions costs, by a signicantly greater extent than the 2% carbon dioxide (CO2) cut cited by the European Commission (EC) in a June 2013 proposal. In this proposal, the EC suggested that all ships calling at European
Union (EU) ports be required to measure and report their annual fuel burn and emissions when travelling to and from the EU.
In a summary, T&E said: ‘As it stands, the proposal goes no further than requiring ships and operators to report fuel consumption based on fuel sales receipts, which ships already carry. Advanced, electronic consumption measuring methods, which provide shipowners with the necessary information to capture real emissions reductions, are mentioned, but not mandated by the proposal’.
Aoife O’Leary, clean shipping ofcer at T&E, questioned: ‘This study clearly shows that the best way to monitor shipping emissions is also the cheapest in the long run.
‘When GPS systems became available to massively improve the accuracy of ship navigation, no shipowner turned a blind eye to the technology just because of an upfront capital cost.
‘So, why should the Commission favour the use of inaccurate old-fashioned paper receipts when they could promote an accurate, real-time fuel monitoring system, enabling real emissions reductions?,’ he concluded.
Green light for LNG bunkeringNORWAY _________________________________________________
New legislation has been passed which will allow vessels with passengers onboard to be bunkered with liqueed natural gas (LNG) in Norwegian waters.
The Directorate for Civil Protection (DSB) told Bunkerspot that the Regulation of 8 June 2009 relating to handling of ammable, reactive and pressurised substances including requisite
equipment and installations has now entered into force. The new regulation allows the DSB to give the go-ahead for the LNG bunkering of passenger vessels with passengers onboard ‘if certain requirements are met and the safety of third parties onboard the ship as well as onshore (in terminal buildings, on parking spaces, etc.) are safeguarded.’
news europe
18 www.bunkerspot.com Bunkerspot February/March 2014
news in briefFINLAND _________________No take-up for takeoverIn January, Wärtsilä’s Board of Directors conrmed that talks with Rolls-Royce had taken place over a possible takeover deal, but discussions had now ended. It had been reported that Rolls-Royce was looking to buy Wärtsilä’s marine propulsion division. In a statement, the Wärtsilä said: ‘We conrm the approach by Rolls-Royce with a preliminary proposal for a possible offer for the company. ‘However, we conrm that there are no longer ongoing discussions with Rolls-Royce.’
EUROPE __________________Feasibility assessmentsThe European Union has pledged over €1 million ($1.3 million) in funding from the TEN-T programme for a series of studies into the creation of a maritime liqueed natural gas (LNG) infrastructure in Spain and France. The studies, selected for funding under the 2012 TEN-T Multi-Annual Call, will determine the feasibility of implementing LNG bunkering facilities in the French Port of Roscoff and the Spanish Port of Santander. The ndings of the studies will be used as a decision-making tool for the construction and retrot of LNG-fuelled vessels, while port authorities in Roscoff and Santander will be able to plan the design and implementation of LNG bunkering stations.
UNITED KINGDOM _________Cutting emissionsUp to £3 million ($4.9 million) is to be injected into the UK maritime sector in an initiative to support the development of emission reduction solutions for naval, leisure and merchant marine vessels. Speaking at the London Boat Show in January, Business and Energy Minister, Michael Fallon, said that the Technology Strategy Board would be opening a new collaborative competition: Vessel Efcient II: Better Systems at Sea.Projects are expected to range in size from £500,000 to £1.5 million. The two-stage competition opened for applicants at the beginning of the year and the deadline for all expressions of interest is 5 March 2014.
Bunkering restrictions eased in 2014?RUSSIA ___________________________________________________
The beginning of 2014 looks to have seen an easing of the turbulent situation which enveloped the Russian bunkering market towards the end of last year.
Bunkerspot understands from local sources that the offshore bunkering ban imposed has now been lifted. However regulations remain tight over who is allowed to bunker and the source of fuel that can be
supplied.An industry source said: ‘The authorities
have lifted the ban but now physical bunker suppliers have to conrm the fuel source.
‘I mean that the bunker fuels should be produced only at a renery licensed and listed in the registry of the Russian Ministry of Energy. Other fuels are not accepted and one cannot supply such bunkers.’
Brittany Ferries commits to LNG propulsion for new ferryFRANCE __________________________________________________
As widely anticipated, Brittany Ferries has announced that it has placed an order for a new liqueed natural gas (LNG)-powered cruise-ferry
The passenger ship will become not only the largest vessel in the company’s eet, but one of the largest such vessels in the world.
The decision to place the order arrives on the back of a two-year study, which has been collaboratively carried out with STX France, regarding the feasibility of using LNG as a marine fuel.
Upon completion, the £225 million ($373 million) vessel will replace Brittany Ferries’ current agship, Pont Aven, and will operate on the longer routes between the United Kingdom and Spain.
Mike Bevens, Group Commercial Director, said: ‘This represents a huge investment which will benet not simply our customers but the environment as well.
The ferry is expected to enter service in spring 2017.
LNG bunker station opens for businessNETHERLANDS ____________________________________________
Inland navigation vessels can now bunker liqueed natural gas (LNG) in the Port of Amsterdam.
The Greenstream, operated by InterStream Barging and on charter to Shell, was the rst vessel to use the LNG bunker location at Amerikahaven. The Port of Amsterdam has designed Green Quay at Amerikahaven to enable bunkering from a tanker truck into an inland navigation vessel or small ocean-going vessel.
Two Dutch ships currently run entirely on LNG, the Greenstream and the Greenrhine,
and one vessel – the Argonon - uses dual fuel technology.
‘The Port of Amsterdam is doing everything possible to encourage the use of cleaner fuels, including LNG. As an energy port, we’re pleased to contribute to greening marine fuels,’ commented Koen Overtoom, Port of Amsterdam’s COO.
‘We’re currently developing plans with our partners to convert green gas into the even cleaner bio-LNG, so that we can reduce carbon dioxide (CO2) emissions even further,’ Overtoom concluded.
UKHO introduces QR codes on chartsUNITED KINGDOM __________________________________________
For the rst time, paper navigation charts issued by The United Kingdom Hydrographic Ofce (UKHO) have been linked with the searchable Notes to Mariners database. This innovation is intended to enable instant access to chart status information on smart phones and tablets.
Unique QR codes – a two-dimensional bar code - have been added to the UKHO’s portfolio of Standard Nautical Charts. By scanning the code on their device, the smart phone or tablet user will be able to go directly to the relevant webpage for the chart on the ‘NM Websearch’ database.
news europe
19www.bunkerspot.comBunkerspot February/March 2014
news in briefUNITED STATES ___________New bargeMaxum Petroleum has announced the construction of a new distillate-only bunker barge, the Global Pilot. The barge will operate on the west coast of the United States, joining four other double hull vessels deployed by Maxum in 2011.Global Pilot is to be built by Vigor Fab, the construction arm of Vigor Industrial, at its Harbour Island facility. With a capacity of 2,000 metric tonnes (mt), it will only bunker distillate fuels.Once the vessel has completed its sea trials, the company’s afliate, Global Marine Transportation, will take delivery of the barge. Delivery is expected to be completed in September 2014.
Worthington takes stake in AritasWorthington Industries, a diversied metals manufacturer, has announced it has acquired a 75% stake in Aritas, a Turkish liqueed natural gas (LNG) supplier.The acquisition is the latest addition to the company’s portfolio of energy and alternative fuel products. Aritas generated sales of around $40 million in 2013, specialising in transport trailers and containers and tanks for the LNG industry. It also produces fuelling systems for LNG-fuelled marine vessels.The President of Worthington Industries’ Pressure Cylinders segment, Andrew Billman, has said that the technology acquired can now be brought to a European market.
UNITED STATES ___________Hybrid optionTwo of Royal Caribbean’s newest cruise ships will be tted with hybrid scrubber technology supplied by Wärtsilä.The two vessels, Quantum of the Seas and Anthem of the Seas, will feature the technology to help them reduce sulphur emissions in order to meet the requirements of the upcoming Emission Control Area (ECA) requirements in 2015.The vessels are under construction by shipyard Meyer Werft in Papenburg, Germany, and are due to make their maiden voyages in 2014 and 2015.Royal Caribbean commented that it opted for the hybrid technology because this enabled a switch between open-loop and closed-loop scrubbing.
Atlantic Gulf Bunkering expands barge fleetUNITED STATES ____________________________________________
Atlantic Gulf Bunkering has expanded its barge eet with the addition of two vessels which will support deliveries in Mobile, Pascagoula, Gulfport, Pensacola and Panama City.
The barges, the AGB 101 and the AGB 102, will be joining the AGB 1801 in service. Each new barge can hold up to 10,000 barrels of intermediate fuel oil (IFO).
In a statement, the company said that it plans to expand its reach into other ports and
locations, and also move into deep water port development.
‘We are very excited about the addition of these two barges,’ said Kirk Callais, Sales Manager for Atlantic Gulf Bunkering. ‘It greatly expands our ability to provide our customers with custom blends and low sulphur fuels that meet today’s emission requirements. We are looking forward to being able to offer the additional capacity to the market.’
Harvey Marine secures growth fundingUNITED STATES ____________________________________________
GE Capital acted as administrative agent on $285 million of senior secured revolving and term credit facilities for Harley Marine Services.
Harley Marine focuses on the marine petroleum transportation sector on the US West Coast, the Gulf Coast and New York. It operates over 100 marine vessels and the credit facilities will be used to recapitalise the company and provide additional funds for growth initiatives.
GE Capital Markets acted as sole bookrunner and sole lead arranger on the transactions.
‘GE Capital has been a valued nancing partner of ours for almost 25 years,’ said Harley Franco, CEO, Harley Marine.
‘They really understand how to help our business grow, and we especially value their structuring expertise and capital markets capabilities.’
DSS fined over ‘magic pipe’ caseUNITED STATES ____________________________________________
In December, Diana Shipping Services SA (DSS), a subsidiary of Diana Shipping, was sentenced by a Norfolk, Virginia, District Court to a ne of $1,100,000 and a probation period of three years and six months following its
conviction in the Thetis ‘magic pipe’ case.In August last year, DSS was held liable for
the actions of the M/V Thetis’s Chief Engineer and 2nd Engineer who were found guilty of failing to properly handle waste oil and water.
BC Ferries introduces fuel surchargeCANADA __________________________________________________
BC Ferries introduced a fuel surcharge on most of its routes from 17 January. The fuel surcharge will be an average of 3.5% on all of its routes, with the exception of the Port Hardy-Prince Rupert and Prince Rupert-Haida Gwai routes.
The company notes that it is currently paying approximately $0.14 per litre higher than the Commissioner approved fuel price included in its fares. In November 2013, monthly fuel prices reached a new high for the year at $1.09 per litre.
‘Market pricing indicates that the price differential will continue throughout the year,’ said Mike Corrigan, BC Ferries’ President and CEO. ‘We are well aware that implementing a
fuel surcharge is unpopular with our customers, and we are doing everything we can to keep our fuel costs as low as possible, including building new ships with liqueed natural gas (LNG) capability.
‘We have waited as long as we can to implement a surcharge, however we must act now as it is clear that fuel prices are unlikely to decline in the foreseeable future.’
The company has reduced its fuel consumption by 5.8 million litres since 2004. However, the cost of fuel in FY2013 was $121 million, up from $50 million in FY2004. According to BC Ferries, each 1% increase in the cost of diesel translates into a $1.2 million increase in company expenses.
news americas
20 www.bunkerspot.com Bunkerspot February/March 2014
Oil spill laws set for changeCANADA __________________________________________________
The ship-source oil-spill regime in Canada is on the brink of change following the publication of a report which intends to force potential polluters to face unlimited liability in the case of a spill from one of their tankers.
The report, published by a three-member panel of experts, cites two current pipeline proposals – by Enbridge and Kinder Morgan – which are set to bring a further 600 tankers through British Columbia waters.
Transport Minister Lisa Raitt has already highlighted the actions taken by the government so far which include a promise to increase inspections of foreign tankers and a study on the behaviour of diluted bitumen in sea water.
While Raitt added that improvements are to be made to an ‘already robust tanker safety
system’, the study insists that the current $161 million liability limit for each spill should be removed and replaced with an unlimited liability for offenders.
The report states: ‘We feel that potential polluters should be prepared, through their contracted response organisations, to respond to a worst-case discharge, whether it be the full cargo of a tanker or a complete release of bunker fuel onboard a vessel.’
The report also goes on to recommend training exercises and regional risk assessments based on local geography, while calling for emergency response times to improve. Further points included increasing resources to help the coast guard, Environment Canada and Transport Canada to improve the system.
Bunker player expands into ColombiaCOLOMBIA ________________________________________________
OW Bunker has launched a new operation in Colombia, building upon its presence in the Latin American region.
A new ofce in Colombia’s most active port, Cartagena, has been established to service customers with products, risk management solutions and related services. As well as moving existing employees to the operation, the company has announced its intention to recruit more staff members to the Colombian ofce this year.
The move is intended to build upon OW Bunker’s presence in Latin America; the company already has ofces in Chile, Uruguay,
Panama and Brazil. The location of the ofce will allow it to act as a ‘hub’ to serve the wider Caribbean marine fuel market as well as vessels transiting the Panama Canal.
The company’s Executive Vice President, Götz Lehsten, commented: ‘Our expansion into Cartagena further strengthens our services across the Caribbean and the Latin America bunker market as a whole. We have an experienced team on the ground, with local knowledge and insight, supported by a global infrastructure and network that ensure customers receive the highest quality products and services when and where they need them.’
news in briefUNITED STATES ___________Breaking the boundariesA Zeus Development Corporation survey has identied more than 40 liqueed natural gas (LNG)-fuelled vessels in North America that are under development or evaluation.Some 42 vessels have been identied by Zeus, which says that marine eets have been inuenced by consistent availability of low-priced natural gas in the region to consider using LNG fuel. Almost a third (29%) of the projects involve the conversion of existing vessels to run on LNG, noted Zeus, with the remaining projects concentrating on newbuilds already designed to be fuelled by LNG.‘LNG in North America is leapfrogging past Europe into the next technological generation,’ says Zeus Development Corporation LNG fuel analyst Siyu Chen.‘Though the rst project (Harvey Gulf’s offshore service vessel, the Harvey Energy) has only recently been completed, American eets are already ordering more, larger vessels than almost anywhere else.’
Bunkering at Alaskan terminalThe Rig Tenders Marine Terminal at Cook Inlet has introduced bunkering services. The terminal has been recently ‘expanded and upgraded’ by ASRC Energy Services Alaska (AES Alaska), allowing the facility to offer refuelling, and additional storage space, as well as equipment repair services. Joe Lo Sciuto, President of AES Response Operations, described the reasoning behind the expansion as a ‘renaissance of production’, stating that: ‘We’re very excited about the future for Cook Inlet and what we see as a nice turnaround in the opportunities for producing energy out of it.’
Going onshoreUp to $5 million could be invested in shoreside power for cruise ships docking in Charleston, South Carolina, after a plan was announced to install the new technology at a passenger terminal at Union Pier. The State Ports Authority (SPA), welcomed the plans, but added:‘While we understand that shoreside power has been the focus of conversations to date, the industry is also pursuing other more modern technologies that provide equal or greater benets.’
CSA requests VGP legal reviewCANADA __________________________________________________
The Canadian Shipowners Association (CSA) has made a formal request for a legal review of the implementation dates in the newly introduced Environmental Protection Agency’s (EPA) Vessel General Permit.
According to the Association, the VGP includes requirements ‘that are currently impossible, making this review critical to ensuring fairness and predictability for CSA’s members’ operations in the US waters of the Great Lakes; a vital link in the continental supply chain’.
The CSA also raised the issue that there are currently two ballast water discharge regimes – one mandated by the EPA and another by the
United States Coast Guard (USCG).The CSA noted: ‘USCG will eventually
certify ballast water treatment systems for use in ships, but no systems have yet to qualify. Recognising this compliance challenge, the USCG has begun to provide extensions to affected vessels.
‘Unfortunately, the EPA has thus far declined to respond to industry’s requests for parallel extensions, which has resulted in two different and conicting federal regulatory regimes.
‘This divergence in approach will adversely affect Canadian shipowners and their Canadian and American customers.’
news americas
21www.bunkerspot.comBunkerspot February/March 2014
“Very interesting presentations, provided a broad range ofprojects & technologies.” European GTL 2013 Event
• Raj Suri, President, EmberClear• James Davis, Senior Vice President, XTLH, SGC Energia• Mitch Hindman, Licensing Manager, ExxonMobil• Mindi Farber-DeAnda, Team Lead, Biofuels and Emerging
Technologies, Energy Information Administration• Paul Langston, Business Development Manager, Conversion
Technology Centre, BP• Roy Lipski, CEO, Velocys• Ren Plastina, Managing Director, BNP Paribas Corporate
and Investment Banking• Denmon Sigler, Partner, Winston & Strawn LLP• Lesa Adair, Chief Executive Officer, Muse, Stancil & Co• Rick Smead, Natural Gas Expert, RBN Energy LLC• Chris Faulkner, Chief Executive Officer, Breitiling Oil and Gas• John Baardson, CEO, Pinto Energy
General Wesley K. Clark (Ret.), Chairman,
Energy Security Partners
KEYNOTE PRESENTATIONS FROM:
TOP-RANKED SPEAKER FACULTY INCLUDES:
BENEFITS OF ATTENDING:
• Hear about the latest projectdevelopments, small and large scale
• Understand GTL economics and how toapply them to your project
• Discover what the banks need to see tosecure your project finance
• Discuss how the industry needs to developin North America
• Evaluate GTL vs LNG
• Evaluate the recent technologicaladvancements and commercial challenges
Sponsored by
Gas-To-Liquids Opportunities Opening Up in North AmericaWorkshop Leader: Alex Forbes, Director, Forbes Communications Limited
1.30pm-5.00pm
12th-13thMARCH
2014Marriott West Loop Hotel, Houston, Texas, USA
Exploring the Opportunities and Developmentsof Gas to Liquids
SMi Group are proud to announce the launch of
Mark Schnell, Director New Business
Development, Sasol North America
PLUS AN INTERACTIVE HALF-DAY PRE-CONFERENCE WORKSHOPTUESDAY 11TH MARCH 2014, MARRIOTT WEST LOOP HOTEL, HOUSTON, TEXAS, USA
www.gtl-northamerica.comAndrew Gibbons on +44 (0)20 7827 6156 [email protected]
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news in briefUNITED STATES ___________Powering upABB has received Approval in Principle from ABS for its Onboard DC Grid power distribution system.The system allows generators to operate at variable speed which in turn achieves fuel savings of up to 20% over a conventional plant. The solution also offers signicant space savings potential, improved dynamic response and reduced emissions. The onboard grid also allows supplementary DC energy sources, including solar panels, fuel cells or batteries, to be plugged directly into the ship’s DC electrical systems, creating scope for additional fuel savings.The platform support vessel (PSV) Dina Star, delivered to Norwegian offshore owner Myklebusthaug Offshore by Kleven Yard in April last year, is the rst vessel to be powered with ABB’s full Onboard DC grid system.‘The implications and importance of AIP put ABB in a particularly advantageous position in the global marine market for the Onboard DC Grid solution. Our clients can feel comfortable that the solution can be applied to their next project and the basic concept acceptance and the clear path toward nal classication approval for construction has been obtained. They become competitive now and will remain so for the next 20 years and beyond,’ commented Heikki Soljama, head of ABB’s Marine and Cranes Business Unit.
LNG reviewThe LNG-CNG as Fuel Subcommittee of the Chemical Transportation Advisory Committee is set to meet in February to discuss safety standards for the design of vessels carrying natural gas or using natural gas a fuel. The Committee, which is sponsored by the US Coast Guard, will meet in Houston on 11-12 February. The Commandant of the Coast Guard has been approached by industry representatives about the design and installation of gas-fuelled systems for the propulsion of commercial vessels as well as the design of vessels carrying or processing natural gas. The Commandant is now looking to work with industry experts, through the CTAC, in order to identify the gaps in current Coast Guard policy and regulation on vessel design.
Quadrise to seek additional equity fundingUNITED STATES ____________________________________________
Quadrise Fuels International has outlined plans to raise equity to help broaden its portfolio and recruit additional staff.
One of Quadrise’s principal projects is Marine MSAR, a low-cost alternative to fuel oil in the shipping, rening and power generation markets.
The company announced its intention to seek funds whilst outlining updates on its active programmes, explaining: ‘The active programmes have been both de-risked and broadened over the past year, with an increased number of ventures planned to enter the commercial phase over the next 24 months.’
It added that the combination of a broader portfolio of high quality projects, and the need for additional staff to support active programmes, have increased the call on available funds beyond that anticipated when Quadrise last raised additional equity in November 2012.
Quadrise has said that additional equity funds should be raised this year, ‘preferably’ before the end of March 2014.
The Board of the Company has reconrmed that debt nance will be precluded until production-related revenues are contrac-tually assured, and says that it favours the approach of securing ‘a reasonable reserve to cover all eventualities’. The anticipated level of fundraising will be within the existing shareholder approvals obtained at the AGM in
November 2013, it conrmed. In the same statement, the company
outlined updates to projects including the Marine MSAR project. Regarding this project, it said, there had been recent progress, such as the loading of fuel, required for the ‘proof of concept’ seaborne programme, to two Maersk ships equipped with Wärtsilä and MAN Diesel two-stroke propulsion engines respectively.
The fuel will be used periodically in a series of programmes involving specic operations and load conditions that will lead to nal approval to commence the next phase.
Quadrise added that these seaborne programmes are independent, with the Wärtsilä programme underway and at sea, and the MAN Diesel programme awaiting results from a precursor land-based engine test required to provide settings for optimal seaborne operation.
The ‘proof of concept’ conrmation will signal the transition to commercial operations and the determination of contractual terms between the parties.
The rst joint activity will involve the creation of manufacturing capacity and production of Marine MSAR2 fuel to provide for up to 4,000 hours of seaborne performance data collection on each engine type. This resulting data is expected to support the issue of Letters of No Objection to be supplied by the respective engine manufacturers for the use of Marine MSAR2 in the engine types concerned.
OW Bunker signs BOSTCO supply dealUNITED STATES ____________________________________________
OW Bunker has announced an agreement with UNIPEC America to supply fuel to the Battle-ground Oil Specialty Terminal (BOSTCO) fuel oil terminal on the Houston Ship Channel.
This new partnership agreement follows UNIPEC’s negotiation of the rights to supply bunkers ex-pipe at the site, and will allow OW Bunker to provide products and services to calling vessels at the terminal.
OW Bunker says that the supply agreement will help its North American operation to utilise its physical supply expertise as well as its regional sales and marketing strengths. It added that the move will further expand its physical presence in the region and complement its existing operations in the Gulf of Mexico and Panama.
Keith Richardson, Physical Manager, OW Bunker North America, commented: ‘Providing bunkers to vessels within the new BOSTCO Terminal gives us the opportunity to drive further efciencies into our customers’ operations.
‘Our physical distribution expertise enables us to provide customers with quality products while they work their cargo, which means that they don’t have to waste time and associated calling costs waiting for a bunker barge at anchorage.’
The 180-acre terminal has a 7.1 million-barrel capacity. On completion, scheduled for this year, this will include 57 storage tanks to handle ultra low sulphur diesel, residual fuels and other black oil terminal services.
“Very interesting presentations, provided a broad range ofprojects & technologies.” European GTL 2013 Event
• Raj Suri, President, EmberClear• James Davis, Senior Vice President, XTLH, SGC Energia• Mitch Hindman, Licensing Manager, ExxonMobil• Mindi Farber-DeAnda, Team Lead, Biofuels and Emerging
Technologies, Energy Information Administration• Paul Langston, Business Development Manager, Conversion
Technology Centre, BP• Roy Lipski, CEO, Velocys• Ren Plastina, Managing Director, BNP Paribas Corporate
and Investment Banking• Denmon Sigler, Partner, Winston & Strawn LLP• Lesa Adair, Chief Executive Officer, Muse, Stancil & Co• Rick Smead, Natural Gas Expert, RBN Energy LLC• Chris Faulkner, Chief Executive Officer, Breitiling Oil and Gas• John Baardson, CEO, Pinto Energy
General Wesley K. Clark (Ret.), Chairman,
Energy Security Partners
KEYNOTE PRESENTATIONS FROM:
TOP-RANKED SPEAKER FACULTY INCLUDES:
BENEFITS OF ATTENDING:
• Hear about the latest projectdevelopments, small and large scale
• Understand GTL economics and how toapply them to your project
• Discover what the banks need to see tosecure your project finance
• Discuss how the industry needs to developin North America
• Evaluate GTL vs LNG
• Evaluate the recent technologicaladvancements and commercial challenges
Sponsored by
Gas-To-Liquids Opportunities Opening Up in North AmericaWorkshop Leader: Alex Forbes, Director, Forbes Communications Limited
1.30pm-5.00pm
12th-13thMARCH
2014Marriott West Loop Hotel, Houston, Texas, USA
Exploring the Opportunities and Developmentsof Gas to Liquids
SMi Group are proud to announce the launch of
Mark Schnell, Director New Business
Development, Sasol North America
PLUS AN INTERACTIVE HALF-DAY PRE-CONFERENCE WORKSHOPTUESDAY 11TH MARCH 2014, MARRIOTT WEST LOOP HOTEL, HOUSTON, TEXAS, USA
www.gtl-northamerica.comAndrew Gibbons on +44 (0)20 7827 6156 [email protected]
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E-042 GTL A4 Ad_R79 08/01/2014 09:18 Page 1
news americas
23www.bunkerspot.comBunkerspot February/March 2014
news in briefUNITED STATES ___________Pollution penaltyIn December, the United States Coast Guard (USCG) issued a $5,000 notice of violation to the Liberian-agged cargo ship Ken Cape for fuel oil and ballast water pollution.The ne was handed out for failure to report a hazardous condition onboard the vessel. The problem was detected following a Port State Control (PSC) examination which found that 120,000 gallons of ballast water and heavy fuel oil had leaked into the cargo hold via a ‘severely deteriorated fuel oil vent pipe’.According to the USCG, the crew of the vessel had discovered the problem several days earlier while at sea, however they failed to report the issue.
Completion scheduleLockheed Martin is nearing completion on the rst of two liqueed natural gas (LNG) fuel tanks it has been commissioned to build for Wärtsilä.The tanks, being built at the Michoud Assembly Facility, Louisiana, will fuel commercial transport ship engines. They will be installed in LNG-powered offshore supply vessels being constructed by Harvey Gulf International Marine.The cost to build the tanks has been put at around $3.8 million. According to Rob Smith, Vice President of Space and Cyber Programs for Lockheed Martin Information Systems and Global Solutions, Lockheed intends to become a key supplier in the LNG supply chain.
CANADA _________________Expressions of interestUp to ve shipyards are in contention to build three dual-fuelled ships for BC Ferries.The companies are understood to have been issued with a request for proposals to build two vessels capable of carrying 145 vehicles and 600 passengers, and a third ship able to carry 125 vehicles. It is believed that Seaspan Shipyards is one of the companies that may make a bid submission.BC Ferries Vice President, Mark Wilson, has said that he expects the new ferries to cut fuel costs, believing that this project will act as a ‘stepping stone to standardising vessels and equipment, which will save on maintenance and training costs’.
Concern grows over ongoing Canal expansion delaysPANAMA __________________________________________________
The delay in the construction of the Panama Canal expansion project may have wide-reaching effects, with some reports suggesting that it may impact on throughput and revenues for several US ports.
The Panama Canal Authority (ACP) is involved in a multi-billion dollar dispute with a Spanish-led consortium which is threatening to suspend work on the project unless the ACP pays $1.6 billion in cost overruns.
The GUPC consortium, which includes Italy’s Salini Impregilo SpA, Belgium’s Jan De Nul and Constructora Urbana from Panama, secured the expansion contract in 2009 to build a third set of locks and the key element of the project will double capacity of the Canal route.
Initial project estimates totalled some $5.25 billion, but the current cost overruns could push the gure close to $7 billion.
A report published by Fitch Ratings in January suggested that the current situation could postpone projected increases in throughput and impact on revenues at the Ports of Houston, Miami, New York, Savannah, and Charleston, as well as others on the Gulf of Mexico.
The report notes that the effect will be less on those ports which are already ‘big-ship’ ready, while real losses could be felt at those ports gearing up to accommodate larger vessels. Any delays could put pressure on these ports to reap back expenditure already outlayed.
In mid-January, the Board of Directors of the ACP publically reafrmed support of the Panama Canal Administration. A press release signed by Chairman Roberto Roy noted that: ‘The Board of Directors reafrms its full support to the management of the Administration in all the challenges it has faced during the Canal expansion.
‘The current situation, even though delicate, is but another challenge that we are facing together. We trust that will be resolved.
‘The Panama Canal expansion will be completed in the shortest amount of time and at the lowest cost possible, within the terms of the contract.’
As Bunkerspot went to press, the ACP had also turned down an offer from the European Commission to mediate in the dispute with the GUPC consortium.
The European Commissioner for Industry, Antonio Tajani, was reported to have held talks with Italian and Spanish foreign ministers about the situation and it was also indicated that he would be seeking to discuss the problem with the European Investment Bank, which has provided nance for the project.
In a statement, the ACP emphasised that: ‘The contract over a third set of locks has already mechanisms to resolve disputes and none of them includes the intervention of a third party.
‘This will only be dealt with in accordance with what the contract says,’ the ACP statement continued.
Caterpillar updates MaK M 25 C engineUNITED STATES ____________________________________________
Caterpillar has developed new features for its MaK M 25 C propulsion engine to meet new operational proles and maritime emission regulations.
Key updates to the engine include reduced part load fuel consumption, improved engine load response capabilities and a 5% higher rating over the current platform, increasing the power output to 350 kW per cylinder.
The platform will meet International Maritime Organization (IMO) II emissions regulations in its standard conguration, and is designed to support the operation of selective catalytic reduction (SCR) systems in order to comply with IMO III emission regulations.
The engine will also feature the new Caterpillar Monitoring Alarm and Control System (MACS) which will provide additional functionality regarding engine control, diagnostics and remote monitoring, including the option to extend these functions to control and monitor engine-related systems as required for the operation of SCRs.
‘It was critical for us to engineer efciency, loading capabilities and power improvements into the platform without sacricing the durability and reliability the M 25 C is known for throughout the industry,’ explained Detlef Kirste, Caterpillar Marine MaK product denition manager.
news americas
24 www.bunkerspot.com Bunkerspot February/March 2014
Team work on LNG-fuelled cargo shipCHINA ____________________________________________________
Nantong COSCO KHI Ship Engineering (NACKS) and Lloyd’s Register (LR) China have agreed to join forces on the development of a liqueed natural gas (LNG)-fuelled general cargo ship.
The 28,000 deadweight tonne (DWT) vessel design will feature new propulsion systems (dual/triple-fuelled) and will meet new operational requirements. The ship will build upon the NACKS 28K MPV design.
LR will aim to issue an approval in principle for the new design, including approval of the LNG-fuelled systems.
Luis Benito, LR’s Head of Global Marine
Marketing, commented on the project: ‘This project is the latest example of our efforts to work with key partners to develop safe, LNG-fuelled deep sea ships.
‘Assessing and addressing risk is where we really add value as we transfer ve decades of leadership in LNG carrier classication into supporting the exciting opportunities offered by gas for mainstream shipping.’
Nishiyama, Vice President of NACKS, also noted that: ‘We are focused on the development of green ship technologies, especially using LNG as fuel for merchant vessels.’
‘Unlawful’ fuel pilferage arrestsPHILIPPINES ______________________________________________
Twelve Philippine police ofcers have been charged with making illegal arrests in connection with alleged fuel pilferage.
Following arrests made last October, complaints against the National Capital Region Police Ofce (NCRPO) were led which alleged that these actions were unlawful.
EON Petroleum Corp., Portvega Ship Management Inc., and Shogun Ships Co. Inc. are seeking damages against Superintendent Harry Domingo, the head of police intelligence and operations unit, and 11 of his subordinates.
The companies also sought the preven-tative suspension of Domingo and his ofcers to prevent them ‘inuencing the case’.
The Philippine Star reported that: ‘EON Petroleum Corp., Portavaga Ship Management Inc., Shogun Ships Co. Inc. and their employees said that M/T Melissa Rae arrived at Delpan in Manila on 10 October for repair, bunkering and refuelling.
‘However, the Philippine Ports Authority advised the ship captain to transfer to the Federation Standby Area in Escolta as Delpan was overcrowded.
‘At about 6:30 p.m., a tanker truck of Unioil was loading diesel into the ship’s tank when RPIOU police ofcers, mostly in civilian clothes, arrived and accused them of being involved in fuel pilferage.’
IRAS issues zero-rate guidanceSINGAPORE _______________________________________________
The Inland Revenue Authority of Singapore (IRAS) now states that bunker fuel may be eligible for zero-rated treatment if it is being directly supplied to a foreign-going vessel, if the following documents are provided: a purchase order indicating the name of the vessel, date of departure and next destination
from Singapore; written instructions from the customer to deliver the bunker fuel to the vessel, which may be included in the purchase order; a sales invoice to the customer; a bunker delivery note endorsed by the Master/Chief Engineer of the vessel; and evidence of payment from the customer.
news in briefCHINA ___________________Rising ordersNaval and merchant ship orders for the China State Shipbuilding Corporation (CSSC) in the rst three-quarters of 2013 climbed by 117% year-on-year. Operating revenue grew 16%, compared with the same period in 2012.Announcing the increases, the company drew attention to what it termed as a ‘breakthrough in the contracting of “double high” ship and offshore engineering products’. To achieve this, CSSC said it had innovated business models and introduced energy-saving and environment-friendly green ships with ‘strong competitiveness’ to the market.
LNG trioFollowing collaboration on the latest Green Dolphin ship design, Wärtsilä and the Shanghai Merchant Ship Design and Research Institute (SDARI) are working with the China Classication Society (CCS).The companies aim to jointly develop a 1,100 twenty-foot equivalent unit (TEU) liqueed natural gas (LNG)-fuelled feeder boxship, which will be used in Chinese waters and along the China-Japan route. Li Xin, an engineer working for SDARI, was resported as saying: ‘Bunker fuel prices have reached levels that are too costly for owners, while at the same time environmental standards for shipping are becoming stricter. The use of LNG would give owners signicant cost savings in terms of bunker bills, and allow owners to meet stringent environmental regulations.’
JAPAN ___________________Seal of approvalNYK has received Lloyd’s Register Quality Assurance Limited (LRQA) certication for two pure car and truck carrier vessels.The certication was awarded following the disclosure by NYK of accurate numerical values relating to the handling of onboard waste and the emission of greenhouse gases, most notably carbon dioxide (CO2).The data collected used environmental indicators from the Clean Shipping Index (CSI), which is used for measuring and evaluating the environmental effects of vessels emissions. The company has formulated a base standard to measure environmental performance during voyages.
MPA cancels supply licencesSINGAPORE _______________________________________________
In January, the Maritime and Port Authority of Singapore (MPA) cancelled the licences of two bunker suppliers for breaches of T&Cs.
Excel Petroleum Enterprise Pte Ltd and Lian Hoe Leong & Brothers Pte Ltd were found to have breached Clause 3 of the Bunkering Licence T&Cs by allowing other companies
to use their Bunker Delivery Notes (BDN) to supply bunkers. Investigations are also ongoing against the companies that used the suppliers’ BDNs to determine whether they have also outed the MPA’s port regulations for operating as bunker suppliers without any bunker licences issued by the MPA.
news asia pacific
25www.bunkerspot.comBunkerspot February/March 2014
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Chairman
Nicholas BrowneGlobal Director
GAC
Roxana LesoviciPolicy Offi cer
European Commission
Dr. Leo Drollas, Director and Chief Economist
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Grant HunterChief Offi cer Legal and Contractual Affairs
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European Bunker Fuel 2014 FP Ad 2b.indd 1 20/01/2014 16:36
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May 22 -23, 2014 | The Manhattan Hotel | Rotterdam, The Netherlands
www.platts.com/europeanbunkerRegister by March 14, 2014 &
SAVE UP TO $700
ENSURING GROWTH IN A CHANGING REGULATORY ENVIRONMENT
5TH ANNUAL
Sponsored by: Supporting Association: Supported by:
EUROPEAN BUNKER FUEL
KEY LEARNING & DEBATE TOPICS: 3 Hear from the IBIA, ESPO, BIMCO, Intertanko and the
European Commission as they give their perspective on the challenges and opportunities faced
3 Discover how the bunker fuel industry is adjusting to keep up with evolving fuel regulations
3 Receive a detailed update on key market developments including advances in alternative fuels and on-board abatement
3 Understand fuel quality trends and their implications to the value chain
HEADLINE INDUSTRY THOUGHT-LEADERS:
Trevor Harrison, Maritime Arbitrator and Mediator and Board Member
International Bunker Industry Association
Chairman
Nicholas BrowneGlobal Director
GAC
Roxana LesoviciPolicy Offi cer
European Commission
Dr. Leo Drollas, Director and Chief Economist
The Centre for Global Energy Studies
Grant HunterChief Offi cer Legal and Contractual Affairs
BIMCO
Speakers
European Bunker Fuel 2014 FP Ad 2b.indd 1 20/01/2014 16:36
SDARI and NAPA team up on monitoringCHINA ____________________________________________________
Shanghai Ship Research and Design Institute (SDARI) and NAPA have agreed to expand their collaborative efforts to include ship performance monitoring.
The new agreement will extend an existing co-operation that includes the application of NAPA software to SDARI’s ship design processes and NAPA’s loading computer, which enhances safe operation and maximises a vessel’s cargo carriage capacity.
Ship performance monitoring has been added to partnership’s scope in response to a shift in focus in the maritime industry from capital expenditure costs to operating costs, amid sustained high bunker prices.
Demand for tools that provide ‘real time’ performance monitoring has risen sharply; playing a critical role in supporting shipowners, operators and charterers as they seek to optimise operational efciency during the
lifecycle of their vessels.NAPA President Juha Heikinheimo
commented on the extended alliance: ‘We are honoured to conrm the expansion of our co-operation with SDARI, China’s leading ship designer.
‘Broadening the scope of our partnership enables us to serve the shipowners and operators even better by helping them to monitor and analyse actual ship performance.
He continued: ‘Shipowners and operators have signicant savings potential of up to 30%, which can be achieved with better designs and more efcient, well-planned, monitored, analysed and optimised operations.
‘NAPA solutions offer comprehensive tools for efcient operations and, in addition, a possibility to prove the superiority of the modern eco-designs and provide valuable feedback to the design process.’
news in briefINDIA/CHINA _____________Pitch perfectA proposed propeller retrot upgrade on a Great Eastern Shipping Company (GESCO) crude oil carrier will deliver a 4% fuel saving, says MAN Diesel & Turbo.Under the terms of an agreement between MAN and GESCO, a Kappel propeller will be retrotted to the Samsung-built 105,000 deadweight tonne (DWT) M/T Jag Lavanya.According to MAN Diesel & Turbo, retrot calculations on different fixed-pitch propellers evaluated for the vessel indicated the efciency of the Kappel design.Christian Wollerup Sørensen, Sales Manager, MAN Diesel & Turbo, commented: ‘With this vessel’s speed and operating prole, the new Kappel propeller will deliver a fuel saving of 4% together with a reduced level of pressure impulses to hull – and without adding any other, efciency-improving devices.’
CHINA ___________________Eco-vesselTGE Marine Gas Engineering has announced it has signed a contract with Navigator Gas Ltd. for one LNG-powered vessel, with an option for three more. The deal will see TGE Marine design and supply cargo handling systems, high pressure fuel gas systems, including LNG fuel tanks, and tank material packages. The vessels are to be the next generation of ethane/ethylene carriers with 35,000 cubic metres capacity for Navigator Gas Ltd.Working closely with Jiangnan Shipyard Group, the company has developed a new eco-design capable of running at slow speeds on dual fuel main engines. With a maximum individual tank size of more than 12,000 cubic metres, the vessels will become the world’s largest type C tank based gas carrier. Delivery is expected in 2016.
SOUTH KOREA ____________Containership contractA contract to construct and deliver six containerships has been awarded to Daewoo Shipbuilding & Marine Engineering (DSME). The $539 million contract, which includes an option to include four additional units, will see DSME deliver six 10,000 twenty-foot equivalent unit (TEU) fuel-efcient post-Panamax vessels to Zodiac Maritime.
The dawning of the age of AquariusJAPAN ____________________________________________________
KEI Systems Ltd (KEI) and Eco Marine Power (EMP) have announced the joint development of the Aquarius Innovation Lab, which will focus on sustainable shipping technologies.
The laboratory, in Osaka, will research and design products related to renewable energy systems and fuel saving technologies, as well as testing equipment in a ‘multi-vendor environment’. Containing an outdoor test centre, the lab can accommodate evaluation processes for hardware such as solar panels, rigid sails and wind power devices.
Aimed at enhancing solutions for ships, ranging from small passenger ferries to bulk ore carriers and cruises ships, the laboratory
will test equipment on an international scale, taking in products from Italy, the United Kingdom, Canada, Germany, United States and Japan.
Current projects include the Aquarius MRS System, the EnergySail and the Aquarius MAS, with the latter being built to monitor fuel consumption as well as emissions and engine performance.
Tsukasa Nakagawa, President of KEI, said: ‘The Aquarius Innovation Lab will allow us to develop with EMP a range of innovative technologies that will reduce fuel consumption on ships and also lower the noxious gas emissions from these vessels.’
Operations team for Jurong storageSINGAPORE _______________________________________________
JTC Corporation is reported to have appointed a Royal Vopak-Jurong Consultants consortium to operate Singapore’s rst underground storage at the Jurong Rock Caverns.
According to local media reports, a team of Parson Brinckerhoff and Germany’s Oiltanking had also been interested in taking on the 15-year contract.
The operator appointment process has been a protracted one. As Bunkerspot has previously reported, JTC Corp. announced a re-tender for the contract towards the
end of 2011. As early as 2007, Vopak and Horizon Terminals were also reported to have expressed interest in the tender process.
The rst phase of the storage project, which is currently slated for completion by 2014, will create 51.91 million cubic feet (cft) of storage capacity for oil, including crude oil, condensates and naphtha.
Jurong Aromatics Corporation is the rst conrmed tenant at the new facility and it is understood to have already set up agreements with potential customers.
news asia pacific
27www.bunkerspot.comBunkerspot February/March 2014
news in briefCHINA ___________________Rolls-Royce inks PSV dealRolls-Royce has secured an order to provide design and integrated equipment packages for two platform supply vessels (PSV) to be built by Sinopacic.The contract incorporates MTU-engines as part of an integrated power and propulsion package with the UT 771 WP vessel series. This vessel design improves performance due to its wave piercing bow.Commenting on the contract award, Ronny Pål Kvalsvik, Rolls-Royce, Vice President of Sales & Contract - Offshore Systems, said: ‘The order demonstrates Sinopacc’s condence in our integrated systems and ship design capabilities. ‘This new design has been developed in cooperation between Rolls-Royce, the shipowner and the yard, and will feature technologies that increase fuel efciency and safety while reducing operation costs and emissions.’
ASIA _____________________New marketsMaK Asia is to add Electro-Motive Diesel’s (EMD) EMD 710 two-cycle engine to its marine sales portfolio.EMD is part of Progress Rail Services Corporation, a Caterpillar company, and hopes that this move will provide customers in Asia with a local support channel.This engine variant produces a signicant reduction in fuel and lube oil consumption when compared with previous generations of the engine.
JAPAN ___________________‘K’ Line doubles carrier order‘K’ Line has ordered an additional four fuel-efcient next generation car carriers with Shin Kurushima Dockyard Co. Ltd and Japan Marine United Corp.The shipbuilders will now each build four of the new vessels, with delivery starting in 2015.In a statement, ‘K’ Line noted that: ‘By adding this series of eight new ships with better stability of the vessel and better fuel efciency, we continue to deliver value added efciency and capability of handling an even wider variety of cargo mix to assure our services successfully meet the needs of our valued customers in order to be best suited for not only passenger cars but also other Ro-Ro cargoes.’
Test facility for ‘green’ projectsSINGAPORE _______________________________________________
South-East Asia’s rst advanced maritime energy test facility is to be set up by Singapore’s Nanyang Technological University (NTU) to enable research and development work on ‘green ship’ and port technologies.
Scheduled for 2015, the facility will be jointly funded between NTU and the Singapore Maritime Institute (SMI) and will allow industry and academia to test the parameters needed for research and development in areas including alternative fuels, fuel additives, engine emissions and control.
The new facility, the Maritime Energy Test Bed, will receive a contribution of S$4.7 million ($3.7 million) from SMI over the next decade, as well as S$3.4 million ($2.6 million) from NTU, with support from industry.
The test bed will be built according to International Maritime Organization (IMO)
requirements and will feature a 1.5 megawatt (MW) diesel engine which can be modied to run on different fuels, as well as advanced equipment to be used for research in energy storage, noise pollution and waste heat recovery.
As well as being available for testing use by engineers and scientists, the facility will be used for training purposes.
The Chairman of the Singapore Maritime Instutite, Mr Teo Siong Seng, commented on the initiative: ‘The establishment of the Maritime Energy Test Bed will help in the translation of innovative technologies from lab-scale to large-scale application where new technologies will be tested prior to sea trials.
‘The METB is a signicant component in demonstrating and raising Singapore’s maritime R&D capabilities and expertise.’
Tussle over Trincomalee storageSRI LANKA ________________________________________________
In late December, the Sri Lankan President, Mahinda Rajapaksa, told parliament that the government was engaged in discussions with a view to taking back oil storage tanks leased to Lanka IOC at the eastern port of Trincomalee in 2002.
According to local media reports, President Mahinda Rajapaksa outlined the government’s intentions during his 2014 budget speech in his capacity as Minister of Finance.
‘Our oil storage tanks located in Trincomalee were privatised. We are currently having talks to take them back (under state control),’ he explained.
Some 99 storage tanks were leased to the
Indian Oil Company subsidiary in 2002 by the then government headed by Ranil Wickram-nesinghe, who is now the leader of the main opposition United National Party.
The state oil organisation, Ceylon Petroleum Corporation, then agreed a memorandum of understanding with Lanka IOC over a long term lease for operating the tanks at Trincomalee for 35 years, for an annual fee of some $100,000.
The government’s move to take back the tanks has been interpreted by some political commentators as a response to India’s decision to vote against Sri Lanka at a Human Rights Council on rights accountability.
Chemoil Adani venture begins supply at ChennaiINDIA ____________________________________________________
In January, Chemoil Adani PVT commenced bunker supply operations at Chennai port.
The company is understood to have three barges available for delivery: the Jaleswara, with a 300 metric tonne (mt) capacity; the Jalabala (600 mt capacity); and the Vamsee (1050 mt capacity). The company also has tank storage with a capacity of 11,200 mt.
In late January, Chemoil Adani undertook its rst bunkering operation at the port. The Jalabala supplied the MV Nikolaos A with 300
mt of IFO 380.The company has previously stated that
it could achieve 10,000 mt of bunker sales within a 12-month period at Chennai. Prior to the start-up of the Chemoil Adani venture, bunkering at the port had been undertaken by the Indian Oil Corp.
Chemoil Adani, a joint venture between Chemoil and the Adani Group, also supplies at Mundra, Kandlar, Mumbai, and Cochin (in association with state-owned oil companies).
news asia pacific
28 www.bunkerspot.com Bunkerspot February/March 2014
news in briefSINGAPORE_______________Arrivals and departuresRafes Bunkering Pte Ltd has been added to the accredited list of bunker suppliers by the Maritime and Port Authority of Singapore (MPA). The company is a part of the Rafes Shipping Group of Companies.
SOUTH KOREA ____________Eco understandingA new Memorandum of Understanding (MoU) between the Korean Register of Shipping (KR) and the Busan Port Authority (BPA) will help the two parties cooperate on environmental initiatives. The MoU will allow the organisations to develop an evaluation index for eco-friendly vessels and green ship verication services. Other initiatives will focus on polar shipping, new and renewable energy, and local business expansion. Lim Ki-tack, President of the Busan Port Authority, commented: ‘Continually introducing new and innovative eco-friendly initiatives is vital to the ongoing development of the port. I expect this agreement to signicantly enhance both our eco-related technical systems and our training.’
JAPAN ___________________Safety guidelines updatedClassNK has released an updated version of the Guidelines for Gas Fuelled Ships.The second edition of the guidelines takes into account the requirements for the design of natural gas fuelled ships ‘based on the outcome of discussions held at the International Maritime Organization (IMO) regarding the International Code of Safety for ships using gases or other low ash-point fuels (IGF code).’ClassNK has updated its safety regulations in this sector of the industry, with the code governing aspects of the application of natural gas for propulsion and auxiliary purposes. The code is set to be nalised and introduced by 2014.
CHINA ___________________Insurers set up associationThe Shanghai Institute of Marine Insurance (SIMI) has been established.Its members include the Chinese companies PICC, CPIC and Ping An Insurance, and foreign organisations Lloyd’s, Sumitomo Mitsui and Allianz.
NYK to build LNG-fuelled tugboatJAPAN ____________________________________________________
NYK Line is to build Japan’s rst liqueed natural gas (LNG)-fuelled tugboat.
In a project subsidised by Japan’s Ministry of Economy, Trade and Industry and its Ministry of Land, Infrastructure, Transport and Tourism, the company will build a vessel featuring a dual fuel engine capable of running on either LNG or heavy fuel oil.
The LNG will be supplied by Tokyo Gas Co. Ltd and, with the support of Tokyo Gas, NYK will make arrangements for a safe LNG supply system.
NYK commented on the project: ‘NYK has
enhanced its initiatives to mitigate environ-mental loads through the practical realisation of environment-responsive technologies such as solar-powered systems and air-lubrication systems.
‘In 2011, NYK established a team in the company’s Fuel Group to research next-generation fuel alternatives to heavy oil, and looked into building an LNG-fueled vessel with the cooperation of Nippon Kaiji Kyokai and others, based on the results of a survey conducted by the Japan Railway Construction, Transport and Technology Agency.’
MPA issues provisional 2013 statisticsSINGAPORE _______________________________________________
Bunker sales fell back by 0.2 million tonnes in 2013 in Singapore, according to Maritime and Port Authority of Singapore (MPA) advance estimates.
The early indications suggest that the port managed to achieve good growth in other areas, including annual vessel arrival tonnage, container and cargo throughput and the Singaporean Registry of Ships.
Vessel arrival tonnage reached 2.33 billion
gross tonnes (GT), marking an increase of 3.2% over the same period in 2012. Attaining a similar increase, with a rise of 2.9%, was container and cargo throughput with over 32.6 million twenty-foot equivalent units (TEUs) in 2013.
Finally, the Singapore Shipping Registry had a bumper year, with the total tonnage of ships under its registry growing by 13.2% to 73.6 million gross tonnes.
Hyundai Oilbank seals supply dealSOUTH KOREA _____________________________________________
In December, South Korean rener Hyundai Oilbank signed a one-year contract with Japanese trading house Mitsubishi for the purchase of 80,000-90,000 metric tonnes (mt) per month of 380 centistoke (cst) bunker fuel.
Under the terms of the contract, which came into effect in January, some 60,000 mt per month will go to Hyundai’s Ulsan renery whilst 20,000-30,000 mt per month will be handled by its Daesan renery.
According to Platts, in 2013 Hyundai Oilbank purchased some 30,000-50,000 mt on a monthly basis from the Chinese oil supplier Sinopec.
Hyundai will use its Ulsan renery to send bunker fuel to its Busan terminal. Busan is South Korea’s largest bunkering port on the south coast of the country, accounting for about 60% of the total 700,000 mt per month of bunker sales in South Korea.
MOL Comfort interim reportJAPAN ____________________________________________________
An interim report investigating the June 2013 sinking of the container vessel MOL Comfort was released in late December.
The 8,000 twenty-foot equivalent unit (TEU) class vessel split into two on 17 June and sank, whilst transiting the Indian Ocean from Singapore to Jeddah. Following the loss of the vessel, a Casualty Investigation Team was established by ClassNK to determine the cause of the casualty.
A Committee on Large Container Ship Safety was also established by Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) to develop measures to ensure the safety of large container vessels – this was composed of maritime experts with relevant knowledge and experience, and related research institution staff.
An english excerpted version of the interim report is available on the MLIT website.
news asia pacific
29www.bunkerspot.comBunkerspot February/March 2014
news in briefOMAN ____________________Duqm hub slated for 2016A new bunkering terminal at the Port of Duqm is expected to be completed by 2016. The $50 million project is being completed by Oman Oil Company and the new terminal ‘is envisioned to become Oman’s epicentre for international commercial trade,’ said CEO Omar Bin Ahmed Qatan.Bunkerspot reported in July 2013 that the company had been seeking to establish bunkering operations at the port, and in December a bunkering licence and lease agreement was nally signed with the Port of Duqm Company.
UNITED ARAB EMIRATES ___Phase out planAbu Dhabi Ports Company (ADPC) is applying a phase-out schedule for old oil tankers, in a bid to protect the environment and promote safety at its ports.Port customers and potential port visitors are being advised by ADPC that oil tankers more than 28 years old will be refused entry, and those older than 25 years will be banned from 1 January 2015.The move to ban older oil tankers has been designed in addition to the phase out schedule already implemented by the International Convention for the Prevention of Pollution from Ships (MARPOL). Acting CEO at ADPC, Mohamed Juma Al Shamisi, commented: ‘Maintaining a clean and safe environment around our ports is our top priority at all times. This is a reminder to shipping trafc that, as a responsible port owner and manager, ADPC strictly monitors the sea trafc and will refuse port access to oil tankers that do not comply with our policy.’
MID EAST _________________Filling stationThe United Arab Shipping Company (UASC) plans to establish a liqueed natural gas (LNG) bunkering station in the Middle East.According to media reports, the station will be used to allow the company’s 10 LNG-ready containerships to refuel on outbound and inbound legs on the Asia-Europe trade. The company has ordered ve 18,000 twenty foot equivalent (TEU) and ve 14,000 TEU containers from Hyundai Heavy Industries.
NIOPDC looks to grow volumesIRAN _____________________________________________________
The National Iranian Oil Products Distribution Company (NIOPDC) has declared its intention to boost the Iranian bunkering sector.
Currently Bandar Abbas, Kharg, Boushehr, Qeshm, Assaluyeh and Chabahar ports are the main centres in the Persian Gulf and Oman Sea for bunkering, but the NIOPDC is looking to expand its services to every Iranian port.
Having launched bunkering operations in the Persian Gulf in 2007, the company worked alongside the private sector and sold one million tonnes of fuel oil in its inaugural year.
Figures rose to 2.2 million tonnes and 4.3 million tonnes respectively in 2008 and 2009, and, despite the impact of restrictions placed upon the nation’s bunkering activities, a total of 1.836 million tonnes of fuel oil was delivered in 2012.
Working closely with the private sector yet again, the company now wants to raise the supply of fuel oil, and local industry sources have suggested that Iranian companies may announce a new strategy for selling fuel in the Persian Gulf in early 2014.
New supplier enters offshore marketWEST AFRICA _____________________________________________
Oleum is a new physical supplier that will focus on bunker supply offshore West Africa.
Jointly established by Dan-Bunkering and Endofa, the company will operate as a fully independent entity. It will supply offshore Abidjan-Lagos and offshore Nigeria-Walvis Bay, and it will offer 380 centistoke (cst), 180 cst and marine gasoil (MGO) to ISO:2010 specications.
Oleum managing director Allan Frost commented on the new operation: ‘We will be operating a “one-stop-shop” and we have
full control of the entire supply chain. Oleum will control every aspect of the operation, from the sourcing and loading of our cargo to the actual delivery to the end user. Cargo is directly sourced from oil majors and transported in major-vetted tonnage to ensure that the quality will never be compromised.’
He continued: ‘At Oleum, we strongly believe in the concept of having full control of the supply chain, and we believe that there is a demand for a different approach to the West African physical supply market.’
UASC seals major financing facilityUNITED ARAB EMIRATES ____________________________________
The United Arab Shipping Company (UASC) sealed the largest shipping nance deal of 2013, closing a $1,251 million multi-tranche syndicated loan facility for the partial nancing of newbuilds.
The money will go towards seven 14,000 twenty-foot equivalent unit (TEU) and ve 18,000 TEU containerships. The facility is part of a larger $1,744 million debt nancing related to UASC’s announced $2,300 million capital expenditure programme.
The programme covers the construction of 17 container vessels. Ordered from Hyundai Heavy Industries Co. Ltd (HHI), the vessels are capable of running on conventional fuel and liqueed natural gas (LNG), with delivery scheduled between November 2014 and January 2016.
The vessels will be deployed as part of a 10-year strategic vessel-sharing agreement between UASC and China Shipping Container Lines.
Basil Al-Zaid, UASC Chief Financial Ofcer
commented on the nancing arrangement: ‘In a capital intensive industry like container shipping, it is critical to invest in new assets to keep up with market growth and to expand. The unwavering commitment of our shareholders as well as the excellent support from our regional and international lenders has been fundamental to the successful closing of this facility. The oversubscription to the facility by 2.2 times also shows the nancial strength of UASC.’
Jorn Hinge, UASC President and Chief Executive Ofcer said: ‘We are rst-movers with these ‘green’ newbuildings that will be equipped for liqueed natural gas (LNG) dual fuel for the rst time in the long haul container trades. UASC is proud to continue its commitment to energy efciency and environmental friendliness. As the UASC vision is Linking the Middle East to the World we appreciate especially that numerous regional Middle East banks have been involved in supporting this facility.’
news africa & mideast
30 www.bunkerspot.com Bunkerspot February/March 2014
Expansion planned for Fujairah storageUNITED ARAB EMIRATES ____________________________________
Vopak has announced a new expansion programme at Vopak Horizon Fujairah which will provide the rst crude oil tanks available in the Middle East for independent storage.
This seventh expansion at the facility will add 478,000 cubic metres (m3) of storage capacity for crude oil. It will feature ve storage tanks, one manifold and pipeline connection to the new very large crude carrier (VLCC) jetty at the Port of Fujairah, and it will increase the total storage capacity at Vopak Horizon Fujairah to
over 2.6 million m3.This latest expansion phase and the jetty
connections are expected to be commissioned in HY2 2016.
Eelco Hoekstra, Chairman of the Executive Board and CEO of Royal Vopak, commented on the new initiative: ‘With its strategic location outside the Strait of Hormuz combined with the available infrastructure and knowledge, the Port of Fujairah is very well positioned to become a crude oil hub in the Middle East.’
Go-ahead for offshore bunkeringNIGERIA __________________________________________________
Nigeria is to legalise offshore bunkering in the country’s waters as it looks to inhibit the large-scale theft of crude and petroleum products.
Announced by the Department of Petroleum Resources (DPR), the country’s oil industry regulator, the new rule will be submitted ‘in accordance with the provision of the Petroleum Act 1969’.
DPR Head, George Osahon, said: ‘President Goodluck Jonathan has approved the issuance of licences to bunkerers as part of his economic agenda.
Potential operators must submit an application to the Nigerian Navy providing information such as the vessel which will be used, location and duration of the supply operation, and the quantity of fuel delivered.
news in briefQATAR ___________________Switching to gasOne of the world’s premier integrated liqueed natural gas (LNG) enterprises, Qatar-based RasGas, is considering the conversion of almost half of its LNG carrier eet to run on the gas. According to media reports, the company is exploring options to convert 13 of its vessels to use gas: 12 Q-Flex vessels, as well as its one Q-Max vessel. In total, the rm has a total eet of 27 LNG carriers.
NIGERIA __________________Terminal ambitionsInternational Container Terminal Services, Inc. has agreed to sell a 25% stake in Lekki International Container Terminal Services LFTZ Enterprise (LICTSLE) in Nigeria to CMA Terminals. LICTSLE, located some 60 km east of Lagos, will provide a solution to the current congestion in the local Nigerian market and will serve as a regional transhipment hub in West Africa.
59 Payne Crescent, o Warehouse Road, Apapa, Lagos, NIGERIA.Email: [email protected] or [email protected]
Web: www.ayoknoxventures.comBranches: Port-Harcourt • Onne • Calabar • Warri • Sapele
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31www.bunkerspot.comBunkerspot February/March 2014
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Shell acquired Gasnor in 2012. Gasnor, a 100% Shell subsidiary is a small scale LNG pioneer and a key supplier of LNG fuel to ships in Northern Europe. Gasnor supplies industry companies and a growing fleet of LNG-powered ships with cleaner burning LNG. Gasnor’s extensive operational experience will add to Shell’s strengths - offering a strong value proposition in LNG fuel to its marine customers.Contact [email protected] or visit shell.com/global/future-energy/meeting-demand/natural-gas/natural-gas-transport.html
LOWER YOUR FUEL COSTSREDUCE LOCAL EMISSIONSOFFER SIMPLE & SAFE OPERATIONS
The driver of environmental regulation is forcing the marine fuels industry to make some tough commercial
decisions over future fuel purchasing strategies and business partnerships. The impending mandatory reduction in sulphur emission levels to 0.1% in 2015 within Emission Control Areas (ECAs) and the imposition of a 0.5% global sulphur cap (which could be in 2020 but, more realis-tically, may enter into force around 2025) means that bunker suppliers and shipowners have had to embark on a steep learning curve in accruing knowledge about emissions abatement technologies and alternative fuel options.
North West Europe has been the most ‘advanced’ market to date in terms of the marine liqueed natural gas (LNG) sector, but a number of European ports and European Commission (EC)-led initiatives are propelling the development of an LNG bunkering infrastructure at an increasingly fast pace.
The majority of players in the marine fuels
market, however, are taking a pragmatic approach to a changing supply landscape and their forward business plans are likely to include all currently available options – the use of LNG, the adoption of scrubbing technology and a switch to marine diesel oil (MDO).
The development of any new standalone supply chain is an expensive proposition – and the development of a European LNG supply and delivery infrastructure is no exception. The properties and handling requirements of LNG mean that existing marine fuel supply infrastructures cannot be replicated or easily adapted.
For a major player such as Shell, building a position in the burgeoning marine LNG marketplace is being achieved through the development of techno-logical and commercial partnerships.
Within Europe, It is pioneering a collaborative business model by working with Original Equipment Manufacturer (OEM) providers, engaging with leading owners and charterers in pilot projects,
and through business acquisition.The global demand for marine LNG
has been estimated at some 5-10 million metric tonnes per annum (mtpa) by 2020, and this includes coastal and international marine segments. Taking 5 mtpa as the demand benchmark, this would equate to around 1,000 coastal vessels (assuming vessel consumption of 6,000-7,000 tonnes per annum) or some 200 deep sea vessels (20,000-25,000 tonnes per annum).
Based on current estimates, and depending on the nal date for the implementation of the global cap, the appetite for marine LNG could accelerate to between 15-25 mtpa by 2025.
Price is clearly a pivotal factor when making a business case for using LNG as a marine fuel, but, as Shell acknowledges, pricing LNG is currently something of an imprecise science.
Gas hub prices themselves are not reective of the price of LNG as a marine fuel in the European market – they are based on pipeline quotes and also demonstrate a strong seasonality given that they are based on the heating requirements of European consumers.
The 6,500 vessels currently trading in ECAs are the most obvious candidates to opt for LNG propulsion. Shell envisages that container feeders, ferries, ro-ro and ro-pax will be the rst movers to LNG or other fuel/technology alternatives as these vessel types trade or operate in predictable patterns between xed bunkering stations.
In the run-up to 2015, Shell sees the main business opportunities for marine LNG within inland and coastal waterways, and by support vessels and offshore facilities.
Some 40% of global bunker demand comes from short sea, intra-regional vessels, and these vessels frequently operate within the parameters of ECAs where the incentive to change to environ-mentally friendly fuel is at its strongest.
In the inland waterways sector in Europe,
Shell is pioneering a collaborative model in the development of the marine LNG sector. Lesley Bankes-Hughes takes a closer look at this business strategy
Pioneering innovationSHELL LNG CAN HELP...
Shell acquired Gasnor in 2012. Gasnor, a 100% Shell subsidiary is a small scale LNG pioneer and a key supplier of LNG fuel to ships in Northern Europe. Gasnor supplies industry companies and a growing fleet of LNG-powered ships with cleaner burning LNG. Gasnor’s extensive operational experience will add to Shell’s strengths - offering a strong value proposition in LNG fuel to its marine customers.Contact [email protected] or visit shell.com/global/future-energy/meeting-demand/natural-gas/natural-gas-transport.html
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LNG focus
33www.bunkerspot.comBunkerspot February/March 2014
Shell is chartering the world’s rst two LNG-powered barges. The Greenstream and Greenrhine were built at Peters Shipyards in Kampen, the Netherlands and are operated by Interstream Barging. The vessels are part of the Shell Rhine Fleet and will operate in the Netherlands, Switzerland and Germany. The barges will carry sufcient LNG for a seven day period and so will be able to shuttle between Rotterdam and Basel without refuelling.
The ports of Rotterdam and Amsterdam are notably proactive in promoting marine LNG. From 1 July 2013, inland shipping has been able to refuel with LNG at Rotterdam and this milestone was marked at the end of June last year with the bunkering of the Greenstream in the Seinehaven.
Last December, the Greenstream was also the rst vessel to use the LNG bunker location at Amerikahaven at the Port of Amsterdam – here the Green Quay enables bunkering from a tanker truck to inland navigation vessels or small ocean-going vessels.
Shell is also exploring other opportu-nities in NW Europe, dovetailing its efforts with customer demand. A keystone in realising its ambitions in the LNG sector in the European arena was its acquisition, in 2012, of the Norwegian market leader in small-scale LNG, Gasnor.
Shell already had a 4.1% interest in the company but in July 2012, in a deal valued at some $74 million, it inked a share purchase agreement to acquire the outstanding shares.
The acquisition gave Shell a signicant entry point into the LNG market by giving it access to Gasnor’s small-scale production plants and distribution assets, including tanker ships, trucks and a terminal network.
Gasnor opened its rst LNG production plant in April 2003, and has since built two additional production facilities, with the largest site located at Kollsnes, just north of Bergen. The company’s ability to distribute LNG by truck or ship also ensures exibility and security of supply.
Together, Shell and Gasnor have an LNG bunkering capability in ports along most of the Norwegian west coast and, in tandem, they are developing a bunkering solution for northern Europe.
Given that the ability to offer LNG as a marine fuel requires the creation of a new supply infrastructure which taps into the expertise of technology providers at every stage, one of Shell’s main priorities has been to build on relationships with key industry experts.
The knowledge and R&D capabilities of engine manufacturers are, of course, crucial to the success of LNG as a marine fuel – in terms
of retrot and newbuild engine applications. The maritime industry’s acceptance of
LNG as a viable bunker fuel has happened remarkably quickly – although LNG carriers have long used boil-off gas as a propulsion option the shipping sector is usually notoriously resistant to change.
Shell has already established collabo-rative OEM partnerships with a number of other leading engine manufacturers who have invested in LNG engine technology.
Shell’s LNG OEM Business Development Manager, Paul McWhirter, explains the rationale behind the selection and operation of these partnerships: ‘Different collaborative partnerships between different players along the value chain are required to enable the market to develop.
‘For Shell it is not feasible to make LNG available and build the infrastructure to wait for the demand to develop.
‘Credible and reliable technology partners, concentrating and aggregating demand in key hubs, and a strong will to make it happen need to come together to create the conditions for the market to develop,’ McWhirter comments.
‘In that context, Shell has sought to work with a wide range of leading OEMs globally so as to lead and innovate in the marine sector.’
To a large extent, the maritime sector’s decision to ‘embrace’ LNG as a marine fuel has moved ahead of regulators and the authors of industry standards. Shell certainly acknowledges that the creation of standards and practices is running in parallel with a quickly maturing market.
McWhirter explains: ‘As the market for LNG as a marine fuel develops, key objectives are to leverage the technical knowhow of partners in developing industry standards around fuel quality, emissions, crew training requirements, and bunkering regulations.’
Within the European arena, the Directive for Clean Transport, issued last year, provided a clear message that the EC is fully committed to promoting marine LNG.
It is an ambitious ‘wish list’ calling for the establishment of LNG bunkering facilities at 139 ports across Europe by 2025, and Shell is responding to the EC’s rallying call. Paul McWhirter outlines Shell’s response to this initiative: ‘Shell will be developing the LNG transport fuel market for B2B heavy duty segments, which include heavy duty trucking, coastal and international marine, inland waterways, mining and rail.
‘Shell is focused in developing the European market and continues to engage potential customers in accessing their interest in an innovation-driven fuel.’
Making the case for LNG…
Gasnor supplies LNG to Statoil, which is the charterer of Eidesvik. Fredrik Meling, CEO
of Eidesvik Offshore ASA, is a rm advocate of the use of LNG as a marine fuel.
Meling explains: ‘Eidesvik has recently celebrated a milestone event in having operated LNG fuelled Platform Supply Vessels for more than a decade. We are today the world’s largest owner and operator of LNG powered supply vessels.
‘We are often asked why we are spending time and resources on this issue. To us in Eidesvik there is a simple answer to such questions. By using LNG as a fuel we reduce both fuel consumption and harmful emissions to the air. We see that nitrogen oxide (NOx) emissions are reduced by approximately 80% and emissions of carbon dioxide (CO2) by nearly 20%. Local navigation alone stands for some 40% of acid rain, and we have to show responsi-bility and take action. To us it is also a matter of course to economise with scarce resources like fuel for ships.
‘Our experience during this past decade is very good. The system is reliable and since start-up we have not had one single hour of technical off-hire due to the LNG systems on any of our gas powered vessels.’
LNG focus
34 www.bunkerspot.com Bunkerspot February/March 2014
While Shell has forged working relationships with OEM providers, the company is also reaching out to other key players in the LNG market. John Grubic, business development manager for the international marine segment, illustrates one example of an ongoing cross industry collaboration (announced last November), which is looking at the use of marine LNG for deep sea transportation – an ambitious project which could take the use of LNG beyond short-sea shipping.
Shell, as the supplier of LNG, is working with Cargill as an end user, while DNV GL is providing risk management expertise and Xynteo is co-ordinating project development.
The project partners are developing and testing the business case for using LNG to fuel ocean-going dry bulk vessels and medium range tankers, which have extensive trade patterns and relatively few LNG bunkering opportunities at sea.
Breaking into the deep sea trades is a challenge and one which is best confronted through collaborative approaches. As Roger Janson, President of Cargill’s ocean transpor-tation business comments: ‘Cargill operates over 500 vessels at any given time, and we have a close relationship with vessel owners.
‘The use of LNG as a shipping fuel for bulk vessels still poses a number of technical, operational and commercial challenges that need to be carefully evaluated. But we are condent that LNG will play an important role in the future of shipping and we are proud to be part of this effort.’
Lauran Wetemans, general manager of Downstream LNG at Shell, is also an advocate of this joint approach to problem solving: ‘We are pleased to be working with Cargill, DNV GL and Xynteo to better understand the commercial potential of LNG as a fuel, specically through a positive and forward-looking format that allows knowledge sharing and open dialogue.’
Clearly, when making a business case for a switch to LNG fuel, the costs of retrofitting vessels or investing in dual-fuelled newbuilds are considerable, and questions remain over future price setting, so why has Shell committed so decisively to the marine LNG supply chain?
‘Adherence to the stringent emission legislation is the driver for change, and LNG as a cleaner burning alternative offers a compelling value proposition to customers,’ says John Grubic.
‘As a cost competitive fuel to the next best
alternative for shipowners and charterers, LNG offers a unique opportunity to reduce the total costs of ownership for the customer, and improve environmental emissions.’
Facilitating the growth of the marine LNG sector in Europe – and globally – is an exciting prospect for Shell and forms a key strand of the company’s strategy in complying with upcoming emissions deadlines.
Lauran Wetemans sums up the company’s pragmatic and multi-faceted approach to the situation: ‘Shell believes in a mosaic of fuel options, as there is no silver bullet solution. Co-existence of multiple solutions, including the use of scrubbers, is beneficial for customers.
‘We believe LNG as a marine fuel is a strategic and sustainable option to adhere with national and international environmental legislation.
Kaushik Burman Global Marketing Manager, Downstream LNG, Shell
Email: [email protected]
LNG focus
35www.bunkerspot.comBunkerspot February/March 2014
Liqueed natural gas (LNG) has generated a signicant global buzz as the marine fuel of the future. The buzz has primarily been based on the hypothesis that LNG will have the ability to
supply the shipping community with a cheap fuel with a signicantly better environmental performance than the present fuels. Consid-erable amounts of public and private money have been spent on regulating, discussing, promoting and developing the use of LNG, but until now the developments in a global context have been slow. Are we now on the brink of a paradigm shift as big as when shipping went from sail to coal or from coal to oi,l or will the buzz fade?
In many respects, the development of LNG as a marine fuel started in Norway during the last years of the 1990s. At the time, there was a growing concern over the environmental impacts of the signicant emissions generated by shipping. One result of this growing concern was the development and delivery of the Norwegian road ferry, MF Glutra, put in service late 2000. She was the world’s rst vessel using LNG as a fuel other than LNG carriers, and she is still in operation.
Since then, Norway has continued the exploration of the possibilities of using LNG as a marine fuel, and today more than 40 vessel of different kinds are in operation in Norwegian waters, with around 15 more on order. The Norwegian experience has shown LNG to be a safe and reliable marine fuel.
In the rest of the world, the development has started to move and there are approximately 15 vessels in operation today, ranging from large RoPax/cruise vessels down to platform supply vessels (PSV) and small oil tankers. Geographically, there are LNG-fuelled vessels in operation in Europe, Asia, North and South America. There are about 25 conrmed orders globally and the numbers are increasing all the time.
Until the middle of the noughties, international interest in LNG as a marine fuel was low. Due to regulatory developments at that
Is LNG set to revolutionise the global marine fuels sector? Johan Algell considers the facts
Game changer
LNG focus
36 www.bunkerspot.com Bunkerspot February/March 2014
time, within both the International Maritime Organization (IMO) and the European Union (EU), the interest started to grow, increasing public awareness of the signicant environmental and health-related issues generated by shipping emissions.
Since the Second World War, shipping fuels have been predominantly petroleum-based. Originally rened products such as diesel were used, and residual fuels were uncommon due to handling complexities. During the 1970s, oil prices escalated due to oil embargoes, wars and revolutions. In combination with a signicant slump in the shipping markets, this forced the shipping community to search for cheaper fuels.
The solution was the increased use of residual fuels. The primary use of residual fuel at that time was power production, but due to new environmental legislations in some of the main markets, the shore-based demand started to decrease. The yards, engine manufacturers and equipment suppliers quickly adapted to the situation; the rening industry was happy and residual fuels rapidly became the main fuel for shipping.
During the last three decades of the 20th century, shipping saw continuous growth in demand. Compared to other modes of transport, the cost development was favourable due to the cheap but dirty residual fuels.
The global economy and trade flourished, and the air emissions generated were more or less ignored.
By the turn of the century, the situation had started to change and shipping was suddenly identied as the main contributor of nitrogen oxide (NOx), sulphur oxide (SOx) and particulate matter (PM) in many areas. This resulted in a lot of attention and a number of new regulations, of which the revised IMO MARPOL Annex VI from 2005 was the most important. Putting limits on sulphur content in the fuel as well as on NOx emissions from the engines, the new rules put the nger on the real soft spot of shipping, its cheap fuel.
To meet the new regulation, three predominant compliance strategies are currently available: • Switch to low sulphur fuel • Keep on using residual fuels and install
abatement technology• Use alternative fuels such as LNG.
The two rst solutions both have benets and drawbacks. Low sulphur fuel is the
simplest solution, with limited investments needed in the vessel or in supply systems but with a fuel price that is signicantly higher than the present residual fuels.
The main issue with abatement technology is the unproven nature of the systems, alongside the question of what to do with the residuals generated by these processes. However, the fuel cost will remain low.
Historically, the main obstacles for LNG have been availability, legislation and price. The former two points have been addressed in recent years, yet price still remains a key talking point.
So how much does LNG cost as a marine fuel? Many who have raised this question have been disappointed by getting vague and ambiguous answers from potential suppliers. Since the cost of bunkers is one of the main cost components when operating vessels, this has raised a lot of frustration among shipowners and charterers in relation to this new and promising fuel.
Today, in principle, all vessels use the same fuels delivered through the same competitive and transparent supply market. This implies that the risk related to fuel cost is limited since the price in principle is same for everybody.
The introduction of LNG into the fuel mix changes this situation, introducing new and unknown risk to the fuel management portfolio.
So why the vagueness and ambiguity from the suppliers? The problem is two-fold. First of all there is the lack of infrastructure for distribution and bunkering. LNG has, until recently, primarily been a method for moving large quantities of energy between two xed points. The infrastructure used for this is often only suitable for small-scale handling. This implies that signicant investments in infrastructure will be necessary to make LNG available as a marine fuel. The cost of this infrastructure has to be covered by a distribution mark-up, making the first tonne of supplied LNG very expensive.
The second problem is the underlying market price of natural gas. Until the end of the noughties, the natural gas price on all major markets followed the crude oil price (and, therefore, was also related to the price of bunker fuels). The two energy sources were used as substitutes for each other and most pricing of natural gas was crude oil indexed.
Two signicant events have changed in the natural gas market. The rst was the
so called ‘shale gas revolution’, ooding the US market with cheap natural gas and quickly reducing the US LNG demand to zero. The other was the Fukushima accident, which overnight generated a significant increase in the LNG demands of Japan.
The two events have created a totally imbalanced global market, with sky high prices in Asia versus rock bottom prices in the US market, and with Europe somewhere in the middle.
At present, all LNG production facilities in the world are fully utilised, and in principle, there is a global shortage of LNG. New LNG production facilities are under construction, but until these are fully operational, the price imbalance will remain.
An undeveloped distribution system requires signicant investment before any delivery is possible, which, in combination with an unbalanced sourcing market in continuous change, makes the formulation of clear price indications challenging.
Skangass, since its establishment in 2007, has made signicant investments in both production and regional distribution infrastructure, including trucks, vessels and terminals. Up until recently, the main focus of these investments has been to supply LNG to land-based customers in both Sweden and Norway. Some marine clients are presently supplied by Skangass, such as the Bit Viking and the Fjord Line ferries, but Skangass has a clear aim to grow in the marine sector and to become the leading LNG supplier to the marine market on the south western coastline of Norway.
We are already able to supply LNG via road to the whole area and from Q4 2014 we will also be able to do ship-to-ship (STS) deliveries anywhere in the region with our newly chartered LNG carrier, Coral Anthelia. We also aim to have a dedicated LNG bunker vessel in operation in the area from 2015/2016.
This development makes it possible for us to give interested clients clear information on the price of LNG delivered to vessels within our focus area.
Johan Algell Business Development Manager Marine LNG, Skangass
Email: [email protected] Tel: +46 31 388 5705 Web: www.skangass.no
LNG focus
37www.bunkerspot.comBunkerspot February/March 2014
It is just over 10 years since the rst commercial installations of marine exhaust gas scrubbers and, amidst the plethora of
environmental legislation, it is pretty much the only technology that performs as it says on the name plate. The latest designs of scrubbers are fully adapted to marine requirements and will normally exceed the requirements of regulation 14 of the revised MARPOL Annex VI.
Given that continuing to pollute is not an option, scrubbers are a modest investment with big returns. The prize includes low cost fuels and fuel exibility which can be added to numerous other benets, including lower black carbon and particulate emissions and possibly the lowest carbon emissions footprint per kW of power production on a well to wake basis, even when compared to liqueed natural gas (LNG).
The current Exhaust Gas Cleaning Systems Association (EGCSA) declared orders, as advised by members, is reected in accompanying table, which was updated on 28 January. The numbers do not reect the true extent of the global order book which has been said to be in the region of 200 ship-sets (number of vessels with scrubbers installed or on order).
For example, the Carnival Cruise Corporation has published an internal order book of 32 vessels for which scrubbers are to be installed. Unfortunately, secrecy and conden-tiality clauses therefore make a fully accurate assessment impossible. What can be said is that the order book is rising almost exponen-tially and rightly so, given the looming changes to Emission Control Area (ECA) regulations which will take effect from 1 January 2015.
Discussions with ship operators have moved from almost outright opposition to the technology and questioning on its reliability to a keen desire to seek more information to make strategic decisions on policy for 2015. A recent scrubber training seminar held in London in January 2014 was populated with at least 15 ship operators, an almost unheard of level of interest.
Information for cost and technically effective decision-making is extremely important and, to that end, operators are encouraged to seek information from several vendors and, if required, independent expertise. The revised EGCSA website, due to launch in February 2014, is intended to provide a rich resource of information for ship operators and owners alike. The website will contain legislation, details of technologies, member contact details and some sub-supplier information, as well as a resource of slides and drawings which can be downloaded for preparation of business case presentations.
A number of operators have already declared in the maritime press that they will switch to 0.1% sulphur distillate as their ECA prole is too low to justify the investment expense. In many cases, these decisions make economic sense but may not always account for other factors. ECA operation will require a considerable purchase and storage of a second fuel. The uptake in demand for 0.1% sulphur distillate will almost inevitably lead to the supply of suspect fuels blended with a focus on hitting the sulphur target, with little attention to other performance characteristics.
Supply chain constraints will limit the availability of 0.1% sulphur distillate to major bunkering ports whilst in other locations on-road distillate may be all that is available. A 10 parts per million (ppm) or 15 ppm distillate may have a ash point (FP) below 60°C, as often the land specications set a FP limit of 55°C. Viscosity of the product will also require attention as anything below about 10 centistoke (cSt) may compromise fuel pump lubrication.
Although fuel sulphur will have minimal effect on four stroke engine lubricants, two stroke cylinder liner lubricants must be changed if there are to be more than just a few hours on 0.1% sulphur distillate. The marine lubricant suppliers are developing cylinder oils with a low Base Number (BN) but with retained detergency to meet the ECA requirements. It is essential that operators check the two stroke OEM
requirements for cylinder oils. The need for two cylinder oil tanks may need to be accounted for when deciding to scrub or not to scrub.
It is apparent that the decision is more complex than simply additional fuel cost versus the capital investment required for scrubbers. It appears that the new emissions standards will see winners and losers in the stakes for the best strategy for compliance.
Shipowners generally prefer global regulations for consistency and a competitive ‘level playing eld’. So the introduction of regional rules by the European Commission (EC) and the US Environmental Protection Agency (EPA) Ofce of Water Quality has been a cause for concern and uncertainty.
In the case of the United States, new requirements have been introduced through the Vessel General Permit (VGP), which came into force on 19 December 2013. The early indications are that the US authorities will take a pragmatic and practical approach in their enforcement guidance and, in any case, the rst 12 months of the VGP will in many respects be a data gathering exercise.
It does stipulate the periodic requirement for the sampling and analysis of scrubber discharge water. Failure to observe and report on this requirement is more likely to lead to difculties than the operation of scrubbers in US waters. The VGP is only applicable in waters from 3 nautical miles (nm) from the coast.
The EU Directive relating to sulphur in liquid fuels includes requirements for ship compliance with emissions standards. The third edition (amendment) of the Directive has also been a serious cause for concern. Although these concerns have festered for some time, there has recently been a response to the concerns with an industry-wide consul-tation process to unblock issues that might prevent the adoption of scrubber technology.
The EC has been given the remit to solve these problems. EGCSA and scrubber designers are participating with other stakeholders to uncover the issues (especially
The order book for scrubbers is showing sustained growth. Don Gregory of EGCSA looks to the future
Coming of age
EGCS technology
38 www.bunkerspot.com Bunkerspot February/March 2014
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Quantity and quality are always under control
in the light of experience of the early installations and certication process). For example, certi-cation processes have uncovered a problem caused by the need to test a scrubber on high sulphur fuel in an ECA without the requisite certication in place. The tests do not cause a SOx emission breach but the use of high sulphur fuel oil is forbidden unless the exhaust gases are treated by a certied scrubber; the so called ‘chicken and egg’ scenario. This might sound trivial but breaking the law can in some circumstances have criminal consequences.
Overall, it would appear that there is an overwhelming will to iron out the wrinkles in the various regulations to ensure that scrubbers can be installed, certied and brought into service prior to 2015.
The current designs of scrubbers do exceed the current requirements for emissions standards. However, ship emissions standards remain less stringent than most other transport modes and stationary combustion plant. In particular, the emissions of particulate matter are currently not regulated. There is on-going work on a specic species of particulate emissions which is a signicant contributor to the global warming, known as black carbon.
The European Union (EU) has provided funding for academic and practical
development work addressing the more intractable pollution emissions. An EU Framework Project 7 consortium has been developing technology to meet current scrubber performance and also addressing ultrane particulate matter and nitrogen oxide (NOx) in one system. The ultrane particulate matter is particularly hazardous for humans as its size prole means it can bypass the normal human inhalation defences and lters. Currently, NOx emissions are addressed using selective catalytic reduction processes. The EU-funded work is examining other means which do not require external chemicals to remove NOx.
There is no doubt that scrubbers or exhaust gas after-treatment systems will become as ubiquitous as the marine diesel engine. Progress is being made and it is now at a stage where shipowners, operators and charterers need to ensure that they have the appropriate level of knowledge to determine their ECA compliance strategies. Help is at hand and should, wherever necessary, be utilised.
Don Gregory Director, EGCSA
Email: [email protected] Tel: +44 1784 481 151
As at 28 January 2014 EGCSA DECLARED ORDERS
Ship TypeOrders &
Installations
Cruise 16
Container 16
Ferry/RORO 23
Tanker 14
Bulk 10
Other 1
Total Orders 80
Total Installed Scrubber Power Handling
Orders & Installations
>5MW 7
>10MW 28
>20MW 31
>30MW 10
>40MW 4
Total Orders 80
EGCS technology
39www.bunkerspot.comBunkerspot February/March 2014
In the nal run up to the implementation of the 0.1% sulphur emission mandate within Emission Control Areas (ECA) in 2015, the maritime industry has already made much headway in
adopting technological strategies to achieve compliance with more stringent environmental regulations.
There are several options available to achieve sulphur oxide (SOx) reductions: a switch to low sulphur fuel inside an ECA, a full time switch to marine gasoil (MGO), the conversion of vessels to enable them to be powered by liqueed natural gas (LNG), or the installation of exhaust gas cleaning systems (EGCS) – or ‘scrubbers’, as they are more colloquially known.
Over the past year, there has been increasing debate over a switch to distillates to meet ECA requirements, and the adoption of LNG as a marine fuel has moved swiftly from the connes of northwest Europe across to North America, China and elsewhere.
The acceptance and uptake of EGCS technology has been, to date, a more low key process but owners are increasingly taking the decision to invest in this equipment.
An EGCS uses a chemical conversion process to capture the pollutants and reduce the vessel’s emissions. Depending on the type of scrubber, the waste is dealt with separately.
There are three types of scrubbers: open loop, closed loop and hybrid. Simply put, the operation of open loop scrubbers partly depends on the alkalinity of the water used.
EGCS technology is now gaining traction in the maritime sector. Sam Lowrey and Rebecca Byers talk to the technology developers and the end users
Making headway
EGCS technology
40 www.bunkerspot.com Bunkerspot February/March 2014
Such scrubbers are used by ships on ocean voyages; an open loop scrubber uses slightly more energy than the closed loop version, but is the alternative for vessels not travelling on lakes or near estuaries.
Some closed loop scrubbers use fresh water which do not depend on the alkalinity of seawater. While these systems are cheaper to run, they are slightly more complex. A tank is required to collect the residual waste, while caustic soda is also required to act as a reagent.
A hybrid system is a combination of the two that can be used onboard vessels that transit through all types of water. This system is even more complex, integrating both aspects of the previous two scrubbers in that it requires tanks, caustic soda and increased power.
With scrubbers’ importance growing, manufacturers are working to produce the cheapest yet most effective systems. However, upon contacting one of the major suppliers, we found ourselves guilty of committing a cardinal sin.
Sigurd Jenssen, Director, Exhaust Gas Cleaning Systems, Wärtsilä, explained: ‘The “misconception” is that we tend to talk about “scrubbers”, whilst we really should be talking about “Exhaust Gas Cleaning Systems”.
‘The scrubber is indeed the key component, but there is more to it. Designing the overall system including all the ancillaries and integrating it into the vessel is the challenging part.’
Wärtsilä is a leading force in the development of the technology, and provides all types of EGCS – open loop, closed loop and hybrid. As Jenssen explains: ‘The important thing from our perspective is that we can offer a solution to virtually every ship out there, taking into account both practical and operational aspects to nd the best t.
‘The common factor for all of our systems is that they are based on more than 50 years’ experience of putting scrubbers onboard ships
in the form of inert gas systems, and the most extensive reference list of marine EGCSs. The basic scrubber design and many components are the same, irrespective of whether it is an open loop, closed loop or hybrid system.’
Norwegian company Clean Marine is one manufacturer that is anticipating a big increase in orders for scrubbers in the future – not only in the run up to 2015, but also in the longer term to 2020, as companies prepare to meet a global sulphur emission restriction of 0.50%.
‘Already this year we can sense an increasing demand for EGCS,’ Clean Marine disclosed, ‘and we expect this demand to accelerate from 2015, when shipowners start paying the extra fuel bill.
‘Many of our enquiries are for newbuilding projects but as many vessels’ special surveys come up in 2014/15 there will also be many requests for retrot during
the scheduled dry-docking of the vessel.’Clean Marine’s hybrid system can run in
open and/or closed loop in all waters and ports. It says that it is ‘the only supplier that offers a proven, true multi-stream EGCS. This means using only one EGC unit to handle all exhaust sources onboard a vessel, also the boiler(s).
‘This is possible due to the fact that our system gives zero back pressure towards the engines, regardless of ship operation mode.’
Meanwhile, over in Sweden, Alfa Laval has recently opened a new test and training centre, constructed initially to develop exhaust gas cleaning technology.
The ship simulation facility is based on the site of the former Aalborg shipyard in Denmark. A 250 square metre (m2) testing area has been built around a 2 MW marine engine, comprising commercial and prototype equipment from all of Alfa Laval’s marine product groups. Connected to the test system are a dedicated control room and a training complex, and at the heart of the test system is a large installation of PureSOx – Alfa Laval’s own scrubber system.
‘As emission caps approach, such as the SOx limits appearing in 2015, Alfa Laval is committed to helping customers meet them,’ says Jens Peter Hansen, Alfa Laval R&D Manager, Exhaust Gas Cleaning.
‘Scrubber technology has already proven effective and commercially viable, and we will continue to rene exhaust gas cleaning through our work here at the centre.’
Despite increases in sales suggesting
‘Many of our enquiries are for newbuilding projects but as many vessels’ special surveys come up in 2014/15 there will also be many requests for retrofit during the scheduled dry-docking of the vessel’
EGCS technology
41www.bunkerspot.comBunkerspot February/March 2014
Source: Clean Marine
161514131211109876543210
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
ECA % - Operational prole
Year
s in
op
erat
ion
Payback time from January 2015 1) EGCS retrot investment cost = $4.5 million2) Assumed net price difference MGO-HFO-300 $/mt3) Vessel burning 10,000 mt fuel per year
that EGCSs are poised to become the solution to many shipowners problems with regards to the incoming regulations, the systems do have their drawbacks.
The initial large expense of retrotting a scrubber could potentially put owners off, and, coupled with its relatively short life cycle, when compared with the option of investing in an LNG-powered vessel, there is an argument that, for something that is in some circles regarded as a ‘stop-gap’, it is very expensive.
Claims such as this, however, are being batted back, especially by manufacturers.
Clean Marine explained its estimates for likely return on investment (ROI) on its hybrid systems:
‘The investment cost for the EGCS unit is normally in the $3 million-$4 million region; in addition, there are installation costs at the yard for a retrot of some $1 million (dependent on the yard and the vessel’s design).
‘Estimated operating cost is $20-$40/tonne fuel consumed by scrubbed combustion units, depending on caustic soda (NaOH) and fuel price, fuel sulphur level and scrubber operating mode. If assuming a realistic $350 per metric tonne price difference between MGO (0.1% sulphur content) and HFO (around 2%-3% sulphur content), the payback time is 1-2 years for vessels operating more than 80% inside the ECA.’
For vessels with a higher fuel consumption, Clean Marine said, the payback time for its system is much less, and also for newbuildings where the installation cost will be less. Clean Marine also said that it is likely that the fuel price spread will be higher than $350 per metric tonne from 2015, should there be an increased demand for MGO.
‘The cost of installing [our] system onboard is about 75% of the cost of equipment. The ROI varies a lot as it is based on how much fuel is used inside the ECA (saving $325.000 per 1,000 tonnes used) and the cost of equipment and installation,’ says Alfa Laval.
Some rms, realising the potential of a low payback period, have made this a priority during the design phase. One such company is Oceanox, manufacturer of the Ecobox EGCS.
‘We have always designed the system to pay back within two years,’ Oceanox managing director and co-founder Nick Holness told Bunkerspot. ‘We have seen paybacks that can be months.’
‘Ahead of 2015 we are seeing signicant interest from shipowners, which is entirely natural given the likely cost of compliant gasoil.
‘What we’ve said all along is that we don’t believe there is a ‘one-size ts all’
solution. There will be a number of routes of compliance that will suit different shipowners. There are some people for whom gasoil compliance, etc., will be viable but a great number of people who will feel that scrubbers will be the best solution for them, and so on.
‘The primary benet of our system is that it generates virtually no back pressure. It does that by treating the exhaust gas horizontally and having a cross ow of sprays. Because that design is basically the same as used in the chemical processing industry, this means it can be used in either pure open, pure closed or hybrid loop states. Our system is also specically designed to be easy to retrot.’
Another manufacturer, Viswa Scrubbers, added: ‘Operational cost is another important factor in scrubber selection. Sludge disposal costs and maintenance are small compared to the cost of caustic [soda] and power use.
‘Cost of power is usually underestimated as many use only the cost of fuel. But the real cost of power to the operator is higher and should include the cost of maintenance and operation. The power use by our scrubbers is small, only about 10 kw/MW.’
‘Previously,’ Viswa added, ‘we have installed over 200 scrubbers and dryers in the onshore industry. We have analysed various problems with scrubbers on ships in the past and we have devised suitable remedies to solve them.
With our experience we are able to provide scrubbers at competitive rates, keeping the capital expenditure (CAPEX) low for the shipowners.
‘We are just entering the market, but at the right time; we expect to be in-line to deliver a lot of scrubbers. There is a big gap between supply and demand and we are getting ready for this.’
Carl Dahlberg of Green Tech Marine also spoke about the advantages of the GTM R15, a hybrid system that can use both fresh
and sea water when running in closed loop.Dahlberg said: ‘The main advantages
with our scrubber are the size and weight, and that there are no moving parts inside the scrubber tower that can cause problems. Thanks to that, the scrubber tower is designed for dry running (when the scrubber is off), and no bypass is required which saves even more space and weight.
‘Furthermore, the scrubber acts as silencer reducing the requirement for an external silencer and saving even more space and weight.’
All manufacturers are positive about an upswing in their EGCS businesses ahead of tighter sulphur emission regulations.
‘Our main focus is on vessels which operate more than 50% of their time inside an ECA,’ summed up Alfa Laval. ‘[But] the impact will be bigger than the 2015 ECA we are facing now. In fact, we believe 2020 to be the biggest thing in shipping. This is due to the fact that it impacts every vessel.’
While a degree of condence is to be expected amongst those who produce the technology, this is a thought clearly echoed around the industry, with one engine manufacturer telling Bunkerspot that scrubbers will ‘be around for a long time.’
Michael Finch Pedersen, Head of Emission Reduction Technology, MAN Diesel & Turbo, said: ‘We believe that high sulphur fuels for marine applications will be around for a long time, and MAN believes that our engines must be designed to cope with this, and to be compatible with SOx scrubbers.’
While MAN is not directly involved with research or development on scrubbers, Pedersen was keen to stress that it is important that, as engine manufacturers, they work alongside EGCS manufacturers.
Looking to the future, Pedersen acknowledges that: ‘We mainly see the 2020 global 0.5% cap as the driver for SOx scrubber installation.’
‘The scrubber is indeed the key component, but there is more to it. Designing the overall system including all the ancillaries and integrating it into the vessel is the challenging part’
EGCS technology
42 www.bunkerspot.com Bunkerspot February/March 2014
What the owners say…
When it comes to the instal-lation of exhaust gas cleaning solutions, their effectiveness
in meeting SOx reduction requirements is clearly a major consideration but another key issue for shipowners is return on investment (ROI).
For example, Carnival Corporation says that its investment in what it terms ‘ground-breaking technology’ will not just meet but exceed emissions standards and this ‘means cleaner air, [providing] a public health benet that you can’t put a dollar value on. It is an ROI that can’t be beat.
‘From a business standpoint, based on our estimates of savings that Carnival will realise from reduced fuel costs, we believe this is a good investment,’ explained a company spokesperson.
‘We are still in the process of completing calculations as we finalise which ships and itineraries will be involved.’
Carnival’s current schedule calls for 25 ships to be tted with scrubbers in 2014 and 2015, with seven vessels scheduled for 2016. In September 2013, the company announced that it had allocated $180 million for the installation of exhaust cleaning technology on these 32 ships. It estimates the cost at $2 million per unit, with ships being equipped with multiple units.
The scrubbers will be installed on vessels from Carnival Cruise Lines, Holland America Line, Princess Cruises and Cunard, which sail regularly within the North American Emission Control Area (ECA). In addition, AIDA, another Carnival
subsidiary cruise line, announced in August that it will spend €100 million ($136,9 million) on environmental protection, some of which will go towards installing scrubbers.
To date, Carnival has largely focused on retrotting vessels but it also plans to look at newbuilds in the future.
Carnival describes scrubbing systems as ‘a major advancement in environmental technology that will signicantly reduce air emissions from cruise ships and large marine vessels’.
‘Working together with the Environ-mental Protection Agency (EPA), US Coast Guard and Transport Canada,’ says a company spokesman, ‘Carnival Corporation has developed a breakthrough solution for cleaner air that will set a new course in environmental protection for years to come. At the same time, the solution will also help the company mitigate escalating fuel costs.
‘Exhaust gas cleaning technology has been successfully used for decades in land-based environments, such as power plants, factories and vehicles. But for cruise ships, and other vessels, the big challenge has been nding a way to implement the technology in a restricted space.
The technology solution that Carnival has developed combines – for the rst time – a particulate lter with a sea-water scrubber. The result is a signicant reduction in sulphur emissions as well as reduced particulate matter and black carbon. That is why this represents a major breakthrough. This is the rst time a solution for using the exhaust gas cleaning technology has
overcome the issue of being able to work properly in restricted spaces on ships.’
DFDS Seaways is also a proponent of the use of scrubbers. To date, the company has installed scrubbers on four of its vessels and is currently in the process of expanding this to a further 15 ships. This will mean, therefore, that of its eet of 50 vessels, more than a third (38%) will benet from this technology.
Like Carnival, all of the DFDS vessels that have had the scrubbers installed to date have been retrofitted. DFDS says that it is prepared to invest around €100 million in scrubber technology.
‘The key challenges have been in trialling and installing the scrubber technology, as the equipment is heavy and the technology is still being developed,’ says DFDS. ‘As we install the technology into more of our ships another challenge would be installation time, as it means our ships could be out of service for up to four weeks at a time, which is a challenge on both our shipping and customer routes.’
Challenges aside, the company sees its investment in scrubber technology as a long term investment, designed to help safeguard the viability of its services in the Emission Control Areas (ECA) in the English Channel and the Baltic and North Seas.
‘However,’ it concludes, ‘not all of our ships are compatible with this kind of technology, which means that we are likely to need to use more rened fuel, which is extremely expensive and the operating costs will inevitably increase.’
avrv Landscape Terpel 19x6,5.pdf 1 7/24/13 6:45 PM
EGCS technology
43www.bunkerspot.comBunkerspot February/March 2014
Oil-Future-Based Prices Connected to ICE and Market Indications
Comparison Chart for Genoa between Market Indications and Oil-Future-Based Prices
for Fuel Oil 380cSt HSFO
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As a result of rapid increases in supply and demand, the future liqueed natural gas (LNG) market will be
more dynamic and complex. This complexity will challenge the current custody transfer methods and require new solutions for accurate LNG measurement.
Emerson developed methods for accurately measuring the transfer of LNG using Coriolis technology in 2006 and continues to supply customers on land and sea with LNG solutions. The new market for LNG is being shaped by both increasing supply and demand. The United States and Australia are increasing export capacity by approving new export terminals, and the global eet of LNG carriers is expected to grow by another 20% before 2015.
Meanwhile, in response to the Fukushima disaster, countries in Europe and Asia are relying on LNG imports to displace nuclear energy for domestic consumption.
Shipping is also going to place a huge demand on the global supply of LNG as vessel operators look to reduce the cost of compliance within sulphur emission control areas. This expansion will be a major challenge for the existing LNG infrastructure and will require upgrades in technology to sustain the growth.
Demand shifting from long term deals between exporting and importing nations, to short term spot market deals between commodity traders will require an update of the LNG measurement technology. Historically, LNG was purchased by making an investment in an LNG export terminal in exchange for a percentage of the export capacity for an extended number of years following completion. The import nation would contract with a eet of LNG carriers to pick up and deliver from this particular terminal. These deals are characterised by large quantities and long term agreements
between a small number of stakeholders.In the new LNG market, deals made
on the spot market will be smaller and more complex. These deals require a more precise form of custody transfer than the level measurements used today to maintain the integrity of the market. For example, it is likely that a tanker operated by a third party will be responsible for delivering a fraction of its cargo to terminals in multiple countries. Smaller batches with multiple stakeholders will create demand for more accurate measurements of quantity delivered. While
delivery terminals are optimised for accurate tank level measurements, the cargo holds onboard vessels that are optimised for storage and insulation make level measurements onboard less accurate for smaller deliveries.
Additionally, a new market for LNG bunkering is developing to supply general cargo and passenger ships with small batches of LNG to reduce the cost of compliance within sulphur emission control areas. Bunkering will require accurate measurement of smaller quantities and ship-to-ship transfer will make accurate level measurement nearly impossible. To deal with these measurement challenges, Emerson adapted proven Micro Motion Coriolis technology to provide buyers and suppliers with a direct
mass measurement of LNG delivered.The unique properties of a Coriolis meter
make it well-suited to handle the challenges of measuring LNG. These meters are ideal for cryogenic applications because they have no moving parts, making them immune to the mechanical issues related to low temperatures.
Two-phase ow is common with LNG, which makes the output of traditional volumetric meters hard to interpret. Coriolis meters continue to provide accurate measurement in the presence of entrained gas and aeration detection provides a powerful diagnostic for managing the delivery process.
Coriolis meters provide additional benets for marine LNG applications. The meters are bi-directional, which enables loading and unloading through the same meter, and because the meter can measure the uid close to the custody transfer point, the minimum measured quantities are much smaller than with level technology. Although the MID certied accuracy class of a Coriolis meter is 1.5%, Micro Motion meters have proven performance on cryogenic uids of 0.2%.
As the LNG market continues to change in response to increases in both supply and demand, accurate measurement and standards around custody transfer will become increasingly important. For this reason, Emerson is working with MID and port authorities around the world to develop standards and best practices for accurate and safe delivery of the smaller quantities required for ship-to-ship transfer as well as spot market trades.
Charles Bogenberger Marine Marketing Manager Emerson Process Management
Tel: +1 303 513 9340 Email: [email protected] Web: www.micromotion.com
‘In the new LNG market, deals made on the spot market will be smaller and more complex’
Charles Bogenberger of Emerson Process Management explores how Coriolis measurement technology is meeting the demands of a changing LNG market
A measure of progress
fuel measurement
45www.bunkerspot.comBunkerspot February/March 2014
Finding solutions to impending emissions regulations has become a headline issue in the maritime industry, with shipowners assiduously searching for the most economically
advantageous and, of course, environmentally friendly options.From 1 January 2015, sulphur emissions within Emission
Control Areas (ECA) will have to be reduced to 0.1%. The nal date for the implementation of a global sulphur cap of 0.5% has yet to be decided – the ‘working’ compliance date is currently set for 2020 but there is a groundswell of opinion within the maritime sector which suggests this could be pushed out to 2025.
For shipowners, after years of running their vessels on heavy fuel oil (HFO) with high sulphur emissions, the time has come to change. But how?
The results of an investigation carried out by Stena into ways of meeting the emissions targets were announced at an Interferry conference in Malta in 2013. The report’s conclusions were that there are four ways to meet the regulations.
Vessels can switch to marine diesel oil (MDO) or marine gasoil (MGO), a move which could prove to be expensive; install exhaust gas cleaning systems (scrubbers) which are expensive and which have a relatively short life cycle; a company can overhaul the way it operates and adapt to the situation from a modal perspective; or, perhaps the most exciting option, it can use a new fuel.
There are inherent problems in switching to new fuels, and the rst is the pertinent issue of ‘will it work effectively and efciently as a marine fuel?’ Secondly, if it is suitable for propulsion, is there a sufcient infrastructure in place to sustain an entire industry?
These questions are of particular interest when considering liqueed natural gas (LNG) and methanol. In recent years, LNG
Optional extra?LNG may be creating a stir as a marine fuel, but there are other options. Sam Lowrey takes a closer look at methanol
methanol
46 www.bunkerspot.com Bunkerspot February/March 2014
has become the ‘buzz word’ of fuel innovation, with millions of dollars being ploughed into research and development.
Methanol as a marine fuel, however, is still to receive a similar level of interest from the maritime sector. This, perhaps, is odd when, on the face of it, methanol would seem to pose few issues.
Tobias King, engineer, LNG systems at DNV GL explains: ‘Methanol does not contain any sulphur, and is therefore an option for compliance with existing and upcoming emission regulations.
‘The only sulphur oxide (SOx) emissions from a methanol-fuelled ship will be from the pilot oil used for the combustion. Regarding nitrogen oxide (NOx), we know [emissions] are signicantly lower than conventional fuel oil.’
A second positive is that it can be run in normal engines, therefore there are no expensive engine retrofit procedures, as is the case with LNG.
King added: ‘It is easier to retrot a ship for methanol fuel than for LNG fuel. Unlike for LNG, you avoid the challenges of handling cryogenic liquid and boil off. Methanol can be stored in integral tanks in the hull structure.’
This thought was echoed by Per Stefenson, Marine Standards Advisor, Stena Rederi AB, who commented: ‘There are extensive costs for retrotting the ship but not as high as for LNG, with the cost to build a methanol tank less than a tenth of an LNG tank.’
Stena Germanica projectDespite LNG taking the limelight, methanol has begun to acquire its own momentum, thanks to the Stena Germanica project.
Funded in part by the European Commis-sion’s Trans-European Transport Network (TEN-T) scheme, which provided 50% of the €22 million ($30 million) required to get the pilot of the ground, the project aims to test the performance of methanol on the passenger ferry, Stena Germanica.
The ferry operates between the ports of Gothenburg and Kiel and will test the feasibility of using methanol as a marine fuel. In addition to this, the programme will also introduce – if only on a small scale – a methanol bunkering infrastructure.
A bunker vessel and a storage tank will be built to carry methanol, as well as corresponding facilities at both ports.
As the project is now well underway, Bunkerspot interviewed Per Stefenson, to see how benecial methanol really was.
‘We chose to trial methanol mainly for economic reasons. There is a lack of LNG infrastructure in our neighbourhood, with LNG
having high distribution and retrotting costs.‘We have found that methanol has the
same exhaust gas advantages as LNG – no sulphur, low NOx and no particulate matter. However, the cost of methanol has been discouraging lately and, at the same time, the cost of MGO is lower than expected. But we are looking at this in the long term.’
With regards to infrastructure, Stefenson allays any doubts, adding: ‘This is a smaller problem for methanol since it doesn’t require any cryogenic tanks and bunker ships. Overall, the infrastructure will be very similar as that for
gasoline as you could use the same tanks.‘Methanol comes from the same
natural gas as LNG so there is no limit to the feedstock but, of course, there will be challenges in the beginning.’
These comments are to some extent shared by Per Wiggo Richardsen of DNV GL, who acknowledges that ‘there is no lack of infrastructure. Methanol is traded to more than 50 million tonnes a year and can be transported in a chemical carrier of IMO 3 type – the type of ships with the fewest requirements.’
Richardsen also revealed that ‘six methanol-fuelled medium range tankers have recently been ordered with an option for another three.’
Another industry project is also in train and this is being conducted by MAN Diesel & Turbo. René Sejer Laursen, Promotion Manager at ME-GI, explained: ‘We are developing our engine to use methanol, and then we are offering this as an alternative solution to owners. The market feedback tells us that there is an interest for ships operating in remote areas where it is difcult to establish LNG delivery and terminals.
‘Large-scale LNG is very econom-ically feasible but small-scale LNG becomes rather expensive due to the quite big investment costs which are needed, so here methanol has a chance.’
While methanol would seem to be a viable alternative to LNG, it does have its drawbacks.
DNV GL’s Tobias King said: ‘Additional safety measures are needed for methanol
compared to conventional fuel oil. This is mainly due to the low ashpoint of methanol of about 12oC. This means that methanol at ambient temperature will evaporate and can form an ignitable mixture with air.’
This problem can, however, be overcome, with René Laursen saying: ‘We really do not see any difculties related to this; we are using a double wall design in all our methanol components, and all leakages will be monitored and collected in the double barrier.
‘So in our design there are very low risks for having any incidents related to the
use of this low ashpoint fuel. It is far easier to handle methanol than to handle LNG. ‘
A secondary problem is the corrosive nature of methanol, an issue highlighted by René Laursen: ‘Methanol is toxic, corrosive and takes up twice as much space as MDO, so it has to be treated correctly, both in the design, during maintenance and in case of leakages.
‘In the combustion chamber we do not expect any change to the corrosive level. Already, today, we have a quite corrosive environment and the combustion chamber is designed to cope with this. However, for the rst engines to operate on methanol we foresee that we need to test different lube oil types in order to nd the best suitable.’
Cost considerationsA particular issue that may prevent methanol taking off from a commercial point of view is the cost, with prices currently higher than HFO it may mean that its cost may drive shipowners away from using it.
The industry experts canvassed for this feature conrmed that the cost of methanol has risen sharply, leaving a situation where – if this price level continues – the use of scrubbers, or funding an LNG retrot may become more nancially viable. With this in mind, it is possible that the methanol movement may stall before it has already started.
However, if prices were to level out, then methanol could remain in contention as a marine fuel. Per Stefenson believes that ‘methanol will be a fuel for all
‘There are extensive costs for retrofitting the ship but not as high as for LNG, with the cost to build a methanol tank less than a tenth of an LNG tank’
methanol
47www.bunkerspot.comBunkerspot February/March 2014
transportation, the question is when. Methanol opens the way to green fuel since it is possible to produce it from biomass, and in the future, through electrolysis with captured carbon dioxide (CO2).’
Wärtsilä has told Bunkerspot that the company is ‘monitoring the methanol situation,’.
A spokesman noted that: ‘Fuel exibility is a key element of Wärtsilä’s strategy, under which we are considering several different options, and methanol is one of them. The technology of using methanol in engines is in the R&D stage, and we are conducting investigations both internally and in cooperation with one customer.
He continued: ‘Engines using methanol
as fuel are not a commercial product offered or promoted by Wärtsilä at this stage. As with all technology developments, there are uncertainties. For this reason it is not possible to comment on when, or if, a commercial product would be available.
‘The environmental characters of methanol can be compared to MGO. Both are sulphur free but neither will meet IMO Tier III for NOx. Therefore, the commercial success of methanol as a bunker fuel is heavily related to its price benet in relation to MGO. Recent price developments for methanol make the business case challenging.’
Going forward, therefore, a more realistic scenario may be that the industry will nd itself
using methanol, but not in vast quantities. The infrastructure is in place in certain areas, and can be easily introduced if it is absent. Its relative abundance means it can be obtained readily and zero sulphur and low NOx emissions mean that it can achieve compliance with upcoming regulations. However, the potential hazard of its low ash point and the requirement for additional onboard storage space may compromise methanol’s chances of a widespread uptake.
René Laursen predicts that ‘due to the price of methanol it will primarily be used in sulphur emission control areas (SECAs), for river trafc and in remote areas with strict emission control, such as on lakes and in Arctic zones.’
Emission regulations are driving key changes in the maritime sector – just how the industry will choose to move beyond the compliance deadlines is a situation that still, to some degree, remains in a state of ux.
Sam Lowrey Bunkerspot reporter
Tel: +44 1295 814 455 Email: [email protected]
‘The cost of methanol has been discouraging lately, and at the same time, the cost of MGO is lower than expected’
methanol
48 www.bunkerspot.com Bunkerspot February/March 2014
The shipping community may be focused on meeting lower emission targets, but owners should look
further than sulphur reductions. We are all pretty familiar with impending
sulphur regulations in Emission Control Areas (ECAs) by now – the rules which need to be implemented, in which region and the dates for compliance.
In the early months of 2014, the focus has arguably shifted away from notifying the maritime industry of the fact that increased regulations on sulphur oxide (SOx) emissions are fast approaching to confronting the pressing issue of how to meet the new, reduced targets in practice.
Of course, it’s not just about SOx. Other emitted substances under scrutiny in ECAs include nitrogen oxide (NOx) and, in the longer term, eventually particulate matter (PM) as well.
Whilst it is true that more stringent SOx emissions reductions are coming up fast, with the introduction of a new 0.1% limit on SOx emissions inside ECAs from 1 January 2015, one industry professional, Sokrates Tolgos, Head of Sales - Cruise and Ferry at MAN Diesel & Turbo, has issued a stark reminder that new NOx regulations are also on the horizon – and the industry needs to start preparing itself.
NOx control requirements were, like those for SOx, set out in MARPOL Annex VI. The regulation sets out different tiers of control based on the vessel construction date, and which apply to installed marine diesel engines of more than 130 kW output power (other than those used solely for emergency purposes) irrespective of the tonnage of the ship on which such engines are installed.
Tier I was the rst reference and was applied to ships constructed on or after 1 January 2000. Tier II, which applied to ships constructed on or after 1 January 2011, called for a 20% reduction in NOx emissions.
Tier III will refer to vessels constructed on
or after 1 January 2016. Under Tier III, ships must reduce their NOx emissions by at least 80% compared to the level set out in Tier I.
‘Whilst permissible sulphur emissions in ECAs will see a signicant reduction to the equivalent of a maximum 0.1% sulphur content in the fuel from January 2015,’ said Tolgos, ‘additionally, only one year later, from January 2016, we expect the International Maritime Organization (IMO) NOx Tier III regulation to come into force.’
At the moment, he acknowledges, the date for NOx Tier III implementation is ‘not yet written in stone’, as some IMO member states have applied for a postponement
of this regulation. At the meeting of the Marine Environment Protection Committee (MEPC) in May 2013, amendments were agreed to the Annex VI regulation on NOx which could defer the implementation of Tier III standards from 2016 to 2021. The decision to delay was passed by a very small majority and the issue will be put to the vote again at next MEPC meeting in March 2014.
Those who called for the deadline to be pushed back argued that implemen-tation of Tier III as soon as 2016 would prove expensive for shipowners and that the technology required to achieve NOx emissions reductions is not fully proven.
In spite of this uncertainty over a
NOx regulation timeline, Tolgos urges the industry not to become complacent – if shipowners and operators haven’t begun to act on this issue already, he says, now should be the time to start.
‘We see a very high probability that this NOx legislation will come into force, at least in the North American 200 nautical mile (nm) ECA zone, as planned from January 2016,’ he says.
One reason why Tolgos feels that the maritime industry has spent time concen-trating on the issue of sulphur is that Tier III controls on NOx will only be applicable to new vessels. However, with many owners and operators investing in newbuilds, Tolgos
believes that the issue of NOx regulations should also be taken into consideration.
‘With respect to legislation, newbuild orders for ships scheduled to sail into ECAs – like the ECA we expect to see at least as a rst step in North America from January 2016 – need to consider both SOx and NOx reduction technologies from next year onwards. This means ship designers and shipowners working on related projects need to think about it now.
‘NOx emissions are mainly related to the combustion process and the level of high peak temperatures (hot spots) generated in the combustion chamber.
‘What we can do on the NOx front in a four-stroke diesel engine is to either
Be preparedSokrates Tolgos of MAN Diesel & Turbo tells Rebecca Byers that the maritime sector should wake up to impending NOx regulations
‘We see a very high probability that this NOx legislation will come into force, at least in the North American 200 nautical mile ECA zone, as planned from January 2016’
NOx regulations
49www.bunkerspot.comBunkerspot February/March 2014
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switch to a different type of combustion process producing low peak temperatures (e.g. switch to the Otto cycle), which can be realised in a dual fuel diesel engine capable of burning also gas, or introduce exhaust gas treatment technologies by means of selective catalytic reduction (SCR).
‘For the SOx emissions there are only two solutions – either use a clean fuel with lower sulphur content such as marine gasoil (MGO) or use exhaust gas abatement technology. An alternative with enormous potential could be the switch to liqueed
natural gas (LNG). There is nothing the engine can do on the reduction of sulphur emissions – what comes in comes out.’
Furthermore, unlike the North American area, the ECA in Europe’s Baltic Sea and North Sea currently only has legislation on the permissible SOx emissions – but there have been ongoing discussions about extending the provisions to a NOx-restricted area as well.
And in Sokrates’ opinion, we won’t have to wait long to find out more.
‘I think a lot depends on how the North American ECA will work. If it proves that
ships can operate, and the technology works, it can be very dynamic and there will be less convincing arguments against extending the Baltic and North Sea to become Europe’s rst NOx ECA.’
Sokrates Tolgos Head of Sales - Cruise and Ferry, MAN Diesel & Turbo SE
Tel: +49 821 322 3733 Email: [email protected] Web: www.mandieselturbo.com
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NOx regulations
51www.bunkerspot.comBunkerspot February/March 2014
Typically less than half of the energy that enters an engine is converted to mechanical power, and the rest is lost in different energy streams as heat, either through the exhaust, cooling
water or radiation. Part of this heat can be recovered and converted to electrical or mechanical energy, thus increasing overall system efciency.
Over the years, Wärtsilä has gained extensive experience of different types of waste heat recovery (WHR) systems, in both land-based as well as marine-based installations.
When talking about WHR from an internal combustion engine many usually think about the thermodynamic Rankine Cycle that converts heat into work energy. Water or steam is the most commonly used media in Rankine Cycle systems and the majority of the electricity used throughout the world is produced in this way.
This principle was also used in 2005 when the 7,500 twenty-foot equivalent unit (TEU) container ship, Gudrun Mærsk, belonging to the A.P. Moller-Maersk Group, was delivered. This ship is propelled by a Wärtsilä 12RT-Flex 96C low-speed common-rail engine with a maximum continuous power output of 68,640 kW and equipped with a WHR system that uses both excessive heat and velocity in the exhaust.
This arrangement has the capability to deliver electrical energy with an output of approximately 8%-12% of the shaft power. During sea trials and in operation, the performance of the WHR plant exceeded expectations and similar WHR installations were installed on all six vessels of the same class. Similar WHR systems were also installed on A.P. Möller’s Emma class vessels.
However, steam-based WHR installations typically require an
Tomas Aminoff of Wärtsilä explains why WHR systems have still some way to go in terms of their economic viability
Recovery position
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52 www.bunkerspot.com Bunkerspot February/March 2014
installed engine power of at least 30-40 MW to become economically feasible. This typically excludes all other vessel types other than the largest crude oil tankers and container vessels.
To nd the economic feasibility for the use of WHR on vessels with lower installed power, Wärtsilä investigated the Organic Rankine Cycle (ORC)-based WHR system.
ORC systems operate using various organic fluids with lower boiling points compared to water, that not only match the waste heat from exhaust gas but also from lower grade heat sources such as high-temperature cooling water.
However, after thorough investigations and development work Wärtsilä concluded that for most installations and for most vessel types the recovered energy was not sufcient to justify the extra expense involved, and the pay-back time typically reached 5 to 8 years, or even longer.
Also the size of the WHR equipment, which equated to two twenty-foot containers, in relation to the rather limited recovered power caused additional challenges in the vessel design stage.
Furthermore, the recent trend for slow steaming not only requires less power (and
thus less energy that can be recovered) but also, in most vessels, involves very low load engine operation where no or only very limited excessive heat is available.
Also, in newbuilds, owners today frequently opt for engine tunings optimised for low load. Where these engine tunings, such as the Delta tuning and Low Load tuning for Wärtsilä low speed engines, are great for fuel consumption, they do not offer the potential for heat recovery and, in many cases, the vessels even need to utilise their auxiliary boilers for normal steam production during normal operation.
Given these recent developments which have resulted in a decrease in heat available from the main engine, in combination with competing users for the produced heat, such as warming of cargo, fresh water generation, de-icing and steam production for tools, the economics for WHR through the Rankine Cycle has become less attractive for the majority of vessel types.
There is still an attractive business case for the most powerful vessels, such as the large containerships, but the market volume remains limited.
In the future, new engine developments could pull the trend in either direction and so
could future fuel price developments. Also, upcoming tighter Energy Efciency Design Index (EEDI) requirements, in combination with potential carbon dioxide (CO2) taxes, other environmental regulations, and the availability of cleaner fuels, could increase the attractiveness of Rankine Cycle-based WHR.
With these different factors taken into consideration, Wärtsilä is not currently developing or offering Rankine Cycle-based solutions for the marine market, but we offer engineering support and optimised engine tunings for those of our customers who have opted for an solution from a third party supplier.
Wärtsilä is also closely following the economic viability of upcoming improvements based on innovative uids as media or, indeed, totally new methods to utilise the heat, and the company is ready to react when the physics and economics are in place.
Tomas Aminoff Director, Technology Strategy, Ship Power Wärtsilä Corporation
Email: [email protected] Web: www.wartsila.com
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waste heat recovery
53www.bunkerspot.comBunkerspot February/March 2014
The rst month of a new year is a little early to second-guess deal-making trends, but M&A activity in 2014 looks likely to mirror overall nancial market trends, which have been strong
throughout 2013.The keystone to any acquisition process – for buyer and seller – is
company valuation, whether it relates to a mid-size company’s purchase of a small marine fuel supplier in order to gain market leverage, or a larger company’s decision to escalate its growth trajectory through the purchase of a similarly-sized venture. At the heart of this decision-making process is a clear-headed and logical approach to valuing the company or share interest in the business to be bought or sold.
At the most basic level, value is the price at which a willing buyer and willing seller would agree over an arm’s length transaction. The value of a company will change over time and includes assessment of data regarding its business as well as external factors.
Valuation, of both publicly traded and private companies, is signicantly impacted by external factors, including the general economic environment, interest rates and whether nancing is readily available or difcult to obtain. Maritime industry businesses are no different albeit subject to their own set of circumstances.
Although some may see valuation as a precise science it is also an
Number-crunchingAs the maritime industry begins to recover confidence, M&A activity looks set to pick up. David Hobbs and Chris Thorpe outline the key methodologies in a company valuation
company valuation
54 www.bunkerspot.com Bunkerspot February/March 2014
art that requires sound judgement. Reviewing the common methodologies shows why.
Valuation methodologiesThere are many popular valuation techniques but the three most common and accepted approaches are comparable company analysis, precedent transaction analysis and discounted cash ow analysis.
Comparable company analysis is a market-based approach to valuation which compares the value of a company to other similar businesses in its industry.
The premise is simple – investors will likely pay similar prices for similar companies. Given the requirement for current valuation metrics (i.e. the need for a publicly available valuation benchmark), the most appropriate comparable companies are publicly traded companies.
The critical question is what is a comparable company? The practical answer is to pick the competitors of the company to be valued that have similar growth and
margins. Sometimes, unfortunately, the closest ‘comparable’ may be a single division of a diversied holding company, making the relevant data more difcult to obtain. These cases must be examined on a case-by-case basis; there is no bright line test to decide when a company is no longer comparable.
On the contrary, it may be that the company to be valued operates in two or more unrelated businesses. In this instance, it could be appropriate to perform a sum-of-the-parts (SOTP) analysis. In a SOTP analysis you value each of a company’s businesses separately then total the individual values to derive the value of the entire company.
As a part of the analysis, one may use a multiple of a company’s cash ow or earnings to estimate its ‘enterprise value’ (EV). EV is dened as equity value plus debt minus cash. EV as a multiple of EBITDA (earnings before interest, taxes, depreciation and amorti-zation) is perhaps the most commonly used valuation metric; but keep in mind that the
metric used should be the one that is most relevant to the valuation target’s industry and its size. It all depends on the sector. However, for most industries enterprise value as a multiple of EBITDA is an appropriate measure of comparable free cash ow.
Small company valuation issuesThe comparable company analysis is a good place to discuss size and its impact on valuation (although size will impact valuation under any analysis).
One is often challenged valuing a smaller company when the only valuation metrics available are for large publicly traded companies. Also, ‘small’ is relative. Large investment banks may start incorporating risk premiums for ‘small’ companies at enterprise values of $250 million, to say nothing of a small but prosperous family business.
Small companies tend to have fewer resources or concentration of customers, less access to capital and less
diversity of revenue than do larger ones. For example, it is more likely that a
smaller company will encounter company-threatening financial challenges than a larger one. Also, investors prize liquidity and it is generally easier for a larger company to create a liquidity event (e.g. initial public offering (IPO), sell shares if it is public, etc.).
Due to these additional risk factors, investors demand a higher rate of return for a smaller company than for a larger company in the same industry. This risk premium can vary but is estimated at 4%-5% and is stated as an interest rate added to the weighted average cost of capital for a given company.
Precedent transaction analysisPrecedent transaction, also called comparable transaction (or acquisition), analysis is related to comparable company analysis. However, precedent transaction analysis uses the valuation metrics of acquired companies. The methodology seeks to value a company
based on what it would be sold for by applying the valuation metrics of past transactions. The companies should still be in the same line of business with similar size and growth prospects.
There are several challenges with precedent transaction analysis. As with comparable company analysis, it can be challenging to nd companies that are in the same line of business with similar margins and growth prospects at the time of sale.
Another common issue is that precedent transactions take place over time and the applicable valuation metrics (also called multiples) used at one point in time can be different than at another.
For instance, perhaps a close competitor was acquired in 2007 but a less similar comparable was acquired in 2013. Certainly, the valuation must be mindful of distressed sales as well as whether transactions were done at peaks and troughs of the cycle.
Discounted cash ow analysisDiscounted cash ow analysis (DCF) seeks to value a company based on the after-tax cash ow that the company generates. Cash ow in this case is literally the amount of cash that is available to pay equity and debt providers in a given year. It is not based on an accounting methodology. Importantly, it adjusts EBITDA for changes in net working capital, taxes paid, capital expenditures, and deferred taxes.
With proper information, it is possible to calculate reasonably accurate numbers for past cash ow. The question becomes how to project cash ow into the future? How many years can be projected with any certainty?
The most-commonly-used periods are 5 or 10 years forward. Generally, the more stable the business, the longer its cash flow can be projected with confidence. One may feel comfortable in projecting the cash ow for a company selling fuel for 10 years. But, the same person could struggle to project the nancial outlook for a shipping company from one year to the next.
The projection period should incorporate at least two important considerations:• that the projection period covers an
economic or product life cycle, and• whether the company’s growth or nancial
outlook may change in the next 5 to 10 years. With respect to the rst consideration,
imagine you are valuing a company in the shipping business. In this case, knowing the eet renewal plan based on age and changing regulations would have a great impact on cash ow and the general capital
‘One is often challenged valuing a smaller company when the only valuation metrics available are for large publicly traded companies’
company valuation
55www.bunkerspot.comBunkerspot February/March 2014
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expenditure requirements of the business. Turning to the second consideration,
one must keep in mind that high growth companies usually do not continue along a steep trajectory (trees don’t grow to the sky!) and, conversely, the company with low earnings in a recessionary period may see earnings rebound in a normal economic environment. This has particular relevance or resonance for marine fuel and shipping companies which have been in depressed economic conditions over recent years.
Terminal value
The nal touch, and possibly the most difcult part of valuation, is the calculation or guess relating to ‘terminal value’, which is the value of the company beyond the 5-10 year projection period. In essence, it is an attempt to discount the cash ows beyond the projection period. However careful the valuation expert is in formulating projections, the terminal value will be a signicant driver of the entire valuation of the company. Often, particularly in the case of a ve year DCF, the terminal value can be signicantly more than 50% of the entire estimated value. Thus the assumption of terminal value must be considered with great care.
There are three common methodologies used to calculate the terminal value. These are:• using the ending year EBITDA (or the most
relevant nancial metric) to calculate a comparable company valuation
• using precedent transaction analysis• using a perpetuity or perpetuity with
growth model. We have already discussed the rst two
valuation methodologies, and valuation practitioners debate how to decide between the two methods. The ultimate choice comes down to an analysis of the typical investor exit in the industry; i.e., sale versus IPO or some other personal judgement based upon the factual circumstances.
The third methodology is used in industries where long-term growth is very predictable and is close to the rate of ination or gross domestic product (GDP).
The final piece of the puzzle is to discount the cash ows and terminal value to today’s dollars. A dollar in the future is worth less than a dollar today. Every project has a certain amount of risk. For the cost of equity, the risk is compared to that of investing in a broad set of stocks, such as the S&P 500 (by far the most common). The cost of debt is compared to a risk-free bond, e.g. the US Treasury 10 year Note.
After establishing these two rates, to establish a discounted value, the expert multiplies each by the respective portion of the capital structure represented by equity and debt, referred to as the weighted average cost of capital (WACC).
After determining the discount rates, the enterprise or rm value is determined by discounting each of the cash ow and the terminal value. Then, to arrive at the value of the equity, the nal step is to subtract the debt from the enterprise value and add the cash on the balance sheet. This same methodology is used for comparable company and precedent transaction analysis if the expert is using enterprise valuation metrics to derive a valuation.
A common question that arises is why not subtract current liabilities? Current liabilities, such as accounts payable, are part of working capital. These are liabilities that arise out of the natural running of the business. They are not a nancing choice but a requirement, just like machinery. Long-term debt, however, is a nancing decision. The current owner actively decided to fund the business using debt versus equity.
Other factors may also come into play. For example, the valuation methodologies discussed in this feature are valuations for an entire company. Sometimes it is necessary
to value a less than complete interest in a company. In general, control is valued. In fact, mergers and acquisitions bankers will often call the average of corporate acquisition premiums as the ‘market for corporate control’. Simply put, where valuing a less than complete equity stake, it is important to take into account whether the valuation is on an equity stake that provides control or only minority interest? For a large equity stake, such as 75%, that provides control, there might not be any discount over the implied valuation for 100% of the company.
Liquidity can also be an issue. In valuing a small stake in a private company there might be a signicant discount due to illiquidity, in addition to lack of control as previously discussed. If it is a minority but still large stake in a public company, a minor discount might arise due to the friction of making several stock sales.
Investors, owners, and business managers are often faced with valuation issues. An appreciation and awareness of common valuation techniques and some of the pitfalls involved in corporate valuations can help avoid gut feeling decisions. There is no question that using relevant metrics is most helpful when considering a company sale or acquisition. Albeit armed with the key valuation tools, it is always wise to consult a valuation expert to guide your estimates or assist in getting a transaction done.
David Hobbs and Chris Thorpe are managing partners of Brick Consulting Partners and Brick Investment Partners. Prior to his current role, David Hobbs was a senior mergers and acquisitions investment banker at Citigroup and Compass Advisors. He has also traded fixed-income derivatives, primarily on a proprietary basis, at UBS. Chris Thorpe co-founded Hudson Capital Energy, an energy risk management firm, and was an investment banker at JP Morgan. He started his career at Methanex and has held positions in Europe, Canada and the United States.
Email: [email protected] Tel: +1 646 790 5778 Email: [email protected] Tel: +1 646 790 5777
‘One must keep in mind that high growth companies usually do not continue along a steep trajectory’
company valuation
57www.bunkerspot.comBunkerspot February/March 2014
The United States is lurching toward self-sufciency in oil and gas, giving the oil industry a chance to take a hard look at the country’s outdated infrastructure and policies, including the
nearly 100-year old Jones Act.As new domestic oil production increasingly ows from new elds
to reneries around the United States, and perhaps one day overseas, some feel it might even be time to jettison the country’s cabotage law.
Drewry Maritime Research in London said, in its December Container Insight publication, that the Jones Act is looking like ‘an increasingly expensive luxury’.
‘As the political need for the Jones Act is much diminished, and most of its foreign trade is already carried in non-US flag vessels, there are strong commercial and environ-mental arguments in flavour of its repeal,’ says Drewry.
The Jones Act, or the Merchant Marine Act of 1920, requires that all goods transported by water between US ports be carried in US-agged ships, built in the United States, owned by US citizens and crewed by US citizens and permanent residents. It was designed
Melanie Wold reports on whether changing domestic and global markets could spell the end of current US cabotage laws
Keeping up with the Jones Act
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58 www.bunkerspot.com Bunkerspot February/March 2014
as a national security measure and as a way to protect the US shipping industry.
Its opponents range from crude oil producers that have no rening outlet – reners can export as much as they want in terms of products, but crude exports remain banned – to industry bodies such as the American Fuel and Petroleum Manufacturers (AFPM).
The AFPM takes the position from a free marketer’s point of view, saying that not only should exports be allowed, but also that the Jones Act needs to be abolished, according to an article in the National Journal. The AFPM was unable to add comment before Bunkerspot went to press.
The nearly 1.5 million barrels per day increase in US production from 2007 to 2012 comes largely from hard-to-reach places – such as the Bakken eld in North Dakota – and has stretched existing pipeline capacity. This has created opportunities to use other means to move the oil. As a result, the crude-by-rail industry has blossomed and the US inland barge and coastal tanker business is booming.
But with progress comes growing pains. Crude-by-rail suffered a reputa-tional blow after the tragic accident at Lac-Megantic, Quebec in 2013, where a crude rail car derailment, explosion and re killed 47 people. Smaller derailments have occurred throughout the United States.
And US-agged barges and tankers have skyrocketed in price, both for building and for leasing, as demand soars. As the barge and tanker market takes off, the age-old Jones Act is coming increasingly under re.
According to some critics, the law threatens to restrict the growth of the US barge and tanker business, jacking up the costs of said ships and their freight rates beyond the usual market forces. This infuriates major US crude producers, who want to have more exibility for their oil.
There is no disputing the Jones Act is costly. In December 2013, it was widely reported that ExxonMobil had paid a record $110,000 per day to lease a Jones Act tanker. Prior to this, reported rates had ranged between $50,000 and $85,000 per day.
And in terms of building, Exxon tipped the scale with the purchase of two 115,000 deadweight tonne (DWT) Aframax tankers in 2011, for the incredible sum of $200 million each, according to The Maritime Blog.
This record was beaten in November 2013 by container ship company Matson when it ordered two 3,600 twenty-foot equivalent unit (TEU) vessels from Aker Philadelphia Shipyard for around $209 million each. The 850-foot long vessels will be the largest Jones Act containerships ever constructed and will be used in Matson’s service from the West Coast to Hawaii, according to a release from Aker.
Drewry said of the Matson purchase: ‘This underlines the possibility that US ag protec-tionism is an increasingly expensive luxury. Ignoring differences in ship specication, comparable sized vessels could be built in Asia today for less than a fth of that price.’
Still, the US-agged eet is expected to grow substantially in the next few years, thanks to new demand for crude vessels.
Sandy Fielden, director of energy analytics at Houston-based consultancy RBN Energy, said in a blog post: ‘Expanding demand for the limited Jones Act tanker eet looks set to keep charter rates lucrative for tanker owners in the next few years, but plans to build at least another 11 tankers by 2016 may well rock the boat.’
For freight rates, too, Jones Act tankers are pretty pricey. US rener Valero, which uses a multitude of transportation methods to get crude oil from shale plays to its reneries, pointed out in a November 2013 investor presentation that a foreign agged tanker can
take oil from the Gulf Coast to Canada for $2.00 per barrel, whereas a Jones Act tanker costs between $5.00 and $6.00 per barrel.
Bill Day, vice president of media and community relations at Valero said that, while the company does not have a specic position on whether the Jones Act should be repealed or overhauled, there is no doubt that it makes shipping between US ports more expensive than shipping from a US port to a foreign port.
Yet, even pipeline companies are sitting up and taking notice of the US domestic tanker business. In December, pipeline operator Kinder Morgan Energy Partners LP said it would buy two tanker companies from affiliates of Blackstone Group and Cerberus Capital Management for $962 million to expand its crude and rened products transportation business.
The acquired companies were American Petroleum Tankers and State Class Tankers, which ship crude oil, condensate and rened products in the United States, own five tankers and are building four more that comply with the Jones Act.
Exporting products
The Jones Act, combined with the 40-year-old ban on crude oil exports, has added impetus and urgency to exporting rened products from the United States. The rationale is that if a producer or rener cannot export excess crude, it can rene that crude and export it legally as products. At a prot, of course.
Therefore gasoline and diesel exports from the United States have soared in the past year, with gasoline nearly doubling since 2009 levels and diesel trebling, according to gures from the US Energy Information Adminis-tration (EIA). Most of these come from the Gulf Coast, the rening centre of the United States.
This has left the Atlantic Coast, where reneries have been closing down for the past few years, bereft of US product – mainly because there is a dearth of Jones Act tankers. Many product tankers were taken into long-term contracts for companies hauling crude oil.
To solve this problem, traders are lifting US gasoline and diesel and sending it to non-US destinations. They then load non-US products which they turn around and send back to the United States Atlantic Coast.
Not only is this inefcient, but it ies
‘Crude-by-rail suffered a reputational blow after the tragic accident at Lac-Megantic, Quebec in 2013, where a crude rail car derailment, explosion and fire killed 47 people’
‘America’s domestic shipping industry is responsible for nearly 500,000 jobs and more than $100 billion in annual economic output’
cabotage
59www.bunkerspot.comBunkerspot February/March 2014
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in the face of US energy security policy. David McCullough, an attorney in
the energy and environmental group of Sutherland Asbill & Brennan, said: ‘Without a doubt, the Jones Act drives business and logistical decisions. It adds to costs up and down the chain.’
Supporters not deterredPrice and destination restrictions do not deter Jones Act supporters, of whom there are many.
There is good reason: the US domestic shipping industry is responsible for nearly 500,000 jobs and more than $100 billion in annual economic output, says the American Maritime Partnership (AMP), a coalition representing the domestic maritime industry, quoting a study by Pricewaterhouse-Coopers for the Transportation Institute.
However, the restrictive nature of the US-ag law means that employee costs are also rising. According to Drewry’s Ship Operating Costs 2012/13 report: ‘Over the past 10 years, maritime wage ination for container vessels between 2,000 and 3,000 TEU has soared by 31%, up to $2,306 per day, and it would have been much higher were it not for the increasing recruitment
of seafarers from developing countries.’But the Jones Act was not designed
to protect energy consumers or foreign interests, said Stephen P. Moschetta, attorney and partner at the New York-based Moschetta Law Firm. Instead it was enacted to protect US seamen who work onboard ships and also to govern the use of foreign vessels in domestic trade.
He added: ‘I am not in avour of repealing the Jones Act, which appears to be contrary to the position of the shipping industry.’
Because of the number of jobs involved, the national security element, and the insistence of the US Navy that repealing of the Jones Act would ‘hamper [America’s] ability to meet strategic sealift requirements and Navy shipbuilding,’ it is unlikely
Congress would consider repealing it. The AMP said: ‘You don’t need to be an
expert in the maritime industry to know that repeal or modication of the key domestic maritime laws would make America less secure economically and militarily. Repeal of those laws would provide little benet while making America more vulnerable.’
On the other hand: ‘It would be cheaper and more efficient to ship commodities without the constraints of the Jones Act,’ said McCullough.
Melanie Wold
Tel: +1 617 817 5604 Email: [email protected] Web: www.melaniewold.com
Thinking of sellingyour business?Brick Investment Partners seeks control investments in middle market transportation, logistics, storage, fuel, energy services and chemical companies.
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‘The law threatens to restrict the growth of the US barge and tanker business, jacking up the costs of said ships and their freight rates beyond the usual market forces’
cabotage
61www.bunkerspot.comBunkerspot February/March 2014
At its core, insurance is about the protection of your assets and liabilities, and a good place to start
is to understand the risks to your operations. Every operation is different, but a good foundation is to identify the risks to your legal liabilities, your property and your people.
Your company’s operations will dictate the exposures to risk, and therefore the appropriate insurance protection. For example, the risks facing physical traders are different than the risks with back-to-back trading. The difference will be the extent to which you have the title to, and therefore the risk of, the product.
For example, we have settled many claims from shipowners who allege that the bunkers supplied had caused damage to their engines, resulting in demurrage to the nearest available port. But before an insurer will settle the claim, the circumstances of the loss will be closely examined and the component parts analysed.
The loss adjuster would rst look at the supply chain to establish causation. If you are able to bring your suppliers in, or show that your customer’s contributory negligence, you should be able to reduce your damages – and the insurers’, because of the legal principle of ‘subrogation’, in which your insurer assumes your legal rights – but you will be potentially liable, with all the attendant legal expenses and management time, while you defend yourself.
Additionally, if you own or operate a tank farm or marine terminal tank farm, most jurisdictions put the primary responsibility of an oil spill on the owner. While the terminal owner can buy environmental insurance covering clean up and remediation of the site and neighbouring property, all companies that are on-record as having stored their product are also potentially responsible for a pollution spill from a shore tank in most jurisdictions, on the legal theory of strict liability. These companies therefore have a ‘contingent
liability’ – and should protect themselves.Both of these exposures – product
liability and pollution incidents – should be covered by a Commercial General Liability programme, using the insurance industry standard form, Commercial General Liability Occurrence Coverage. But this is just the start! Like all policies, there are the pitfalls of exclusions to avoid before a claim. Examples range from exclusions of marine fuel (really!), to ‘property damage to storage tanks or other property leased, rented or occupied by the Insured in the storage or transportation of the Insured’s product’, to benzene, lead and
methyl tertiary butyl ether (MTBE). These must all be deleted. Products liability and completed operations liability is covered and a ‘pollution incident’ must become known within 14 days and reported to the insurer within 90 days.
Other cover can be added to this policy, again depending on your operations. Wharfingers liability can be included at all owned and operated locations, and many governmental authorities will require their own particular endorsements. And, if you transport your product by pipeline, road or rail, these should all be included.
So this pretty much covers your liabilities onshore. Off shore, liabilities facing charterers
and cargo owners can be just as severe.As an example, when a ship transporting
petroleum products enters US waters, the US Oil Pollution Act 1990 requires shipowners to show nancial responsibility to $1 billion. Other jurisdictions have similar, if lesser, requirements. This is generally best covered by an entry into a P&I club.
As a charterer, and as a cargo owner, the same legislation holds you potentially liable and requires that you carry at least $100 million. Depending on your volume shipped, charterers’ liability insurance is generally quite reasonable, and covers you for
offshore spills and other maritime legalities.You will also want to know how much
liability insurance you should buy to adequately protect your company. We can benchmark this by reference to other similar companies, but regardless of the limits though, excess or umbrella liability insurance is essential. It ‘sits over’ all the underlying liability policies and increases their limits.
Turning now to the protection of your property, there are various ways to insure. For example, if you own or operate a tank farm or marine terminal, you may be required to insure replacement costs on your tanks and truck racks. You may also want to
Michael Newman, president of International Energy Insurance Brokers, offers a useful checklist of insurance protection options
Take cover
‘The insurance market is moving with the changes but the issue is of growing concern to insurers, and they want more information about likely claims linked to use of LNG as a cleaner, greener ship fuel’
insurance
62 www.bunkerspot.com Bunkerspot February/March 2014
include business interruption, to cover the lost prot and expenses after a re or other peril. Another potential risk to your property is employee dishonesty; theft of money or securities, forgery, computer fraud, and ‘rogue trader’ losses can all be covered under an employee dishonesty policy.
If your petroleum products are transported by ship, barge, truck, pipeline, rail or road – or in storage – anywhere in the world, an open cargo policy can protect your property in transit. You will have the choice on the extent of protection you buy: either Bulk Oil Clauses SP-13C extended to include ‘All Risks: Guaranteed Outturn’ or, extended to include shortage, leakage and loss in weight or volume and contamination, while onboard vessels.
Finally, there are ways to protect your human assets. Some jurisdictions require employers to carry worker compensation insurance; some require additional protections for any port, harbour and maritime workers that you employ. Kidnap and ransom insurance covers your employees in the event of kidnap, extortion and detention – and your response to the crisis. Employment Practices Liability insurance will protect you against claims of actual or alleged wrongful termination, sexual harassment and discrimination.
You will also want to make sure that the insurance companies are financially able to respond to your claims – we check the Standard & Poors, Moody’s and A.M. Best ratings of all insurers – and that the choice of law and jurisdiction are specied in the policy to policyholder-friendly courts.
Moving into the future, many in the industry hail liqueed natural gas (LNG) as a greener fuel. LNG holds enormous potential as a marine fuel for vessels for both economic and environmental reasons, and the maritime industry is in the process of developing, converting and constructing LNG-powered vessels. Natural gas in the United States is, currently, at least 70% less expensive than heavy fuel oil (HFO) and 85% less expensive than distillates, and the price advantage is projected to continue or even increase through 2035. This has opened up an opportunity for signicant annual fuel cost savings when converting marine vessels that use petroleum fuel to natural gas operation.
The insurance market is moving with the changes but the issue is of growing concern to insurers, and they want more information about likely claims linked to use of LNG as a cleaner, greener ship fuel.
London insurance market’s Joint Hull
Committee is to research the risks involved
in using LNG as a fuel. Insurers push cat ne
guidance and say owners must tackle the
problem to avoid an increase in premiums.
The group will carry out a technical investi-
gation, looking at storage of the fuel, sulphur
emissions and lubrication, and in particular
at whether using LNG as fuel will create
problems similar to those that stem from
cat nes in conventional fuel. Insurers have
already started to adopt the committee’s
guidance on engine damage from cat
nes. Clients can ignore the advice but that
will mean they have a different risk prole
compared to a client who has fully adopted the
guidelines, potentially increasing premiums.
Michael Newman is the President of International Energy Insurance Brokers, an energy and marine insurance specialist with offices in California, Texas and London.
Tel (US): +1 213 236 3674 Tel (UK):+44 207 397 4920 Email: [email protected] Web: www.energyinsurancebrokers.net
Bomin is an international company operating around the globe, with more than 35 years of experience in the bunker market. Our business portfolio covers activities ranging from cargo trading to the supply of bunker fuels, lubricants and other services. Whenever and wherever you need us. Choose a dynamic partner: www.bomin.com
insurance
63www.bunkerspot.comBunkerspot February/March 2014
A recent decision of the Netherlands Court of Appeal has, in effect, extended the jurisdiction of the Dutch
courts substantially following a ship arrest. This offers new potential opportunities for bunker suppliers chasing bad debts to get to grips with shipowners and operators who have failed to settle their fuel bills.
Shipping has been through a tough ve-year period, with many owners and operators unable to meet their outgoings. Those that have failed to restructure have usually failed to survive. In almost all cases, at least in theory, the banks have been able to turn for recourse to the mortgages that they hold on vessels. But in many cases they have been forced to pursue the arrest of vessels in seeking satisfaction of outstanding claims.
Arresting a vessel is a far from simple procedure, depending upon where in the world – and in which legal jurisdiction – one seeks to attach the ship. For that reason, the recent decision in the Dutch Court of Appeal is likely to be greeted with great enthusiasm by shipping bankers and other creditors.
The decision in HSH Nordbank vs Hero Shipping substantially extends the jurisdiction of the Dutch courts following a ship arrest, with the court ruling that the 1952 Arrest Convention applies to all vessels, irrespective of ag and owner. The dispute involved the repayment of a loan, secured
by a mortgage on the vessel Hero. The court held that jurisdiction by courts in the Netherlands is created simply by the arrest of the vessel by the mortgage bank, regardless of the ag and nationality of the owner and allows banks quick access to the very favourable auction system in the Netherlands.
The applicability of the Arrest Convention and its ability to create jurisdiction varies across different countries. Where it does not automatically create jurisdiction, it may offer protection to owners of vessels from – or vessels ying the ags of – nations which have not contracted to the convention. The decision of the Netherlands appeal court lifts that protection.
Carel van Lynden, partner with the shipping and offshore team at AKD in Rotterdam, says: ‘For the rst time, a claimant has not had to provide security in a case involving owners registered in a European Union (EU) country. Summary judgment sought by a bank against an owner is a provisional measure under European law and until now has only ever been granted if security for the claim has been posted by the claimant. In this case, the court ruled that no security was required because the bank was nancially strong enough, and also sufciently likely to repay the claim if it later failed.’
The Court of Appeal ruled that the 1952 Arrest Convention applies to
all vessels, irrespective of the ag and nationality of the owner. The Arrest Convention states in Article 2 that:
‘A ship flying the flag of one of the Contracting States may be arrested in the jurisdiction of any of the Contracting States in respect of any maritime claim, but in respect of no other claim …’
Article 8, Paragraph 1, meanwhile, reads:
‘The provisions of this Convention shall apply to any vessel f lying the flag of a Contracting State in the jurisdic-tion of any Contracting State’,
and Article 8, Paragraph 2 stipulates:
‘A ship flying the flag of a non-Contracting State may be arrested in the jurisdiction of any Contracting State in respect of any of the maritime claims enumerated in Article 1 or of any other claim for which the law of the Contracting State permits arrest.’
The arrest of vessels ying the ag of a contracting state is therefore only allowed for ‘maritime claims’, which can be regarded as a restriction of the potential to arrest. This limitation would then not apply to vessels ying another ag, which could be regarded as preferential treatment. This issue was discussed during negotiation of the Arrest Convention, but the nal text restricts the ‘limitation’ to vessels ying the ags of contracting states. A number of countries have adopted the provisions of the Arrest Convention in their local law so that the distinction between vessels ying the ag of a contracting state and a non-contracting state no longer exists.
Other countries, where the convention applies but has not been adopted into local law, differ as to the above issue, and also as to whether other provisions of the Arrest Convention should be applied to vessels ying
A landmark decision by the Netherlands Court of Appeal widens the scope of ship arrests and offers new hope for bunker suppliers chasing payments
Arresting developments
‘The claimant wants a country where an arrest is easy to make and to enforce, where resolution is swift and certain, and where the auction procedure is simple and cheap.’
legal rulings
64 www.bunkerspot.com Bunkerspot February/March 2014
the ag of a non-contracting state. In a number of countries, arrest does not create jurisdiction, while in others it does, except where a valid jurisdiction clause applies between the parties.
This makes the choice of where to arrest a vessel a crucial one for the claimant. The claimant wants a country where an arrest is easy to make and to enforce, where resolution is swift and certain, and where the auction procedure is simple and cheap. In addition, it is vital to ensure that the ag of the ship does not somehow negate local jurisdiction.
Article 7 of the Arrest Convention stipulates that an arrest creates substantive jurisdiction in the following cases:• If the domestic law of the country in which
the arrest is made gives jurisdiction to such courts,
or:• if the claimant has his habitual residence or
principal place of business in the country in which the arrest was made
• if the claim arose in the country in which the arrest was made
• if the claim concerns the voyage of the ship during which the arrest was made
• if the claim arose out of a collision• if the claim is for salvage• if the claim is on a mortgage or form of
security relating to the arrested ship.In 2012, in a case involving the arrest of the vessel Kaliakra in pursuit of a collision claim, the Rotterdam court ruled that that the Arrest Convention, including
the jurisdiction provisions therein, also applied to vessels flying the flags of non-contracting states. This decision was criticised, but the interpretation has now been conrmed by the Hague Appeal Court.
The Appeal Court concluded that a logical interpretation of the text of the Arrest Convention and the relevant preparatory work deemed it applicable to all vessels, because otherwise vessels flying the ag of a non-contracting state would get preferential treatment. The court also took account of the fact that this interpretation is followed in many other contracting states.
Carel van Lynden explains: ‘Following this decision, EU owners do not benet from the general jurisdiction rules of European law. Because the Arrest Convention is to be regarded as a special convention in the sense of Article 71 EEX (EEX is EU Regulation 44/2001 on jurisdiction and enforcement of judgments in commercial matters), the jurisdiction provisions in the Arrest Convention supersede those in the EEX when the defendant is an EU individual or company. Thus, with this decision, the substantive jurisdiction of Dutch courts following an arrest is signicantly extended.
‘In HSH Nordbank vs Hero Shipping, the claim was for repayment of a loan, secured by a mortgage. Thus, with this decision, jurisdiction of the Dutch courts was created by an arrest by a mortgage bank, irrespective of the ag and nationality of the owner. Given the very
favourable auction system in the Netherlands, which is quick and inexpensive, and features quick release of sales price and no liens, this is a favourable decision for mortgage banks.
‘The second part of the court’s decision was remarkable because it hinged on the court deciding that the bank was both nancially strong and likely to pay. One can just imagine how that perception might have been received by certain banks and owners alike.’
HSH Nordbank had asked for a summary judgment against the owner of the Hero. Because the owner was registered in an EU country, the EEX applied. The measure sought was a ‘provisional’ one in the sense of the EEX. Courts of an EU country may, irrespective of substantive jurisdiction, grant provisional and protective measures.
The European Court of Justice, in its landmark 1988 decision in Van Uden/Deco Line, ruled in respect of claims for summary money judgments that a provisional measure only qualies as such when security for the repayment of the money judgment is posted.
Lower courts have to date followed this decision in ruling that such security must have been offered and must be in place at the time the provisional measure is being requested. So banks have to put up security before they can force the sale of the ship.
In this case, the bank did not offer any security because it said it did not have to as it had sufcient nancial strength. The court followed this reasoning by stating that it was sufciently likely that the bank had the necessary strength and would honour any possible repayment obligation.
Carel van Lynden Partner Shipping & Offshore, AKD
Email: [email protected] Web: www.akd.nl/en
‘Given the very favourable auction system in the Netherlands, which is quick and inexpensive, and features quick release of sales price and no liens, this is a favourable decision for mortgage banks’
legal rulings
65www.bunkerspot.comBunkerspot February/March 2014
Evolving ship operations, environmental regulations and high bunker prices have led to technical changes in marine engines that aim to reduce fuel costs and environmental impact.
In order to improve the specic fuel oil consumption, the pressure in the combustion chamber has been increased on the newest engine designs, especially at low load. This pressure increase, together with the increased operating time at low load, has led to increased water and acid condensation on the cylinder walls, leading to cold corrosion in the combustion chamber.
Increasing numbers of shipowners appear to be favouring these new generation engines to optimise fuel costs. However, there are other signicant operational changes that they need to be aware of; not least to combat the problem of corrosive wear, which stems from increased water and acid condensation on the cylinder walls.
Recent guidance from engine manufacturers (OEMs) recommends the use of higher base number (BN) lubricants in these engines to help prevent the damaging effects of corrosive wear.
To ensure the industry can meet these guidelines, major oil companies are now adding higher BN lubricants (in many cases up to BN100) to their product portfolios. However, in addition to the right lubricant for the vessel’s operating pattern, OEMs have also stressed the importance of drain oil monitoring and port inspections.
One way of managing corrosive wear is to frequently test the total base number (TBN) of the lubricant to ensure it maintains its efciency over long periods of time. Testing the TBN of residual cylinder oil is important, as it is continuously exposed to acidic combustion products that should be neutralised before they corrode engine parts. Consequently, maintaining a correct alkaline reserve in the lubricant is critical in preventing unnecessary harm to expensive components within the engine.
Dr Steve Dye of Parker Kittiwake explores next gen solutions to monitor engine wear
Damage limitation
monitoring technology
66 www.bunkerspot.com Bunkerspot February/March 2014
To assist shipowners and operators in effectively addressing these technical, operational and environmental challenges, Parker Kittiwake has launched its newly updated DIGI TBN test kit. The digital, used-oil analysis kit now gives a rapid indication of TBN depletion in scrape down cylinder lubricants with a BN range up to 100.
The latest Parker Kittiwake test kit provides ship operators using high BN lubes with the ability to test residual TBN levels in their oil. This gives operators peace of mind by ensuring they are following OEM guidelines to prevent cold corrosion. This quick and simple test can be used in conjunction with laboratory testing, but gives an onboard reading within two minutes to meet OEMs’ testing recommendations.
Another option is to test for the presence of cat nes and corrosive wear within the scrape down oil, allowing shipowners to catch it early and prevent damage.
The recent publication of guidance from the Joint Hull Committee on cat ne damage demonstrates that this is an issue on the rise. Cat ne damage occurs mainly in large, slow-speed crosshead main engines. Large abrasive particles can pass through fuel injection equipment and into the cylinder
liners, where they embed themselves onto the cylinder wall surfaces. Damage to the cylinder liner can happen for various reasons but a rise in damage has coincided with the growth in demand for the use of low sulphur fuel.
Engine damage claims can be very expensive, costing anything up to $1 million. Therefore, it is important to understand that technology to monitor and prevent cat fine damage already exists and is easy to implement.
The liner is one of the most crucial and costly components of a ship’s engine. Monitoring wear and uncovering problems at an early stage not only extends its life, but can also mean the dif ference between minimal damage control and considerable financial loss.
Advancements in condition monitoring systems al low online diagnostic equipment to continuously and automat-ically provide complete sets of trend data showing levels of wear in all critical equipment, including cylinder liners.
Technology is available on the market that uses magnetometry to quantify the iron in used cylinder oil, reporting changes caused by abrasive wear and highlighting periods of increased physical or thermal stress.
Sensors can be tted to each cylinder of the vessel engine to continually monitor the scrape down oil for ferrous wear. Integrated software systems can provide onboard engineers with actionable readings that can be used to minimise liner wear, optimise lubricant feed rate and detect ingress of catalyst nes.
Parker Kittiwake is continuously conducting research to tackle the problems facing the shipping industry, including engine wear. The company will soon launch a test kit that, within minutes, effectively measures the level of corrosive wear within used scrape down oil.
This will expand Parker Kittiwake’s portfolio to allow ship operators to monitor specic levels of both metallic and corroded iron in cylinder oil, giving them a comprehensive overview of the operating conditions within the cylinder chamber.
Dr Steve Dye Business development and marketing manager Parker Kittiwake
Tel: +44 1903 731 470 Email: [email protected]
monitoring technology
67www.bunkerspot.comBunkerspot February/March 2014
Testing marine fuel for hydrogen sulphide (H2S) content allows critical assessment of a fuel’s safety when being stored and transported as well as its potential to corrode pipelines,
storage tanks and other ship components. Corrosion may cause operability problems, including engine breakdown. Signicant concentrations of hydrogen sulphide have been known to accumulate in the headspace of storage tanks and marine fuel bunker cargoes, which can pose a serious and potentially lethal hazard.
Hydrogen sulphide is a toxic gas which is dangerous to humans even at trace parts per million (ppm) levels. In the United States, the Environmental Protection Agency (EPA) has established that hydrogen sulphide is a regulated toxic substance. The National Institute of Occupational Safety and Health (NIOSH) recommends a maximum exposure level of 10 ppm.
Hydrogen sulphide is present in crude oil and may also originate during rening. Industry manages hydrogen sulphide formation by careful process control as well as the use of scavengers to ensure that nished products only contain safe levels of hydrogen sulphide.
Due to the complex nature in which hydrogen sulphide is released or entrained, its presence is more likely in heavier products such as bitumen and residual oil. That said, when difculties arise in the rening process there have been instances where hydrogen sulphide has been found in distilled product streams such as diesel.
In response to the International Maritime Organization (IMO) request that the 4th edition of international bunker quality
Ian Mylrea of Stanhope-Seta, and Chair of the Sulphide G-5 Hydrogen Task Group, reviews testing methods for hydrogen sulphide
Standard procedures
hydrogen sulphide
68 www.bunkerspot.com Bunkerspot February/March 2014
standard ISO 8217 should consider any safety matters, the decision was taken to include hydrogen sulphide limits as a proactive precautionary measure.
ISO 8217:2012 species that marine fuel shall contain less than 2 mg/kg hydrogen sulphide, by the UK Energy Institute Test Method IP 570. The test method provides a rapid, automatic and precise quanti-tative analysis of liquid phase hydrogen sulphide below 1 mg/kg in marine fuels.
The CONCAWE Report 8/13, published in 2013, stated: ‘This new liquid phase H2S limit in ISO 8217 is intended to provide an additional margin of safety by reducing the risk that personnel are exposed to levels of H2S vapour that can cause sudden and severe health effects.’
When compared to previous analytical chemistry techniques, the methodology is very simple from the user’s perspective. At its heart, the SetaAnalytics H2S Analyser uses a chemical sensor which is specic to hydrogen sulphide. In addition, a specic vapour phase process (used in Procedure A, the referee method) removes unwanted interfering chemicals such as methyl mercaptan.
The analyser is prepared by inserting a lter cartridge into the vapour phase processor. The analyst weighs in a sample, typically 5 ml, to the test chamber containing 20 ml of low
viscosity oil, then types in the weight and presses ‘start’. Fifteen minutes later, the test result is displayed in mg/kg to two decimal places. Further analysis is possible using the graph feature, which may give an indication of the presence of another undesirable chemical such as methyl mercaptan. At the end of the test, the oil and lter cartridge are replaced ready for the next test.
Whilst the technology is straightforward to use, verication of the accuracy for a particular laboratory remains difcult. Normally test methods suggest a verication material which can be used to conrm accuracy, but until recently this was not feasible for this test as hydrogen sulphide is a highly reactive and unstable gas. Transport is limited to larger samples of material and no decanting is allowed, as hydrogen sulphide would be lost during that process. So, any form of rebottling process leads to much variability between nominally identical samples.
A new innovation by SetaAnalytics enabled the transport of a small (15 ml) stabilised sample of verication uid containing a precise amount of hydrogen sulphide. Samples are made with a precise known quantity of hydrogen sulphide that has a stabiliser added to extend lifetime. In 2012, a Prociency Testing Scheme (PT Scheme) for hydrogen sulphide was evaluated via the UK Energy Institute’s
SC G-5 Hydrogen Sulphide Task Group. Users were invited to test the new stabilised verication uid then enter their results into a web site specically designed for the purpose.
This was an important step towards conrming the verication uids’ accuracy and the ability to ship them across the world. Following good overall performance the PT Scheme commenced in April 2013 and has operated monthly since then. Each month, samples with a hydrogen sulphide content of between 1.0 and 4.0 mg/kg are distributed to participating laboratories around the world. When the data becomes available various statistics are calculated including: • Calculated hydrogen sulphide content –
the actual amount of hydrogen sulphide originally dissolved in the sample
• Quality control average – the determined value using IP 570 in a controlled environment from a number of bottles of sample from the batch
• The participants’ average – the mean of all results received. From the data the mean test result,
repeatability and z-score for each participant is calculated. The z-score indicates how close each individual laboratory’s results are to the participants’ average. When labora-tories enter their results to the PT Scheme web page they are given an immediate indication of how close they are to the calculated hydrogen sulphide content, so remedial action can be taken immediately if required. The results for all labs are published blind to maintain company privacy.
The PT Scheme has proved to be highly successful. The UK Energy Institute SC G-5 Hydrogen Sulphide Task Group balloted a change to IP 570 that incorporates the liquid verification samples, stating that the preferred means to conduct verifi-cation was through the PT Scheme.
As a result, IP 570/13a recommends the use of liquid verification standards. The Task Group will monitor the results and outcomes with a view to mandating their use in a future edition of the standard.
IP 570 Procedure A (using the vapour phase process) is the referee test for hydrogen sulphide, as specified in ISO 8217. The test method is specied without a year sufx which means that the latest published version shall be used.
Level (ppm) Effect on people
0.05 Detectable odour
50Headaches, nausea, insomnia, pulmonary oedema, possible respiratory failure, olfactory failure (loss of sense of smell)
300 Unconsciousness after a few minutes
600 A single breath causes immediate respiratory arrest & unconsciousness
Harmful effects of hydrogen sulphide on people
IP 570/13a can be purchased from the UK Energy Institute. For more information on the IP 570 PT Scheme contact [email protected]
hydrogen sulphide
69www.bunkerspot.comBunkerspot February/March 2014
There has been a great deal written about bunker quality, and if you believe all the stories then there is a demon lurking in every sample bottle, ready to jump out and make an expensive
claim against the supplier. The elephant that commonly lurks in the room of bunker transfers is both large and potentially expensive – quantity. With bunkers over $600 per tonne for RMG 380, it doesn’t take much to generate a loss for someone, and subsequently a gain for someone else.
In an ideal world, the barge delivers 500 tonnes and the ship receives 500 tonnes. Everyone is happy. Or are they? Do we know what really happened?
Firstly, let us look at the respective levels of expertise. On one hand, we have a barge or facility making perhaps two or three deliveries a day from well-calibrated tanks combined with traceable stock records. On the other hand, we have a ship with very tired staff, which takes bunkers less than a dozen times a year, with bunker tanks in awkward places and calibrated ‘off plan’.
So on which side are the dice loaded? Are they loaded at all? Even with the best will in the world, measurement error is a possibility. However, the issues are greater than this; dubious practices are regularly reported within the bunker industry, some of which directly impact on actual measurement. Here are the main ones (and how to deal with them):
Poor sampling This is not a measurement issue as such, but any analysis is only as good as the sample; a claim for water or density, for example, is seriously weakened if the sample is not representative. To be representative, a drip sample must be collected during the whole operation.
All may not be as it appears in bunker transfers. David Springett of SGS explains why
Check points
fuel quantity
70 www.bunkerspot.com Bunkerspot February/March 2014
Pre-prepared ‘supplied’ samplesYes, it does happen, and it’s why the whole operation must be witnessed to ensure that a correct sampling regime is maintained.High water content With the ship effectively paying $600 a tonne for water, it is good sense to have some independent verication of the drip sample.
Mis-declared densityArticially high delivered tonnage can be the result of an incorrect density on the bunker delivery note (BDN). Once again, it is good practice to have the drip sample independently tested.
Temperature errors – both on the barge and on the shipThis impacts on volumes and can easily be prevented by using calibrated temperature measurement equipment onboard both barge and ship. Be suspicious of all temperatures being the same.
Use of non-calibrated gauging equipment‘Short’ and ‘long’ tapes have been used to give articial readings. This may be simply due to a broken tape being repaired but it is easily prevented by checking the tape against a known accurate tape, or better still against a calibrated gauging tape.
Tampered pipework/meters Visual inspection is the best tool to use here; look out for any evidence of ‘extras’ or broken seals.
Sole use of ow meters, without manual gauge backupThe ship should always insist on manual gauge readings to back up ow meter readings and not accept excuses.
Out of date or doctored calibration tablesThese can easily be checked to see if they are original, class approved and stamped and dated.
Incorrect gauge reference points The gauge tables should always have reference heights and these should always be checked against the readings as found by tape, which is why soundings should always be taken and not ullages.
Excessive trim on barge or ship This is cause for suspicion, as it is then relatively easy to conceal fuel at the back end of the tank if required. There should always be wedge tables or calculations available on the barge.
Tank transfers during gaugingIt is not unknown to run fuel from one tank to another internally immediately after it has been gauged, especially with the above excessive trim.Empty tanksThese are sometimes not as empty as would be believed. Bunker fuel is by nature a viscous product, so apparently empty tanks on a barge may have either a wedge of fuel at the back end or a high amount of clingage residue. A barge with eight tanks and 2 cubic metre (m3) residue in each may be declared empty but in fact have 16 m3 still on board.Cappuccino effectThis is well known and still happens. All gauging operations should be checked for evidence of bubbles on the tape and all transfer operations should be carefully listened to, since pumping of air can make a noise and cause excessive pipework vibration.
ROB issuesAs below, the gures before bunkering on both sides must be carefully checked and certainly against the log book for any differences. It is the one set of measurements that are impossible to recheck once the operation has started.All of the above sounds like a recipe for disaster and for the unwary shipowner/operator, but the old adage of ‘prevention is better than cure’ stands true. Some relatively simple precautions can be taken to avoid issues becoming problems and then becoming expensive claims.
Diligence Are the ship’s staff diligent? Let us not forget that ship’s staff work extremely hard and are likely to be tired after a long pilotage or cargo operations. With the best will in the world, some things might inevitably get prioritised.• Do they go and witness the barge
measurements or simply rely upon the barge telling them?
• Do they witness the sampling exercise during bunkering and see that it is representative?
• Are they listening and watching for anything unusual?
• Is the ship going to nish bunkering into a single tank to help reduce cappuccino-type errors?
Training • Does the ship’s staff know how to correctly
gauge a tank and to accurately use the tables?
• Do they apply and interpolate trim and list corrections?
Calibration
When were the barge tanks last calibrated, and are the tables original? The same applies for any metering system.
Tampering
This comes under diligence and sometimes can be hard to spot, but is there any evidence of meter or pipework tampering or alteration?
Initial measurements:• Are the ship remaining onboard (ROB)
gures indeed what they say they are? Do they match with the record book and have they been accurately measured and calculated?
• It is not unknown for a Chief Engineer to keep a little spare bunkers ‘up his sleeve’ to help even out the daily consumptions. In some cases, the attractiveness of $600 a tonne bunkers could be too much – 30 tonnes is worth over $18,000
• Non-nominated tanks on the barge and on the ship – have they all been gauged both before and afterwards?There is, of course, an international
standard for bunkering operations: ‘ISO 13739 Petroleum products – Procedures for transfer of bunkers to vessels’ and its Singapore counterpart, SS600. These standards give best practice for the bunkering operations as well as examples of forms to be used that help to clarify the process and help with the evidence trail in case of issues.
Prevention is better than cure as stated above, but if there is a difference then it is crucial that traceable evidence is secured by the ship. Therefore: • Witness everything• Politely believe nothing• Record everything • Check everything• Sign only for volumes• Issue a letter of protest whenever
appropriate and if in doubt.There is another way, of course. In
most ports there is a good source of very cost-effective expertise, which is a reputable independent surveyor. This is worth a couple of tonnes of fuel in anyone’s language and will help to prevent losses by ensuring that measurements, both on barge and on ship, are conducted properly.
David Springett SGS Oil, Gas and Chemicals Services
Email: [email protected] Web: www.sgs.com
fuel quantity
71www.bunkerspot.comBunkerspot February/March 2014
The start of any new year brings with it resolutions, reinvention and self improvement. It is often seen as an
opportunity for a fresh start and to blow away the cobwebs accumulated from the previous year.
The onset of 2014 shook the shipping world from its post-Christmas lethargy with a timely reminder of what was to be expected during the coming 12 months and prompted a renewal in focus for all matters relating to sulphur, Emission Control Areas (ECAs) and legislative compliance.
Although the rapidly approaching change in ECA requirements will no doubt account for a great deal of owners’ and operators’ time, they cannot allow their attention to wander from other important matters, in particular the quality of the product purchased and supplied.
Looking back a year, 2013 began with the promise of a brief respite from legislative change for owners and operators, with no immediate amendments to be anticipated during the coming year. However, 2013 did prove to be a year of signicant change, not as a direct result of legislative reform, but in
relation to the quality of fuel products available.As has been highlighted many times
before, fluctuations in fuel quality and alterations in supply patterns go hand in hand with any signicant legislative change, and it would be fair to state that the impending drop from a maximum allowable sulphur content of 1.0% to 0.1% within ECAs can be considered as the most signicant change to date.
When examining overall quality patterns for the year, Q1 of 2013 followed the trend established in the
final half of 2012, with the number of off-specs sitting around the 20% mark.
The majority of issues seen by vessel operators also followed on from the previous year, with the bulk of concerns relating to density, viscosity and sulphur variations.
However, this was to change dramat-ically, and the test data accumulated during Q2 showed a signicant increase in the number of off-spec samples seen. When the test data was collated, it highlighted an increase in the number of off-specs from 19.9% to 25.3%. Previous experience would suggest a shift of this magnitude would only accompany a major policy reform but, as the next scheduled change was over 20 months away, it prompted speculation that this rise was merely an unexpected blip.
Any suggestions that this figure represented an anomaly were quickly dispelled with the publication of the data from Q3 that conrmed off-spec levels had been maintained. When the data was examined, it showed 24.3% of all submitted samples exhibited one or more tested parameters to be in excess of the levels stated in the ISO 8217 standard.
Based on the nature of the data accumulated during the middle part of the year, it came as little surprise when the gures for Q4 showed a similar pattern. However,
The incidence of off-spec fuels rose dramatically in 2013. Michael Green of Intertek considers if this is an anomaly or a sign of things to come
Trend-spotting
‘Test figures for the final quarter of 2013 showed an all-time high of 27.1% of all submitted samples to be off-spec’
fuel quality
72 www.bunkerspot.com Bunkerspot February/March 2014
0102030405060708090
Q1 Q2 Q3 Q4
2013 Quality Data.
% On spec Fuels
% Off Spec Fuels
2013 Quality Data
there was to be yet another twist in the tail as the nal part of the year served up another increase in the number of problem fuels seen.
Test figures for the final quarter of 2013 showed an all-time high of 27.1% of all submitted samples to be off-spec.
Taking the year as a whole we have subsequently seen a rise of around 27% in the total number of off-spec fuels submitted. To give a greater degree of perspective, it must be noted the data supplied takes into account all tested samples which provide a test result in excess of the limits stated within the ISO 8217 standard.
However, that being said, 27% of all
submitted samples is an unprecedented gure based on recent history and questions must be asked as to whether this trend is set to continue.
In comparison to previous years, 2013 stood out as being highly unusual not only due to the overall reduction in fuel quality, but also in the respect that it was not immediately linked to a legislative change.
It may seem like a contradiction in terms to then state that the changes do have a link to the forthcoming 2015 deadline, as this would appear to be the only rational explanation as to why this was witnessed.
But even with this thought in mind, the time frame involved (well over 12 months
in advance of the change), and the nature of the issues noted, appear to contradict our initial expectations in relation to quality patterns in the build-up to 2015.
If we consider the development of 2014 from a logical point of view, it is fair to assume that we would expect to see an increase in the number of distillate fuels showing a reduced quality, particularly with regard to parameters that can be affected by hydro-treatment or the presence of a bio-element, with a slow but steady improvement in the quality of residual product.
If we look at the 2013 data in relation to individual fuel types (residual and distillate) it is clear that issues have increased across the board, which does not support what we would necessarily expect in the build-up to 2015.
The number of off-spec residual fuels rose by 5.5% (from 22.7% to 28.2%) between Q1 and Q2 whilst off spec distillate fuels also rose by 5.5% (from 7.6% to 13.1%) during the same time period.
This trend was maintained in Q3 and Q4 for both residual and distillate fuels as shown in the table at the bottom of the page.
Drawing definitive conclusions from all this data as to ‘how’ and ‘why’ would appear to be an exercise in futility. In looking to read the fortunes of the industry over of the coming year, it is fair to suggest the issues noted during 2013 represent the high water mark for poor quality fuel.
It might be flippant to suggest that 2013 simply amounts to a blip in terms fuel quality but it is difcult to see this trend being sustained. The more likely sequence of events will see a significant change in the type of quality issues seen, with increased problems being associated with distillate product. Overall, off-spec rates are likely to fall away, settling back to the 20%-22% level as the deadline approaches.
Beyond these particularly broad speculations, what the future holds is anyone’s guess and, as the Danish physicist Niels Bohr once said: ‘Prediction is very difcult, especially if it’s about the future’.
Michael Green is the Technical Manager with Intertek Lintec Shipcare Services, which offers a global submitted marine fuel-testing programme.
Email: [email protected] Tel: +44 1325 390 180 Fax: +44 1325 460 055 Web: www.lintec-group.com
Q1 2013 Q2 2013 Q3 2013 Q3 2013
Residual Product % Off-Spec
22.7% 28.2% 27.0% 30.4%
Distillate Product % Off-Spec
7.6% 13.1% 13.1% 12.2%
fuel quality
73www.bunkerspot.comBunkerspot February/March 2014
15
17
19
21
23
25
27
29
Q1 Q2 Q3 Q4
% Off Specs
Quarter
Quarterly Off Specs
2011
2012
2013
Quarterly Off-Specs
05
101520253035
Resid
ual
Dist
illat
e
Resid
ual
Dist
illat
e
Resid
ual
Dist
illat
e
Resid
ual
Dist
illat
e
Q1 % Off Specs Q2 % Off Specs Q3 % Off Specs Q4 % Off Specs
% Off Specs by Product
% Off-Specs by Product
Q1 % Off-Specs Q2 % Off-Specs Q3 % Off-Specs Q4 % Off-Specs
ENVIRONMENTAL FRIENDLY BUNKERING
Typical:
Vanadium 20 ppm
Sulfur 0.7%
0706 bunkerspot v6i6.indd 63 02/12/2009 16:06
ENVIRONMENTAL FRIENDLY BUNKERING
Typical:
Vanadium 20 ppm
Sulfur 0.7%
0706 bunkerspot v6i6.indd 63 02/12/2009 16:06
In August last year, the world changed for Adelina Risler. At the age of 62, her father, Alejandro Risler, the founder of
Argentinean bunker supply companies Risler S.A. and Bunkeraires S.A., passed away, leaving her and her family to take on the family business and build on the legacy created by her father.
A hugely popular figure within the Argentinean and international bunkering communities, Alejandro had worked tirelessly to build his companies and to promote the industry around the world. He was also an enthusiastic founder member of the International Bunker Industry Association (IBIA) and an international rugby player. Following in his footsteps, perhaps more so for a woman in this largely male-dominated industry, will therefore be a mighty challenge.
Fortunately, Alejandro’s legacy is still very much alive. Adelina, his eldest daughter, spent more than 12 years working by her father’s side and is more than ready to take on the business and embrace the values and ideas he taught her. Starting out as a receptionist 16 years ago before coming senior sales manager, Adelina is now ready to carry the baton. As President, she now nds herself dividing her time between Buenos Aires and Rosario, and her eight year-old daughter Carola, running two of the most successful fuel supply businesses in South America.
‘The decision to take on the role of President has come in what is probably the saddest moment of my life. It was my Dad’s dream that Risler and Bunkeraires would remain family-run businesses and it is with pride that I now take on this responsibility. I
value the position and appreciate the support I have received, and promise to put all my efforts into fullling our father’s vision. Dad taught us to be humble, responsible and honest. Together with my family and our dear partners we will replicate those values he taught us in life.’
Risler S.A. was established in 1973, as a parent company of Risler Cereales S.C.C., a grain and related by-products brokerage rm founded in 1919. The new venture started out selling lubricating oils and solvents to the newly-arrived edible oils factories installed around the Rosario and San Lorenzo areas. The company soon began to offer services to other industries and to supply gasoil.
In the 1980s, Risler began to supply bunker fuels, initially to the tugs and barges transporting iron ore from Brazil or vessels moving cargoes to and from Paraguay, all through the Paraná River. In 1985, Bunker-baires S.A. was founded and the Buenos Aires ofce was opened. This company has always been a wholly-owned subsidiary of Risler.
During the rst years, Bunkerbaires would charter barges to make bunker deliveries, but in 1992 the company bought its rst bunker vessel, the MT Adelina, a tanker with a capacity to carry 1,080 metric tonnes (mt) of bunker fuel. Since then, it has grown rapidly, adding seven more owned and chartered self-propelled vessels to its eet: Rio Cisnes (820 mt capacity); Soa R (550 mt); Gustavo U (3,294 mt); Nany (3,294 mt); Serra Theresa (1,650 mt); Kadriye Ana (2,400 mt) and the Milo (2,100 mt).
This year, the company plans to add another 3,000 tonne barge to its eet. Current volumes vary, depending on the season, between 70,000 mt and 85,000 mt a month.
Risler has also built a eet of 39 road tank wagons (RTWs) to deliver small volumes of distillates and intermediate fuel oils – from 35 to 350 mt – to ships at berth, including shing vessels in Buenos Aires and Mar del Plata. The RTWs also supply farms, factories and transport eets.
Risler S.A. does not own any oil storage and is not involved in blending bunker fuels. Instead, it buys direct from the local reners, Shell CAPSA, YPF, Petrobras, Axion Energy and Oil Combustibles, and delivers their fuels to its customers by road or barge.
Following in the footsteps of Alejando will not be easy, but Adelina has taken on the job as President with the full backing of a newly-formed board of directors. Her younger brother, Santiago, has also stepped up to the management team.
‘We were overwhelmed by the honest support and kind words we received after our President and father passed away,’ says Adelina.
‘Alejandro had ideas and was developing projects until his last days and we are here to make sure that they come to fruition. We will continue with the legacy of our father who taught us to both understand and love this great business.
‘It wont be easy, but we are convinced that we can take these two companies to the next level.’
Adelina Risler Risler S.A. and Bunkeraires S.A.
Tel: +54 341 424 1234 Email: [email protected] Web: www.risler.com.ar
Scupper plug…Adelina Risler reviews the achievements of her late father, Alejandro, and says that she is now ready to take the Risler businesses to the next level
scupper plug…
75www.bunkerspot.comBunkerspot February/March 2014
On the move... EUROPE ____________________
Hugo Le Moing, a trainee bunker trader at Bominot Ltd in London, left the company after four months to work for Hewlett Packard in Paris.
Serge Zeller, previously at Mediterranean Shipping Company, has joined Pacic Basin Shipping Ltd, working initially in Hong Kong before returning to the United Kingdom as a bunker executive. Email: [email protected].
A/S Dan-Bunkering Ltd’s Kaliningrad Repre-sentative Office has appointed Katerina Plekhanova as a bunker administrator. Tel: +7 4012 519009; Direct: +7 4012 519008; Mob: +7 9062 130781; Email: [email protected].
Monjasa A/S has opened a new ofce at Amaliegade 33B 3, 1256 Copenhagen K, Denmark. The bunker department is manned by Senior Bunker Trader, Jørgen Vindahl Larsen, Bunker Trader, Soe Amalie Østergaard, and Head of Chartering, Niels B. Knudsen. Tel: +45 70 260 236; Email: [email protected].
After more than six years as a bunker trader at Monjasa A/S in Fredericia, Søren Madsen has joined A/S Trumf Bunker in Middlefart as Senior Bunker Supplier. Tel: +45 7642 9696; Direct: +45 7642 9695; Mob: +45 6037 5435; Fax: +45 7642 9690; Email: som_trumf-bunker.com.
Global Risk Management has appointed Torben Kampp Madsen to Chief Financial Ofcer in its Middelfart, Denmark head ofce. Tel: +45 8838 0015; Email: [email protected]).
Yvonne Rittfeldt, for eight years Sales Manager at Topoil in Västra Frölunda, Sweden, has been appointed Chief Operations Ofcer. Tel: +46 3169 6150; Direct: +46 3169 6152; Mob: +46 7 0975 9214; Email: [email protected].
Soyuz Bunker Group Europe BV, has opened an ofce at c/o FESCO North West Europe BV, Port City I, Waalhaven Z.z. 21, 3089 JH, Rotterdam, Netherlands. Chris Todd has joined as Chief Operating Ofcer. Tel: +31 10 487 3491; Mob: +31 6 1227 6581; Email: [email protected]. Joe Tierney has joined as Trading Manager. Tel: +31 10 487 3492; Mob: +31 6 1275 3238; Email: [email protected].
After more than 15 years at Bomin, co-Managing Director, Peter Schreiber, left the
company on 10 December. Julio Tellechea, Managing Director of Bomin’s parent company Mabanaft GmbH & Co. KG and a member of the Marquard & Bahls AG Executive Board, will manage the bunkering company’s business together with the present Managing Director Thomas Roller, until such time as a successor is appointed.
Dan-Bunkering (Monaco) S.A.M. has appointed Aurélie Saint-Jean as Junior Accountant/Sales Supporter. Tel: +377 9777 5401; Direct:+377 9777 6325; Mob: +33 6 7863 5565; Fax : +377 9777 5301; Email: [email protected].
MIDEAST & AFRICA ___________
Soyuz Bunkering Group DMCC, headed by Peter Grunwaldt, has opened an ofce at JLT, Bldg: JBC-2 37th oor. P.O. Box 113154, Dubai, United Arab Emirates. Tel: +971 4374 5775; Mob: +971 52925 7705; Email: [email protected].
ASIA PACIFIC ________________
Global Risk Management has promoted Christina Seah Ai Lin (Tel: +65 6500 7594; Email: [email protected]) and Caner Seren Varol (Tel: +65 6500 7593; Email: [email protected]) to Senior Oil Risk Managers in its Singapore ofce. It has also promoted Nadiya Bani to Assistant Risk Manager (Tel: +65 6500 7591; Email: [email protected]).
Jacky Yen has joined Dynamic Oil Trading (Singapore) Pte Ltd as a bunker trader for the Singapore market. Tel: +65 6437 5500; Direct: +65 6437 5514; Mob: +65 9644; Fax: +65 62 95 28 85; Email: [email protected].
Andatee China Marine Fuel Services Corp. has promoted Wang Hao, previously CFO, to the post of CEO, replacing An Fengbin who has stepped down but continues as Chairman of the Board of Directors. Quan Zhang has been appointed Interim CFO. Tel: +86 411 8360 4683.
Kasper Soeje has been appointed Managing Director of Soyuz Bunkering Group in Singapore. Tel: +65 6808 6614; Mob: +65 9135 4419; Email: [email protected]. Patrick Ng has joined as a trader. Tel: +65 6808 6615; Mob: +65 8686 3535; Email: [email protected].
William Chia has joined Soyuz Bunkering Group in Hong Kong as Trading Manager. Tel: +852 2882 9280; Mob: +852 9517 0200; Email: [email protected]. Vincent He has joined
as a bunker trader. Tel: +852 2882 3876; Mob: +852 9039 9180; Email: [email protected]. Maggie Lau has also joined as a trader. Tel: +852 2882 9312; Mob: +852 6651 8806; Email: [email protected].
AMERICAS __________________
A new bunker trading company, CANDEN Marine Fuel Services Ltd, has been opened at 282 Elm Street, St Lambert, Quebec, J4P 1W3 Canada, managed by Gayle Lewis, who is joined by Chantal Gagnon, both previously at ICS Petroleum. Tel: +450 259 1791; Fax: +450 465 7680; Email: [email protected].
Justin Sander left C-Fuels America LLC in early December. His duties have been taken over by Lana Piterova. Tel: +305 461 2050; Email: [email protected].
Bunkers LLC has merged with Toyota Tshusho Petroleum to become Toyota Tshusho Petroleum USA Inc. Tel: +1 212 785 1888; Email: [email protected]; Ryuta Irahara: [email protected]; Jeanne A. Kostiuk: [email protected]; Claire Moe: [email protected].
Germán Soto Menchaca has left Mexican supplier ABC Marítima / Sonora Bunkers. Tel: +52 229 938 2804.
Melissa Aniceto has joined Donald Ogenia in the bunkering trading team of Curoil N.V. in Curaçao. Tel: +599 9432 0517; Mob: +599 9522 9812; Fax: +599 9461 3335; Email: [email protected].
Christoffer Pedersen has been appointed Business Development Manager at OW Bunker Panama S.A. Tel: +507 316 8107; Mob: +507 6616 6701; Email: [email protected].
OW Bunker has established OW Bunker Latin America in Cartagena, Colombia, headed by Regional Manager, Pedro Gomez. Tel: +57 5645 5410; Email: [email protected].
Joseph Pyne is to step down as CEO of Houston-based tank barge operator Kirby Corp. but will remain Chairman, as David Grzebinski switches from CFO to CEO, and Andrew Smith joins the company as its new CFO.
networking
76 www.bunkerspot.com Bunkerspot February/March 2014
Tony Sanderson of Nautical Supply International has some extra reading to do
Bunkerspot captures some recent moments in London…
bunkerspotted...
Jeffrey Evans, Alderman and Sheriff of the City of London, with Doug Barrow, CE of Maritime London, outside the Marine Money ship nance conference
KPI’s Neil Lamerton attempts to outsmart Étienne Angot of Socomet Bunkering
Neil Lamerton of KPI Bridge Oil London and Neal Bolton of OceanConnect Marine UK take a break at the Introduction to LNG Bunkering courseIntroduction to LNG Bunkering courseIntroduction to LNG Bunkering
Capt. Auwalu Hassan, of Nigeria LNG, takes a break at the Oxford Advanced Course
Nghia Tran of Bunge SA, Stephanie Reynaud of CMA CGM, Capt. Auwalu Hassan of Nigeria LNG and Karine Lenepvue of CMA CGM celebrate the end of the Oxford Advanced Course with lecturer Nigel DrafnOxford Advanced Course with lecturer Nigel DrafnOxford Advanced Course
Karine Lenepvue and Stephanie Reynaud of CMA CGM eager to learn at the Oxford Advanced Course
Nigel Drafn shows Capt. Auwalu Hassan the way forward for LNG bunkering
bunkerspotted...
77www.bunkerspot.comBunkerspot February/March 2014
FEBRUARY _________________TURKEY: 2nd Annual Container Handling Technology Conference11-12 February, IstanbulContact: Celeste HuangEmail: celeste@portnanceinternational. comWeb: www.portnanceinternational.com/ cht/chtturkey2014#register
MARCH ____________________POLAND: Transport Week4-6 March, GdanskContact: Alan Arent, Event DirectorTel: +48 58 627 2323Email: [email protected]: www.transportweek.eu
UNITED STATES: Gas to Liquids North America 201412-13 March, HoustonContact: UK ofceTel: +44 207 827 6000Web: www.smi-online.co.uk
RUSSIA: Petropavlovsk-Kamchatsky Port-new opportunities for development12-14 March Contact: Olga KantyshevaTel: +7 914 791 74 96Email: [email protected]: www. tranzitdv.com
UNITED STATES: CMA Shipping 201417-19 March, Stamford, ConnecticutContact: Lorraine ParsonsTel: +1 203 406 0109Email: [email protected]: www.shipping2014.com
NETHERLANDS: StocExpo18-20 March, RotterdamContact: StocExpoTel: +44 20 8843 8800Email: [email protected]: www.stocexpo.com
NORWAY: 11th Annual Green Ship Technology Conference18-20 March, OsloContact: Informa MaritimeTel: +44 20 7017 5511Email: [email protected]: www.greenshiptechnology.com
SOUTH KOREA: Gastech Conference and Exhibition 201424-27 March, SeoulContact: Laurence Allen, Marketing ManagerTel: +44 203 615 0390Email: [email protected]: www.gastechkorea.com
APRIL _____________________CHINA: Intermodal Asia1-3 April, ShanghaiContact: Sophie Ahmed, Event Director, InformaTel: +44 2070 175 112Email: [email protected]: www.intermodal-asia.com
DENMARK: The 35th International Bunker Conference2-4 April, CopenhagenContact: Hilde Spaeren, Project ManagerTel: +47 464 102 17Email: [email protected]: www.bi.edu/ibc
SINGAPORE: Bunkerspot LNG: An Introduction to LNG Bunkering7 April, SingaporeContact: The Petrospot Events TeamTel: +44 1295 814 455Email: [email protected]: www.petrospot.com
SINGAPORE: The Oxford Bunker Course (Advanced)8-10 April, SingaporeContact: The Petrospot Events TeamTel: +44 1295 814 455Email: [email protected]: www.petrospot.com
UNITED KINGDOM: LNG & CNG For Transport Forum9-10 April, LondonTel: +44 207 017 5518Email: [email protected]: www.ibcenergy.com
UNITED STATES: LNG Export USA 2014: Global Buyer Congress29-30 April, HoustonWeb: www.lng-export-usa-2014.com
CANADA: Canadian Frac Sand Logistics & Market Forecast Summit29-30 April, CalgaryTel: +44 800 098 8489Email: info@london-business-conferences. co.uk
MAY _______________________NETHERLANDS: BunkerExperience 201412-15 May, RotterdamContact: Goris VermeulenTel: +32 484 168 780Email: [email protected]: www.bunkerexperience.com
UNITED KINGDOM: The Oxford Bunker Course12-16 May, OxfordContact: The Petrospot Events Team
Tel: +44 1295 814 455Email: [email protected]: www.petrospot.com
PANAMA: Maritime Week Americas 201419-23 May, PanamaContact: The Petrospot Events TeamTel: +44 1295 814 455Email: [email protected]: www.petrospot.com
JUNE ______________________GREECE: Posidonia 20142-6 June, AthensTel: +30 710 428 3608Email: [email protected]: www.posidonia-events.com
UNITED KINGDOM: Maritime Logistics & Energy9-20 June, LiverpoolContact: The Petrospot Events TeamTel: +44 1295 814 455Email: [email protected]: www.petrospot.com
SEPTEMBER ________________UNITED KINGDOM: London International Shipping Week Launch Reception 201411 September, LondonContact: The Petrospot Events TeamTel: +44 1295 814 455Email: [email protected]: www.petrospot.com
UNITED KINGDOM: The Oxford Bunker Course15-19 September, OxfordContact: The Petrospot Events TeamTel: +44 1295 814 455Email: [email protected]: www.petrospot.com
OCTOBER __________________BELGIUM: The Bunkering Symposium1-3 October, AntwerpContact: The Petrospot Events TeamTel: +44 1295 814 455Email: [email protected]: www.petrospot.com
NOVEMBER ________________CANADA: Tank Storage Canada5-6 November, CalgaryContact: Sharé MasonTel: +44 208 843 8819Email: [email protected]
Diary
To list details of bunker-related events and conferences, contact:
Tel: +44 1295 814455Email: [email protected]
conference diary
Bunkerspot February/March 201478 www.bunkerspot.com
PORT OF
GIBRALTAR
Close to main shipping routes
Competitively priced bunkers delivered by quality operators
Safe anchorage
Established, quality cruise facilities
Broad spectrum of marine services
Excellent international communications
www.gibraltarport.com
North Mole, Gibraltar, Tel: +350 20046254, Fax: +350 20051513 [email protected]
