20 JAN 2019
With the implementation of the IMO’s 2020 global sulfur limit now less than a year away, the number and variety of industry players contributing to the debate surrounding the new regulation continues to increase, as does the speed at which narratives around the topic change. Low sulfur fuels, which the majority of vessels will use to comply, are rightly central to industry discussion. In particular, talk of bunker blending, and risks associated with the practice in a post-2020 era, are prevalent.
Today there are around 10 to 15 blended fuels in the shipping market which are used to meet 0.1 percent Emission Control Area (ECA) targets. Come 2020, the number and diversity of bunker fuels will grow to previously unprecedented levels. According to a study by CE Delft, commissioned by the IMO, blended fuel will constitute 233 million tonnes of demand, with compliant fuels chiefly created by blending heavy fuel oil with distillates to create low sulfur fuel oil (LSFO) blends. By necessity, there will be an increase in blending of smaller stems from more fragmented sources, and new fuel suppliers with lesser or no prior experience in the shipping industry will enter the market to meet demand.
Furthermore, when it comes to sources of fuel, it is likely that the types of crude oil hitting the market will alter to a sweeter, low sulphur raw product that would make it easier to formulate blends of compliant 0.5 percent marine fuels. In keeping with this prediction, there is already increased demand for light U.S. crude in anticipation of 2020.
While it is impossible to predict with absolute certainty how increased fuel blending will impact vessel operations in future, we expect that commonplace and diverse use of the practice will heighten the risk of fuel being “off spec” and not complying with ISO 8217 standards, or other issues not specifically covered within pre-2020 fuel standards, including compatibility or the fuel being contaminated. In addition, present testing regarding stability may no longer provide adequate indication and safeguards for post 2020 fuels.
Based on previous trends in bunker quality disputes claims, we can infer that contamination caused by non-petroleum products such as bio-derived waste, slops and chemicals may persist in the future. As the bunker ‘pool’ diversifies in terms of products, regional sourcing and blends, the trend is likely to become more prevalent and problematic for ship owners and operators (as well as other stakeholders such as charterers, bunker suppliers, insurers, and financiers).
These problems could vary in scale, from low impact to hugely transformative to operations. Examples of the latter could include engine stoppages and failures; which poses an obvious navigational risk to safety of the vessel and crew, and could lead to a significant loss of earnings through unplanned downtime, repair costs, having to write off expensive bunker fuel, as well as litigation costs in seeking to recover such losses; and increased issues during fuel switching for vessels transitioning in and out of ECA areas.
With significant cost and safety implications at stake, the industry recognizes the urgent need to put plans in place that mitigate against the potential impact of new fuels. Most industry commentators, including BIMCO, believe the risk of fuel contamination will increase in future and that fuel testing laboratories can play a key role in mitigating the impact. Indeed, BIMCO’s Deputy Secretary General Lars Robert Pedersen recently advised that “doing a full analysis and screenings for known contaminates of the product is a way to try and prevent operational problems from contaminated fuel.” All this means the workload of the industry’s fuel testing laboratories is likely to increase.
Laboratories, including those operated by class societies, are well versed in delivering standard fuel tests against ISO 8217 standards, but, as 2020 approaches, stakeholders should consider a more analytical approach to fuel testing, which sees a differentiation between commoditized, standard testing, and more focus on the possibilities of complex fuel contamination, compatibility and instability issues.
For example, over and above ISO 8217 testing, most fuel laboratories can be contracted to do certain tests such as Gas Chromatography Mass Spectrometry (GC-MS). However, when widespread problems arise, delays in testing at standard laboratories can be significant. This problem is more acute when the experts needed to interpret GC-MS results may be lacking or in short supply. In addition, as such testing is not standardized, and then there may be significant variations in the results obtained by different laboratories.
All this comes as little comfort to ship owners and charterers when they encounter an issue with their vessel’s fuel – while they await advanced fuel testing results, and are unable to make an informed decision on whether to consume, remove, or segregate the suspected problem bunkers.
At the onset of problems, all involved may benefit from partnering with the right independent experts early to help safeguard business continuity and manage risk.
This includes partnering with laboratories, such as those operated by Exponent, which are geared up to solve the most complex fuel problems and are run by experts with the knowledge and experience necessary to analytically assess results and provide evidence to a forensic level. Working in tandem with laboratory scientists should be marine industry experts with the technical ability to provide practical on-site assistance and thorough incident investigation at the earliest possible opportunity.
While the official 2020 deadline is a year away, ship owners have, from a practical perspective, far less time to prepare for the upcoming change. Indeed, the International Chamber of Shipping’s senior technical advisor Sunil Krishna kumar recently advised that owners should start preparing now and “be in a position to start contacting bunker suppliers to make sure fuel is available and ordering at least six months ahead.”
Amid this intense period of preparation, debate continues across the industry regarding the optimum way to ensure low sulfur fuels are of an adequate standard. Some claim more transparency in the fuel supply chain is key while others believe further regulation is the answer.
This latter point was voiced by Anna Ziou, Policy Director at the UK Chamber of Shipping, who recently highlighted that “Shipping is the only industry where the [fuel oil] supply chain is not properly regulated.”
No matter which course the shipping industry takes to clamp down on marine fuel quality, instances of “bad bunkers,” and their operational impact, will inevitably continue (to a greater or lesser extent). When faced with an issue, Exponent believes that a combination of scientific and technical expertise provides the best route to identifying the cause of fuel issues, and implementing resolutions that not only address problems, but do so in the most efficient manner.