Marine fuels are becoming an internationally regulated and strictly controlled commodity, with high demands for quality and documentation. Per Holmvang, managing director of DNV Petroleum Services, here discusses the new and stricter requirements hitting the marine fuels market.
Over the last 15 years the bunker market has changed dramatically. “Marine fuels delivered in a certain area used to originate mostly from local sources and refineries, but today fuels are being mixed, blended and transported all over the world. Back then, two thirds of all fuels came from the majors and the rest from independents. Now the opposite is the case. For example, in Singapore alone, there are over 100 bunker suppliers,” says Per Holmvang, illustrating the growing complexity and unpredictability of this market.
Deterioration of fuel quality
As head of DNV Petroleum Services (DNVPS), Holmvang is leading the largest global fuel testing network in the world, with some 70 percent of the worldwide market for contracted fuel testing services. Since its start-up in 1980, DNVPS has performed fuel quality analysis and consultancy on more than 800,000 bunker deliveries.
One trend the company has observed is that new and more efficient refining methods are causing a deterioration in marine fuel quality. Explaining this apparent contradiction, Holmvang says that “marine fuels are practically made from the leftovers of petroleum production. The more efficient the production gets, the less quality materials are left for marine fuels.”
He stresses, however, that “fuel quality worldwide is generally acceptable. The quality issues that we do see come mostly from poor housekeeping and errors in blending and operations.”
Capping sulphur content
Environmental concerns have been translated into new legislations and requirements which are causing a major impact on the marine fuels market. An important date is May 29, 2005. That is when the new IMO requirements set forth in the Marpol Annex VI will enter into force, capping the amount of sulphur and nitrogen oxide emissions (SOx and NOx), as well as the volatile organic components (VOC) permitted in marine fuels.
“The aim of the legislation is to reduce the ship emissions of these components by setting a worldwide limit of sulphur content in fuel to 4.5%. Northern Europe is specifically addressed, due to geological conditions and heavy marine traffic. There, in certain areas called SECAs (SOx Emission Control Areas), the sulphur content is required to be as low as 1.5%. SECA starts in May 2006 for the Baltic Sea, and in November 2007 for the North Sea,” says Holmvang.
Are ship operators prepared?
The North Sea SECA will include the British channel and the UK out to 5 degrees west. The two areas combined will cover most of the ship traffic in Northern Europe, and the requirements affect all ships above 400 gross tonnes. In fact, DNVPS is worried that the new requirements will lead to a shortage of low-sulphur fuels available in the market.
“The ship operators and bunker suppliers need to prepare for these requirements, and especially for the SECAs. The only way for ships entering a SECA to be in compliance is to switch fuel tanks from 4.5% sulphur fuel to 1.5% sulphur fuel. That entails fitting ships with additional fuel tanks, as well as service tanks, settling tanks, pumps and separators. We have been encouraging the industry to take the necessary actions for ensuring that their vessels comply with the new requirements, but we still get the impression that ship operators are not yet fully prepared for this change,” says Holmvang.
Marine fuel management
With the stricter requirements comes an increased need for fuel documentation, as well as a need to change the approach to the bunkering process.
“In this situation we are aiming not only to provide a high quality testing service, but we are also positioning ourselves as service providers of a more extended marine fuel management. This entails offering services to all parts of the fuelling process; pre-bunkering, during bunkering, and post bunkering. Marine fuel management is part of ship operations. It cannot be thought of as a side-activity where quality and controls can be forgotten,” says Per Holmvang.
FuelWise
One new service underlining this approach to marine fuel management is ‘FuelWise’. This is an online fuel quality data service, leveraging the data already available in the DNVPS network.
“The FuelWise service offers subscribers access to test results of the latest fuel deliveries from virtually any supplier in the world. This is live data, immediately available as soon as our fuel tests are completed. We believe using the system will reduce the risks in bunker purchasing, as the quality of fuel deliveries from suppliers can be checked before a purchase is made,” says Holmvang.
DNV Petroleum Services (DNVPS) is a wholly-owned subsidiary of DNV.