OPEC plans informal September 26-28 meeting in Algeria

Updated 08 August 2016
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OPEC plans informal September 26-28 meeting in Algeria

VIENNA: OPEC said it has called an informal meeting of member countries for next month in Algeria to help stabilize the oil market.
The Vienna-based Organization of the Petroleum Exporting Countries said in a statement that the meeting would take place on the sidelines of the International Energy Forum in Algeria from September 26 to 28.
“OPEC continues to monitor developments closely, and is in constant deliberations with all member states on ways and means to help restore stability and order to the oil market,” it said.
OPEC President Mohammed bin Saleh Al-Sada reiterated the organization’s view that oil demand will pick up in the third and fourth quarters of this year.
OPEC sees recent oil price declines and current market volatility as “only temporary” and due to weak refinery margins, an inventory overhang and the impact of Britain’s decision to leave the EU on the crude oil futures market.
An expected return of economic growth in oil-consuming countries would rekindle demand for oil in the remainder of the year while oil supply would tighten, leading to higher prices.
Al-Sada added that more investment in oil production was needed to meet growing demand and offset declining output from existing wells.
Oil production was expected to decline as a result of an “unprecedented drop in capital expenditure” in the industry since last year.
Oil edged higher to near $42 a barrel in Asia Monday but analysts said the increase was unlikely to last as the commodity remains under pressure by a supply glut and a strong dollar.
Prices have been fluctuating since entering a bear market last week, falling more than 20 percent and closing below $40 a barrel for the first time since April.
OPEC said last month it expected the global supply glut to ease further this year and next thanks to reductions in oil output from producers outside the cartel, particularly the US.
If accurate, this would be a vindication of its strategy since 2014 of squeezing non-OPEC suppliers by keeping production at high levels despite low prices.
In its July monthly report, OPEC predicted a drop in non-OPEC output to 56.0 million barrels per day (bpd) this year from 57.0 million bpd in 2015.
In 2017, a further drop to 55.9 million bpd is expected, OPEC said, due in part to further falls in production by US shale oil producers, who need a higher oil price than the current $45-50 to survive.


Fujairah joins other ports, tightens exhaust rules ahead of 2020 regulations

Updated 23 January 2019
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Fujairah joins other ports, tightens exhaust rules ahead of 2020 regulations

  • Under International Maritime Organization (IMO) rules that come into effect from 2020, ships will have to reduce the sulfur content in their fuel to less than 0.5 percent
  • Singapore, China and Fujairah marine sales volumes represent a quarter of global ship refueling, also known as bunkering

SINGAPORE: Fujairah in the UAE has become the latest major port to ban a type of fuel exhaust cleaning system to comply with a coming tightening in rules regarding global sulfur emissions, mirroring similar moves in Singapore and China.
Under International Maritime Organization (IMO) rules that come into effect from 2020, ships will have to reduce the sulfur content in their fuel to less than 0.5 percent, compared with 3.5 percent now, forcing huge changes upon global shippers and also oil refiners.
Fujairah’s harbor master said in a faxed document seen by Reuters that the port “has decided to ban the use of open-loop scrubbers in its waters ... (and) ships will have to use compliant fuel once the IMO 2020 sulfur cap comes into force.”
This follows top marine fueling port of Singapore announcing a similar move in November, while China banned the use of open-loop scrubbers from Jan. 1, 2019.
Singapore, China and Fujairah marine sales volumes represent a quarter of global ship refueling, also known as bunkering.
Impact for shippers
To comply with IMO 2020 rules, shippers can switch to burning cleaner but more expensive oil, invest in exhaust cleaning systems known as scrubbers that may allow them to still use cheaper high-sulfur fuels, or redesign vessels to run on alternatives like liquefied natural gas (LNG).
Scrubbers use water to clean up fuel emissions, preventing them from being released into the atmosphere.
Open-loop scrubbers are the cheapest option, but they have come under criticism as they wash heavy metals and sulfur from the waste water into seas instead of storing it for a controlled discharge in ports, as closed-loop scrubbers do.
Of the more than 2,000 ships that have so far opted to invest in scrubbers, around three-quarters have installed the cheaper, open-loop type, shipping sources estimated.
Closed-loop scrubbers, which store wash water for later discharge, are still accepted in most ports.
Despite the spreading bans of open-loop scrubbers, Douglas Raitt of ship classifier Lloyd’s Register said vessels can still benefit from such systems as they can pump out the waste water in open seas, outside a port’s jurisdiction.
“The benefits of open-loop scrubbers are largely realized in open water during transit from one port to the next,” he said.
Raitt said shippers, however, should consider alternative measures to prepare for IMO 2020, considering that when the new rules come into force refueling infrastructure will be mostly geared toward compliant low sulfur fuel oil (LSFO) rather than high sulfur fuel oil (HSFO).
“Prevailing wisdom would be for operators opting for scrubbers to have a meaningful dialogue with their supplier base to secure HSFO post-2020 in ports of call,” Raitt said.