Ships running on fumes as fuel switch causes delays

Logistical problems, including a lack of refuelling barges, have added to shipping firms’ woes in the wake of a switch to cleaner marine fuels. (Reuters)
Updated 05 December 2019

Ships running on fumes as fuel switch causes delays

LONDON: Disruption to shipping from the long-anticipated switch to more environmentally friendly marine fuels has finally arrived, exacerbated by logistical problems as much as any shortage of the cleaner fuel.

New International Maritime Organization (IMO) rules, referred to as IMO 2020, aim to stop ships from using fuels containing more than 0.5 percent sulfur unless they are equipped with exhaust-cleaning systems known as scrubbers.

From the start of January ships must load very low sulfur fuel oil (VLSFO) or more expensive marine diesel unless they have scrubbers for the old high-sulfur fuel oil (HSFO).

The new regulations have been on the radar since 2016, with no prospect of any extension to the 2020 deadline, prompting concern from oil producers, storage operators and shippers and multiple warnings over the potential for a chaotic switch.

With only a minority of ships in the global fleet having installed scrubbers, the oil industry had feared refiners would not be able to make enough diesel and VLSFO. But delays appear to be more down to a lack of refueling barges than the fuel itself, with sources saying that major ports are running 10 days behind schedule across fuel types.

HIGHLIGHTS

• IMO 2020 fuel regulations take effect on Jan. 1.

• Logistics rather than fuel supply causing delays.

• Some ships forced to wait 10 days or longer.

“It’s a very disrupted bunkering market,” one senior industry executive said of the ship fueling sector, declining to be named because of company policy.

“There is enough product in most places, but it’s the barge availability that is a problem.

The executive said that first availability in Singapore is not until Dec. 15 for the 0.5 percent grade — a long 10-12 day wait compared with the usual three to five days. There have been similar delays at Brazilian ports and in the busy Mediterranean terminals of Gibraltar and Malta, he added.

The delays have been creeping up steadily in recent weeks as ship owners swap to the cleaner fuels ahead of the fast-approaching deadline.

Shipping sources said there have also been delays of about a week at the Middle East hub of Fujairah.

The barge problem stems from the need for them to be cleaned before transporting different types of fuel, and many were converted to carry only cleaner grades in a process that can take a week.

Furthermore, barges that carry fuel from storage to individual ships now have three rather than two grades to handle and many more ships will require combinations that increase the number of barge trips to each vessel.

“The problem is you have twice as much product potential but no one built more barges,” one of the shipping sources said.

Tankers without scrubbers are also asking for smaller volumes of the more polluting HSFO.

“Imagine the time and logistics of bunkering 10 ships with 200 tons instead of three to five ships with 1,000 tons. It’s a lot busier,” another shipping source said.

In the past week, one tanker expecting to load crude at the Black Sea port of Novorossiisk had to sail back to Istanbul for fuel because the Russian port was unable to supply the ship.

In another instance, a tanker had to cancel a job after it was unable to secure fuel to reach its next port in time.

The disruptions are likely to worsen over the winter when northern hemisphere ports may be forced to close because of bad weather.

The logistical problems don’t end there, however.

In addition to refined VLSFO the fuel can be produced through blending. But the mingling of fuel from different sources can cause compatibility issues that clog engines.

The industry executive said there have been several cases of tankers having to discharge freshly loaded fuel because of quality issues, which can tie up barges for several days.


Dubai’s Al-Habtoor Group to open representative office in Israel

Updated 20 September 2020

Dubai’s Al-Habtoor Group to open representative office in Israel

  • Al-Habtoor and Fogel both welcomed the landmark agreement that was signed on Sept. 15 in the US
  • The tycoon revealed his plans to open a representative office in Israel

DUBAI: Dubai’s Al-Habtoor Group (AHG) plans to open a representative office in Israel its chairman said, following an historic peace deal signed last week between the UAE and Israel to normalize relations.

Khalaf Ahmad Al-Habtoor, who is AHG founding chairman, welcomed Ampa Group’s co-owner, chairman and CEO Shlomi Fogel at the hospitality conglomerate’s Dubai headquarters. Ampa Group deals in real estate, finance and industry. 

Al-Habtoor and Fogel both welcomed the landmark agreement that was signed on Sept. 15 in the US. 

The UAE and Bahrain signed the Abraham Accords in a ceremony overseen by US President Donald Trump. The two Gulf countries join Egypt and Jordan as the only Arab nations to have full relations with Israel.

“I have been looking forward to this day for a very long time,” Al-Habtoor said. “I have always believed that Emiratis and Israelis have a lot in common. Both peoples are business-oriented and have relied on human talent and ambition more than their countries’ natural resources to build robust, innovative economies. The opportunities that this deal will present are great for both sides. I am confident this will open up new doors and lead to stronger economies, and closer cultural ties between the peoples.”

The tycoon revealed his plans to open a representative office in Israel and said that there was a lot of interest in collaboration.

“We have received a large number of inquiries for collaboration in several fields, ranging from AI and technology, to agriculture, hospitality and trading. The possibilities are endless for both sides in our diversified fields and new ones, and we want to be present to grasp them.”

He previously disclosed that AHG had started talks with Israeli domestic carrier Israir Airlines to open direct commercial flights, “and we are preparing to reveal a few collaborations in the coming days.”

Fogel said that peace would be cemented through successful business collaboration and trade. “Together with our Emirati counterparts we will show the way to live in peace to the rest of the world,” he added.

Fogel was accompanied at the meeting by Ampa Group executives, including Erez Katz and Saar Bracha.

AHG was represented at the meeting by Mohammed Al-Habtoor, Ahmad Al-Habtoor, Maan Halabi, Sanjeev Agarwala and other members of senior management.