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Tuesday, October 23, 2018

Heavy fuel supply and consumption problems as SECA introduced in Europe

German ship owners have suffered recently due to the poor quality of heavy fuel oil (IF 380) supplied in St. Petersburg, according to a recent article in Lloyd's List, giving rise to disputes between ship owner and ship time-charterer.


The fuel stemmed needs to comply with quality requirements (ISO 8217) but these requirements/specifications are relatively minimal. The fuel may comply with contractually agreed specifications, but the ISO standard does not stipulate the stability of the fuel or the facility and effectiveness of its ignition and combustion, and thus the main and/or auxiliary engines may still suffer significant damage.


The fuel delivered to the German operators was properly analysed and, apart from slightly increased water content, the basic specifications were found to have been met. However the ships in question suffered damage to fuel pumps, injection nozzle systems leading to some engine breakdowns.


While the vessels were undergoing repair they were placed off-hire, obliging ship owners to make claims against their charterers for damage caused by the fuel delivered by the charterers to their ships, on the basis that  the charterers had not supplied fuel of a quality suitable for burning in the vessel's engines. Charterers contend that the fuel met ISO obligations and that they therefore did not breach charterparty obligations. Such disputes are of great concern to ship operators as the English Channel SECA commences under EU law.


Bunker buyers have also been expressing concern that low-sulphur bunker fuel is not available everywhere, although some vessels with predictable trading patterns have been stemming such fuels for a month or two in preparation for when they return to the area after the SECA commences.


The U.K. port of Falmouth (which is right on the SECA boundary line) offers LSFO, but other alternative bunker ports for ships entering the SECA without LSFO on board are said to either have inconsistent supply or are unattractive and/or expensive as bunker-only stops. This means that vessels in less predictable trades will face a greater challenge to ensure that they comply with SECA requirements.


Those who consider that all the hassles of locating, buying, treating and burning residual fuels and their waste sludge make it worth switching their ships to burn distillates have been facing criticism from those who maintain that producing and burning distillates instead of residuals increases the CO2 output and that this is unacceptable.


But Dr. James Corbett from the University of Delaware has recently commented that, "If an absolute CO2 increase is an argument not to achieve environmental benefits, then it is a red herring." The Associate Professor in the university's Marine Policy Program is critical of organisations such as the International Energy Agency, which has been highlighting the CO2 penalty of increased refining to produce more distillate fuel. "There is always a CO2 "trade-off," he insists, "but there are substantial benefits from reducing other pollutants."  Pollutants such as nitrogen oxides (NOx), sulphur oxides (SOx) and particulate matter (PM). "CO2 is important to consider, but it is not a reason to delay going forward to achieve cleaner shipping."


Corbett recently presented to the California Air Resources Board some of the findings of the Ship Traffic Energy and Environment Model (STEEM) which show huge increases in world trade leading to a doubling of ship emissions by 2050, although growth also in other modes of transport will mean that shipping's share stays steady as a percentage of total emissions.


A recent poll by asked the question, "Do you believe than an increase in CO2 emissions due to extra refinery processing required is a valid argument against introducing a low global sulphur limit for marine fuels." As we go to press, 60% of respondents have replied NO whereas only 31% have replied YES. The rest don't know.


Contact: Bill Box