Bunkers: Qualifying Quality

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1 Bunkers: Qualifying Quality A supplier's view of what really happens Bob Thornton World Fuel Services 10 March, 2014

2 World Fuel Services Corporation 2013 Revenue $41.6 billion Market capitalization $3.28 billion Stock symbol NYSE: INT Fortune 500 Ranking* 74 Global headquarters Miami, Florida, USA Founded 1984 Number of employees** 2,500 All figures, except employee count, are as of 12/31/12 * Source: Fortune 500 Ranking Issue Date May 6, 2013 ** As of February 2013

Global Presence with Over 60 Offices Miami London

Canada Chile Colombia Denmark Germany Gibraltar

Netherlands Norway Russia Singapore South Africa

3 Global Presence with Over 60 Offices Miami London Singapore Afghanistan Australia Argentina Brazil Canada Chile Colombia Denmark Germany Gibraltar Greece Hong Kong India Japan Kyrgyzstan Mexico Netherlands Norway Russia Singapore South Africa South Korea Taiwan United Arab Emirates United Kingdom United States 3 3

WFS Manages the Largest Bunker Volume Million MT 30.0 WFS is #1 in market with 10% share 27.0 24.0 21.0 18.0 15.

4 WFS Manages the Largest Bunker Volume Million MT 30.0 WFS is #1 in market with 10% share

5 Marine Technical who are we? 5 professionals with broad technical knowledge marine educational backgrounds About 180 years experience marine fuel and lubrication quality bunker fuel testing ship machinery and hull Inspection new ship construction project management marine consulting shipboard engineering marine engine design and construction and Bob Thornton Dennis Eley

6 John Stirling Gajanan Pawar Marine Technical Sea experience Multiple types of diesel and steam vessels Members of ISO 8217 Marine Fuel Specifications Working Group ISO Bunkering Protocol Working Group CIMAC Heavy Fuels Working Group IMO's Marine Environmental Protection Committee IBIA Board (International Bunker Industry Association) Manuel Vinas

tonnes Related to high price of fuel Quality claims

7 Technical Issues Facing the Industry Frequency of fuel claims Quantity disputes both higher in number & tonnes Related to high price of fuel Quality claims more complex FTIR / GCMS Influence of the testing services

8 Technical Issues Facing the Industry Environmental Legislation Proliferation of ECAs Rules and enforcement not uniform 2015 Max 0.1% sulfur in an ECA 2020 Max 0.5% sulfur global Scrubbers vs using LSGO or 0.5% LSFO if available Is LNG really the future?

9 Technical Issues Facing the Industry Changing fuel quality Suppliers blending to meet legislation v.s. spec Law of unintended consequences

10 Typical concerns Quantity disputes Use of surveyors Barge vs ship figures Cappuccino real or an excuse for sleeve oil Vnet Quality claims Sulfur test accuracy MARPOL vs Commercial testing Study of normal bunkers Debunkering may no longer be possible Using what s on board Sulfur legislation Revision of the EU Sulphur Directive North American ECA : U.S. & Canada Reports of detentions & fines in Europe & USA

11 Additional worries Fuel quality Is it really getting worse? ISO 8217: 2005 vs 2010 vs 2012 vs Future Blending to meet LSFO with MGO Cost to meet sulfur specs with 95% & 99% certainty Responsibility of the vessel to clean the fuel Future availability an educated guess Sampling MARPOL vs Commercial samples Why suppliers insist on sampling on the barge Why Owners want it on the vessel What we ve seen Contractual requirements Supplier s terms of sale Charter party clauses

12 Ask Anything! But first Since perception becomes truth Is the quality of bunkers really getting worse? Are Catfines increasing dramatically as claimed by many?

13 Are Bunkers Getting Worse? Courtesy of DNVPS

14 WFS Bunker Claims

15 Split of Registered Claims

16 WFS Quality Claims % of products (MGO & IFO) delivered by WFS are free of claims Of the 1.5% having a claim, only 32% relate to quality Quality Claims = 32% of 1.5% or less than 0.5% of WFS deliveries WFS results are 50x lower than the 25% off-spec test results cited by some test labs Frequently the contractual sample is subsequently tested and found to be on-spec Since some WFS quality claims relate to reports from vessels, not lab results, the difference is even higher Are we that good or is there some explanation for the extreme difference?

17 Courtesy of DNVPS Focusing on Al+Si

18 Data - courtesy of DnVPS A Dramatic Increase or?

19 Data - courtesy of DnVPS An Accurate Depiction

20 Use of Truncated Graphs Note that both of these graphs display identical data; however, in the truncated bar graph on the left, the data appear to show significant differences, whereas in the regular bar graph on the right, these differences are hardly visible. Data - courtesy of DnVPS

21 It s not always the fuel

22 Now you can ask anything!

23 GC-MS Analysis

24 Quality What s in Bunkers

25 But what is this? Sulphate SO mg/kg (ppm) Calcium Ca mg/kg (ppm) Chloride Cl mg/kg (ppm) Magnesium Mg mg/kg (ppm) Sodium Na mg/kg (ppm) Potassium K mg/kg (ppm)

26 San Pellegrino Mineral Water

San Pellegrino Mineral Water Sulphate Bicarbonate Calcium Chloride Magnesium Sodium Silica Residue Strontium Potassium Borates Nitrate Fluoride Bromide Lithium SO 4 HCO 3 Ca ++ Cl Mg ++ Na + SiO 2 Sr

27 San Pellegrino Mineral Water Sulphate Bicarbonate Calcium Chloride Magnesium Sodium Silica Residue Strontium Potassium Borates Nitrate Fluoride Bromide Lithium SO 4 HCO 3 Ca ++ Cl Mg ++ Na + SiO 2 Sr ++ K + H 3 BO 3 NO 3 F Br Li mg/kg (ppm) mg/kg (ppm) mg/kg (ppm) 68.0 mg/kg (ppm) 53.5 mg/kg (ppm) 42.0 mg/kg (ppm) 9.4 mg/kg (ppm) 3.5 mg/kg (ppm) 2.8 mg/kg (ppm) 1.2 mg/kg (ppm) 0.77 mg/kg (ppm) 0.61 mg/kg (ppm) 0.40 mg/kg (ppm) 0.18 mg/kg (ppm)

Marine Fuel Management. Mark Pearson ASGL Marine Fuel Manager Athens, 9 April 2014

Marine Fuel Management. Mark Pearson ASGL Marine Fuel Manager Athens, 9 April 2014 Marine Fuel Management Mark Pearson ASGL Marine Fuel Manager Athens, 9 April 2014 Cargo Traders e.g. Vitol with an Annual Turnover > $300B Refinery Core Business to refine Crude Oil and sell the resulting