The International Bunker Industry Association 1
Three months into the implementation of European Emission Control Areas, what's been the impact? What's happening on the Marine Fuel Scene What's the prognosis for 2020 global limits?
Early Indications with ECA influence A marked improvement in bunker fuel quality with 8% of samples found to be off-spec compared with 10% in the first quarter of 2014. A significant change in purchasing patterns of the types of products, with a steady increase in the number of distillate fuels being tested. The number of distillate samples being submitted for testing rose by 15% There is an emerging 60/40 split HFO/MGO as opposed to 80/20 Cost of Fuel has significantly changed,- does this influence the current picture??
Changing Scene of Marine fuel Concerns about future supply availability of new fuels Unavoidable changes to fuel manufacturing processes can alter fuel chemistry Increased number of available cutter stocks to reduce S levels adding totally unknown cutter stock chemistry Growing alternative sustainable fuel market - creating more complex fuel chemistry Low sulphur HFO resulting in higher trends in abrasive catfine content and density in some regions Past statistics are not an assurance for the future, good processes and procures are
Current Situation Cross industry and Press attention to quality concerns about the issue of the control of fuel quality, its handling and its use within the marine industry On one hand there seems to be constant improvement such as: engineering advancement in designs of marine diesel engines, better concepts in bunker treatment plants, tighter ISO fuel specifications, stricter environmental regulations, On the other hand there seems to be concerns such as: fuel oil availability, energy sustainability, pollution control, emission reduction, bunker contamination, quality alerts, quality of bunkers rapidly getting worse and sophisticated testing demanded for every bunker stem. Off Specification does not necessarily mean poor Quality Challenges of New fuels of wider variations in formulations Focus on switching to distillate and other new fuel operations
IMO Sulphur - Marpol Regulation 14.1 and 14.4 on fuel sulphur limits Non-specified chemical contaminants Regulation 18.3 fuel oil quality requirements: Fuels derived from petroleum refining must be free from inorganic acid; may not include added substance or chemical waste that jeopardizes ship safety or adversely affects machinery performance, is harmful to personnel, or contributes to additional air pollution.
Ships are responsible for sulphur compliance but have no control over what they receive from suppliers For low sulphur fuels, suppliers will have financial incentive to blend close to upper limits. Local authority control of bunker suppliers who exceed sulphur limits has been limited Conflict between commercial and statutory sulphur verification procedures puts ships at non-compliance risk
Standards need to be included in bunker terms and applied more rigorously by all parties ISO 3170 Manual Sampling ISO 3171 Automatic Sampling ISO 13739:2010 Procedures for the transfer of bunkers to ships (Revision to full ISO due 2010) Gibraltar Bunker C.O.P. SS 600 (Singapore) Bunker C.O.P ISO 4259 Determination and Application of precision data In relation to methods of test ISO 8217:2010/12 Marine Fuel Specification ISO 8216-1 Classification of Marine Fuels EU Sulphur Directive 1999/32/EC amended 2012/33/EU IMO MARPOL Annex VI Appendix VI SOLAS (Flash point) Sampling Guidelines MEPC.182(59) CARB & other regional controls
Frequency of results x -0.59xR x x x x x x x x x x x x True Value +0.59xR x x x Variability of test result 95% Con 95% Con X Stated Limit Spec Met Spec NOT met x x x True Value = Infinite results from infinite Laboratories 95% confidence = X +/- 0.59 R
Iso 4259 On the basis of the inherent level of test variability, establishing the true value of a specification parameter is not achievable in practice. Instead the usual approach adopted is in terms of 95% confidence that a single test result either satisfies or does not satisfy a specification limit. 95% confidence is that upon multiple testing a single test result can be expected to be less than or greater than a target figure. When a single test result falls within the grey area there is a statistical chance that multiple testing would still show the product to be on specification or within the limit.
ISO standard v Marpol Market standard for interpreting sulphur test results is ISO 4259 IMO sulphur verification procedure is more stringent Conflict between statutory and commercial interpretation of sulphur test results IMO s verification procedure for testing of MARPOL samples could easily lead to cases where fuel that meets sulphur limits under ISO 4259 principles is regarded as non-compliant by PSC authorities.
Consequences Ships may be deemed to have non-compliant fuel based on PSC tests of MARPOL sample Buyer s grounds for successful commercial claim against supplier is dubious if S% result is within 95% confidence limits What happens if buyer seeks compensation from supplier on basis of damage caused by breach of statutory limits? Would PSC authorities have a successful court case against supplier if ISO 4259 confidence limits are met? Majority of non-compliance cases (Notes of Protest) reported to IMO are within 95% confidence limits
Analysis of NOP s Bunkerworld analysis of information submitted to the IMO from the flag state administrations of Cyprus, Liberia and Norway for H1, 2014 and by Cyprus and Liberia for H2, 2014 where ships test results exceeded MARPOL limits. Period > 3.67% S 3.5-3.67%S >1.06% S 1-1.06% S >0.11%S 0.1-0.11%S H1, 2014 0 13 56 216 0 2 H2, 2014 2 8 14 67 0 0 % of total 0.53 5.56 18.52 74.87 0 0.53 H1, 2014: 56 out of 287 sulphur content objections, or 19.5%, exceeded 95% confidence limits. H2, 2014: 16 out of 91 sulphur content objections, or 17.6% exceeded 95% confidence limits.
IBIA has asked IMO to revise Appendix VI to MARPOL Annex VI Submission to sub-committee on Pollution Prevention, January 2014: - supported IMarEST proposal to drop reference to regulation 14.1 and 14.4 in the supplier s declaration and replace with statement that sulphur content is in accordance with the value stated on the BDN. - proposed to align the MARPOL Annex VI sulphur verification process with ISO 4259 and recognise the result of a single test as compliant as long as it falls within 95% confidence limits.
What are the consequences? - Universal and unambiguous approach to sulphur verification in all jurisdictions - No conflict between commercial and statutory methods (fewer NOPs) - Cut cost and administrative burden for PSC by simplifying procedure - Protect shipowners against unfair bias caused by statistically normal variations in test results
What are the consequences? - Uncertainty of test results covered by the 95% confidence limit swings both ways - IMO procedure meant to encourage suppliers to blend fuels slightly below sulphur target - Adopting ISO 4259 will tempt suppliers to blend to upper sulphur limit - Could affect ships ability to reach ECA compliance i.c.w. fuel changeovers
What s been done IBIA have asked IMO to reconsider this position We need member state support We need association support Ambiguity helps no one
Quality - Some fuel can cause operational problems on ships INTERTANKO submission to MEPC 62 (2011) highlighted the risk to ships (1.4% of bunkerings led to machinery problems) Majority of cases reported in INTERTANKO submission related to chemical contamination Chemical contamination is not picked up in routine fuel analysis Growing concern about safety implications of off-spec fuels gain momentum at IMO in 2014
IBIA s twin track approach Partnership whereby the all stakeholders come together to support each other within the fuel supply chain. Key ports develop a consistent system - IBIA Port Charter IMO CG on fuel quality
IBIA Ports Charter Ports that sign the charter are committed to three key principles, these are that a port Establishes measures to enable a Quality bunker fuel supply to be delivered. Establishes measures to ensure that the correct Quantity is delivered. Demonstrate that the system that is operated within the port is Transparent. Standard (ss 600, Guide to good practice) Licensing scheme Regulation and enforcement Declare results Independent checks
What is being done to improve Fuel Quality? Test Samples Contract Ports Charter IMO-BDN Competency and understanding across the chain
Proposals to MEPC 66/67: Examine ways to strengthen implementation of the current provisions in regulation 18 of MARPOL Annex VI and be more proactive in auditing and inspecting local bunker suppliers Introduce "specific criteria and requirements for the operation of local suppliers" developed at the IMO Introduce a supplier licensing scheme, ban unregistered and unlicensed suppliers Register quality specification agreed between supplier and buyer on the BDN PSC to report results of investigations and follow-up actions in response to Notes of Protest
Most of the concrete proposals to MEPC 67 were flatly rejected by US submission because "The responsibility for procuring and using MARPOL Annex VI compliant fuel is the responsibility of the ship Quality issue should remain a commercial contract arrangement between the ship and the supplier Majority of deliveries cause no quality disputes Too burdensome for many countries to set up systems to control that bunker suppliers meet criteria Proposal to develop non-mandatory guidelines to help authorities assure that local suppliers have quality controls in place
ToR for CG on fuel quality agreed at MEPC 67:.1 develop draft guidance for assuring the quality of fuel oil delivered for use on board ships;.2 consider the adequacy of the current legal framework in MARPOL Annex VI for assuring the quality of fuel oil for use on board ships taking into account the outcome of MSC 94, when available; and.3 submit a report to MEPC 68. MSC 94 agreed to forward new INF paper from Singapore and INF paper from MSC 93 to CG
Questionnaire for CG on fuel quality Q-1 What fuel oil (gas, distillate, residual fuels) should be covered by the guidelines? Q-2: What entities should be the subject of the guidelines? Q-3: What MARPOL Annex VI fuel oil property requirements should be covered by the guidelines? Q-4: What format should the guidelines take? Q-5: What are the key elements that should be addressed in the guidelines (for each level, if you support a menu-based approach)? Q-6: Please provide any additional information you think would be helpful toward the development of non-mandatory guidelines for fuel oil quality. Q-7: Please comment on the above description of the current legal framework of MARPOL Annex VI with respect to fuel oil quality. What are the pros and cons of this current framework?
Three Tier system mooted with a menu based approach to fit local need/capacity. Level 1 - Documentation/information sharing. Proposes public review platform of suppliers performance and identifying non-complying fuel suppliers. Needs to be moderated. Level 2 - Introduce fuel quality management systems (voluntary or mandatory) for suppliers to demonstrate control throughout supply chain. Level 3 - Level 2 becomes mandatory requirement in supplier licensing scheme. Compliance and enforcement measures of suppliers in licensing scheme put in place. Most CG participants calling for a more specific framework with policy, standards, procedures, legislation and enforcement. Singapore INF paper held up as example.
Flash Point SOLAS Convention stipulates a 60 C minimum flash point limit for marine fuels Flash point limits applicable to automotive diesel in the European Union is minimum 55 C Flash point limits applicable to automotive diesel in the US minimum 52 C IMO has agreed to begin a review of the limit, but without pre-empting an exact outcome
Prognosis for 2020 IMO Fuel availability study due 2018 Refineries need to be gearing up now to meet 2020 target EU will implement Rest of the world? ECA s increasing- Australia considering new ECA Far East?
70 New 0.10% Sulphur Fuels broad range of characteristics 60 50 40 30 20 10 0 K Viscosity at 50oC Micro Carbon Residue Net Specific Energy Gross Specific Energy Sulphur Content Pour Point Aluminium + Silicon Forewarning of the even wider formulation of fuels that will surface to meet 2020-0.50% - changing characteristics does not mean bad quality
Thank you for your attention! To join IBIA visit our website www.ibia.net or Email ibia@ibia.net Oxford Bunker Course 30