Worldwide the marine bunker market consumes approximately 200 million mt/year, which represents about 5% of overall oil demand. The EU is estimated to comprise around 25% of total international bunker use.
By far the largest bunkering port in the world is Singapore, which supplies around 36million mt/year; total US bunkering activity amounts to circa 25 million mt/year, with China at about 10 million mt. Within the EU, the Netherlands, with Rotterdam and Amsterdam, accounts for around 15 million mt/year, followed by Spain (especially Algeciras and Ceuta) at 9 million mt and Belgium (Antwerp) at 7 million mt/year.
UK international bunker supply is just over 2 million mt. (with a further 1.2 million mt supplied to vessels which remain within UK coastal waters).
As a rough and ready rule of thumb, vessels up to about 6,000 DWT use marine diesel/gas oil for propulsion, while vessels above that size use a grade of fuel oil in their main engines and marine diesel/gas oil in auxiliary power units. Typically, fuel oil accounts for between 80% and 90% of total marine fuel supplied on a worldwide basis, with relatively minor variations by country according to the type and pattern of trade.
A well-established feature of the supply chain is the role of the bunker trader, who acts as a reseller from a physical supply source(s) and/or, in certain instances, has direct access to their own physical products in storage. Active in this area are well known names such as Argos Bunkering, Aegean Bunkering, Bominflot (now owned by Mabanaft), Chemoil, Cockett Marine, Maritime Bunkering, Mersey Bunkering, OW Bunkers and World Fuel Services, etc. These companies maintain and service substantial portfolios of shipping customers.
The marine fuels supply chain
- Barge, carrying anything from 300mt (distillates) up to around 5,000mt (fuel oil), delivering to vessels at recognised anchorages or jetties
- Ex wharf/jetty, from shore tankage (or refinery) – an established feature of installations/locations where oil is loaded and/or discharged to/from tankers
- Road tanker, for the typical 20-30 tonne delivery of gas oil to ports where access to this type of bunkering arrangement is available e.g. fishing trawlers.
Bunker deliveries are known as ‘stems’ within the trade.
Current and future challenges
Although shipping movements account for just under 3% of global greenhouse gas emissions, there have already been a number of initiatives put in place to curb harmful emissions, especially SOx; there are some substantially more challenging restrictions in the pipeline.
These initiatives, and accompanying regulations, fall under the aegis of the IMO, the UN agency responsible, among other things, for prevention of marine pollution by ships, and are governed by the Marpol (marine pollution) convention, of which Annex VI covers air pollution from shipping. Under this convention, emission control areas (ECA) have been established where sulphur emission limits are tighter than on the open sea. The first ECA was established in the Baltic Sea in 2006, followed by the North Sea and English Channel in 2007; comparable restrictions were established in North America in 2012 and will be in place for the Caribbean Sea in 2014 ( these latter two restrictions also covering NOx and PM emissions).
So, a significant challenge looms on the near horizon when, from 1st January 2015, fuels used by vessels in ECAs will be subject to a maximum sulphur content of 0.10% by mass i.e. 1000 ppm, which effectively means switching from fuel oil to gas oil. In the EU, this additional requirement will place added strains on sourcing a grade of fuel in which the area is already in substantial deficit of circa 25 million mt/year.
The bigger challenge, however, comes in 2020 (or 2025, if deferred after 2018 review), with enormous implications for the configuration of the worldwide refining network in having to make the necessary adjustment(s) to meet the requisite standard. For ship owners/operators the cost implications are equally daunting, with the distillates grades costing typically 50% more than fuel oils.
Sulphur scrubbers, which clean the ship’s exhaust emissions, may offer a partial solution, but the logistics around their large/wide scale installation are as yet relatively unknown.
In the longer term, maybe the solution will be provided by a switch to a cleaner fuel, such as LNG, but requiring a whole new fuelling infrastructure to be put in place. Significantly, Shell has commissioned two LNG powered barges this year, which are now operating on the Rhine. The company has unveiled plans to develop two LNG corridors, mainly for the marine industry, in the Gulf Coast and Great Lakes area of North America.
Maybe a harbinger of the future for marine bunkering?
The principal grades of fuel
- Bunker ‘C’- a heavy fuel oil and the most commonly used, especially in the more modern engines (also known as No 6 fuel oil)
IFO – intermediate fuel oil
- IFO 380 – a blend of heavy fuel oil with a small amount of gas oil, to produce a fuel with a maximum viscosity of 380 centistokes at 50 degrees C
- IFO 180 – a blend of IFO 380 and about 10% gas oil, to produce a fuel of maximum viscosity of 180 centistokes at 50 degrees C
- Marine diesel – a heavy gas oil/ light fuel oil, with maximum density which can range between 0.890 and 0.920 kg/m3 at 15 degrees C
- Marine gas oil – meets the inland heating oil specification i.e. maximum 0.845 kg/m3 density and 0.1% sulphur content.
Fuel oils used in marine bunkering account for about 40% of total fuel oil demand.
Milestones in the evolution of regulations under both the EU and IMO Marpol Annex VI
|Date||EU||IMO Marpol Annex VI|
|1st January 2010||Sulphur content of Marine Fuels Directive – vessels at berth, max. 0.1% wt. in all EU ports||Global marine fuels- max. 4.5% wt sulphur content.|
|1st July 2010||ECAs – max. 1.0% wt. sulphur content|
|1st January 2011||Fuel Quality Directive-inland waterways, max. 10ppm sulphur content|
|1st January 2012||Global marine fuels- max. 3.5% wt. sulphur content.|
|1st January 2015||ECAs – max. 0.10% wt. sulphur content|
|1st January 2020||All marine fuels to be max. 0.50%wt. sulphur content- subject to review in 2018 and possible deferral to 2025 introduction.|