Sunday, July 19, 2015

The Ostrich and 2020/2025 Bunker Global Specs

The Ostrich and 2020/2025 Bunker Global Specs
Recall the familiar old saying that someone is "burying their head in the sand" when they refuse to acknowledge a problem!
How does that “ostrich parable” apply to marine bunker global Sulfur specs? Well, for one thing, we cannot practically and economically make that kind of fuel with 0.5% S. The Global Marine Bunker Fuels Sulfur 2020/2025 Specs of 0.5%S will kill the (Residual) Bunker Business worldwide. Meanwhile, we waste time on golf outings and dinners, and everybody’s sitting on their hand waiting for somebody else to do something, or praying that it will not happen, in effect, zero effort to change specs.
 The consequences?

Goodbye Singapore, Fujairah, Rotterdam...your 60 to 70 million ton/year bunker
business will disappear together with about US$25 billion in annual bunker sales plus
associated port services. The same fate will befall smaller bunker hubs... so adios, Algeciras, Gibraltar, Malta, Piraeus, Panama, etc.

Selling MGO will not compensate for that loss of bunker sales, and forget about scrubbers saving the day...less than 0.5% of world’s sea-going vessels have scrubbers..

Finally, residue desulfurization (RD) does not pay for making 0.5% S marine bunkers from typical 2%S residue. RD units costs $ 500 million to a billion per unit, and produce mostly naphtha and distillates that have a much higher $-value than IFO bunkers, so nobody in his right mind will use it for 0.5% S bunker.

Bunkers use residue (cheap atmospheric, vacuum, visbreaker residues) and cutter stock (cheap black gasoils) to make IFO380 at the lowest possible cost. Most crudes around the world produce residues with about 2 to 4% Sulfur, which cannot produce 0.5% S bunker with acceptable properties (see Table 1 in my June 2015 Fuel Bunker Insights newsletter).

On the other hand, if the global specs are changed to 1% S, there are plenty of low Sulfur crudes producing residues with around 1.5 to 2.5% S that can be blended down economically to meet 1% S specs.

This IMO Global Spec was pushed by Europeans down the throat of the rest of the world. Yes, they are free to kill themselves if they wish, but have no right to do the same to the rest of the world. At the International Maritime Organization (IMO) Marine Environment Protection Committee (MEPC) meetings in London, the loudest dominant voices are from Europe.
The feeling is that the other countries don’t care or are too stupid to understand the consequences, particularly the “flag-of-convenience” micro-countries run by Europeans for Europeans; and nobody seems to object.
2020 or 2025 is not that far away, and the issue cannot and will not be resolved at the last moment. As is always the case, “we pay for our stupidity through the nose”....

What Can Be Done

What is needed is a UN IMO member country representative to object and introduce a resolution amending MARPOL VI annex replacing the 0.5% S specs with 1% S specs. That is still a 350% reduction from today’s global 3.5% S specs.

I am planning to start an organization modeled after the API (American Petroleum Institute), as a lobbying organization to change the global bunker specs. Membership will include bunker suppliers, traders, brokers, and ship owners.

Such a project will involve countless man-hours and serious technical and legal resources.
I am seeking support and backing for this effort, and I hope I can count on you. Please email me at

Remember, DO NOTHING is not a solution.

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