Global Regulations –The Complexity - Fastmarkets RISI · 2020 Gasoil demand increasing globally due to urbanisation/economic growth US distillate demand highest since 2008 Inventories

Copyright © 2017 World Fuel Services Corporation. Proprietary & Confidential. All Rights Reserved.

Global Regulations – The Complexity

PPI Transport Symposium, September 16-18, 2019 – Tarragona, Spain

John Stirling, WFS Director Marine


WFS at a GlanceHeadquarters: Miami Florida, USA

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1984

Copyright © 2019 World Fuel Services Corporation. Proprietary & Confidential. All Rights Reserved.3


Our Marine BusinessSecure supply, quality lubricants, and complete Marine solutions

• 2020 Solutions• Claims management• Contract & spot options• Fuel management• Market reports & analysis• Operational support• Technical quality control• Yacht solutions• Credit & financing• Price risk management• Transaction management

• 23.7 million MT sold• 88,000+ transactions• 1,200+ ports

Data as of January 1, 2019 6

• 5.6 billion gallons sold• 1,000+ distribution locations• 1.64 million+ fuel transactions

• 8.2 billion gallons sold• 3,500+ service locations, including 2,900+ airports• 3.43+ million fuel transactions annually

Aviation BusinessLand Business


MARPOL Annex VI : How long have we known?

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Max 0.50% Sulphur, 1 Jan 2020 - Confirmation

Thursday 27th October 2016, London

Concerns from MEPC 70

MEPC 70/5/24 ISO response

Stability Blend stocks

Flash point Availability

Light distillate? Land quality

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Have the rules changed?

“Dr Emily Shuckburgh’s early morning presentation shook us to the core.”

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Source : Splash247.com

BUT, still no consensus...

MEPC 70 - The attitude certainly did

Copyright © 2016 World Fuel Services Corporation. Proprietary & Confidential. All Rights Reserved. 7

What will be the mix in 2020?MGO/ULSFO/VLSFO/HSFO+Scrubber/LNG – lots of jargon

Courtesy Robin Meech


Distillate, Gasoline and LSFO at expense of HFO

Gasoil demand to spike sharply in one year Where will it come from?

VLSFO will see a rise in demand BP estimates more than 50% of volume will be VLSFO

But….Exxon has indicated VLSFO will not be distillate (only) based


Middle distillate demand increasing even without 2020

Gasoil demand increasing globally due to urbanisation/economic growth

US distillate demand highest since 2008 Inventories are close to five year low Prices would tighten anyway even if no 2020-changeover

Marine has to fight for distillate Go head to head with land (geographically)?

2020 changeover makes the outlook much worse, especially for Europe/Asia

Complex refiners will run even harder as simple refineries struggle. Source: PIRA Oil outlook


2020 – The Seven Seas? - 7Cs

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Choices

Challenges

Complexity

Compatibility

Cost

Compliance

Consequences


Which Solution is best to comply with Sulphur legislation?

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Depends on various factors: Age of ship Trading pattern Time spent in Emission Control Area (ECA) Price differential

No single solution fits all ships! Crew training

Crew retention? Experience gathering Reap the benefits!


Geographical solutions – capacities and segregation

ULSFO DM

DistillatesDMB/DMC7% FAME

DistillatesDMB/DMC

HSFO

DMA - 7% FAME

(RM/DM)

FAME FREE DMA (RM/DM)

ULSFO RM

LNG OthersContamination?...a challenge!...both onboard the vessel and supply side

...Plus distillate pour point!

VLSFO RMVLSFO DM


The Choices..... Complex for both the supply side and the customer side

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What may happen post 2020

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Just some of the key points: How will shippers meet the new regulations?

What will be the mix HFO/MGO?

What will be the uptake of VLSFO (0.50%) Sulphur bunkers?

How will the quality vary for VLSFO?

How will the changes affect different bunker hubs?

How will the change affect existing quality?

What is the alternative for the excess HSFO?

How will prices for HSFO, MGO 0.1 and MGO 0.5% develop?


WFS Forward Curves – Singapore.

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VLSFO (0.50%) Fuels


What’s changes are expected in the fuel quality?

Paraffinic VS Aromatic Same rules of thumb apply, but... More important to segregate

Minimize commingling onboard More important to educate!

Retain your people Wax Vs Stability Vs Compatibility

If you dont know the difference you cant get help If you dont know the difference you’ll do it again

More important to have accurate CoQ More varied viscosity

5cSt to 380 cSt

More focus on viscosity NO Minimum Viscosity

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All fuels : Compatibility MUST be checked every time!

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Distillate Fuels


Do distillates have to be clear and bright?ISO 8217 DMB/DMC (or RMA10)

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Good, old fashioned blends!

Cheaper than gas oil DMC was moved to fuel, RMA10 (blended fuel) Generally higher viscosity than gas oil

Higher temperatures in the system Remember the sediment!

TSE Compatibility

Unlike gas oils Asphaltenic sludge can fall out


DMA (Gas oils) : are all very different…

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Courtesy of VeriFuel

No color specification in marine gas oil (DMA) – visual appearance


Cold properties : CP/CFPP/PP

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•Cloud point•Temperature at which dissolved particles precipitate and form a cloudy appearance

CP

•Cold filter plugging point•Lowest temperature at which the fuel will pass through a filter under specified conditions

CFPP

•Pour point•Lowest temperature at which the fuel will flowPP


Biofuel Mandates - FAME

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Onboard the vessels – challenges?

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(RM)heating

(DM)No heating


MEPC 73 : Ship Implimentation Plan – SIPVoluntary...but.....

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Individual plan for every ship’s system Clean to compliance by 1st. Jan 2020

Draft guidence Only a skeleton!

Flush tanks? Multiple times? Additives? Seperators?

Manually clean? Set up a structured plan

Based on individual (ship) needs

It’s all about timing!

SIP will be scrutinised if ship is found non-compliant!


Fines..what’s changed from 2015?

Enforcement – Is it possible to get consistecy?

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Sampling onboard? MARPOL Sample testing?EU Vs IMO?


What’s important to remember?

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Complex fuel decisions! Individual solutions for individual ships Once you choose you option, difficult to change Invest in your people Heat your distillate tanks..... Heat your filters! Dark distillates are good

it doesnt have to be clear and bright, only compliant! Know your viscosity Compatibility is NOT guaranteed..and NEVER has been. Wax Vs Stability Vs Compatibility Enforcement?

Dollar cost? Reputation cost?

Availability/Price will become even more geographical Build your relationships!


Documents

Global Regulations –The Complexity - Fastmarkets RISI · 2020 Gasoil demand increasing globally due to urbanisation/economic growth US distillate demand highest since 2008 Inventories