Marine fuel spec changes underway as pandemic shakes up blending pool

London — Low-sulfur marine fuel supplies have suffered from instances of instability and limited shelf life in 2020 due to blending pool changes, but with road fuel demand strengthening as lockdowns ease in some locations, the marine fuel could see further specification movement.

A result of lighter fractions finding their way into the blending pool from motor and aviation fuels, 0.5%S fuel oil tends to have a shelf life of only three months, market sources said during the Petrospot Global Bunkering Summit over April 28-29. This can be a problem for long-term storage or voyages longer than 90 days.

When jet, gasoline and diesel are blended with marine fuels, it raises the prospect of lower flashpoints and the risk of fire on vessels, participants said at the event.

S&P Global Platts jet fuel assessments reflect standard commercial A1 jet fuel specifications, for which the minimum flashpoint is 38 C. Platts guidelines specify 60 C for fuel oil.

Another issue has been low fuel viscosity, which can cause engine leakages.

The quality of 0.5%S FO has been satisfactory, but shelf life has been limited because 0.5%S FO has the fuel oil element and also the more paraffinic element in the distillates, Mads Bjornebye, bunker services manager at Teekay Bunkers, said during the summit.

While it is not clear if the shelf life of very-low-sulfur fuel oils, as the fuel type is also known, will get longer as less light product blendstock makes its way into it, the fuel is showing signs of change as restrictions on mobility ease and road fuel demand rises.

"As 2020 started, the viscosity was higher, but still lower than high-sulfur fuel oil, it then dropped from above 100 CST to the 0-80 CST range," Joshua Townley, EMEA marine market specialist at Innospec Fuel Specialties, told Platts.

"In September, it started getting a bit heavier again, and both density and the flashpoint started rising, while there was a lower demand for fuel from road vehicles and aviation, the viscosity in marine fuels was lower," Townley said.

This is a global trend and not regionally specific as a lot of the fuel at bunker hubs like Singapore is imported, he said.

"If this trend is connected to higher oil demand, then we can expect it to last beyond this year, maybe for the next three years," Townley said.

Product profitability

Product cracks have incentivized different fuels over a tumultuous period. At the start of 2020, marine fuel 0.5%S FOB Rotterdam barges versus Brent crude front-month futures got off to a strong start. Platts assessed it at $21.86/b on Jan. 2, 2020, compared with gasoline Eurobob 10 ppm FOB ARA barges versus Brent at $5.10/b and jet FOB Rotterdam barges versus Brent at $17.27/b.

On March 30, 2020, Platts assessed the 0.5%S FO crack at $6.62/b, the gasoline crack at minus $5/b, and jet at $1.80/b. On April 29, Platts assessed the 0.5%S FO crack at $6.61/b, the gasoline crack at $10.40/b and the jet crack at $4.20/b.

Caution still required

Future changes in marine fuels may not be for the better.

"With higher flat prices, there can be more incentive for some to blend with lower value components," Tyler Baron, CEO of Minerva Bunkering, a wholly-owned subsidiary of Mercuria Energy Group, told Platts in an interview in March. This poses the risk that certain suppliers will end up putting components in their fuel that shouldn't be there, he said.

On the other hand, the industry has been learning lessons over the course of 2020 and Q1 2021 about the importance of stability and compatibility, Baron said.

Storing fuel for longer than three months can lead to clogged filters and sediment, Bjornebye said.

In any case, there is some variability in fuel content.

"Right now, we can't pinpoint what components are being used for blending; it's not port or supply related, but most quality issues [we have experienced] relate to flashpoint, sediment," a source said.

Global oil demand will grow by 5.5 million b/d this year, S&P Global Platts Analytics said April 28 in its World Oil Market forecast.

The 2022 forecast for global oil demand growth has been upgraded to 4.4 million b/d compared with the 3.5 million b/d forecast last month. Broadly, global demand is expected to recover to pre-pandemic levels by 2022, Platts Analytics said.