Bunker fuel quality issues surge as VLSFO use gathers pace

Sediment-related bunker fuel quality issues have grown at many ports, including Singapore, adding to shipowners' concerns as they grapple with operational challenges and higher bills due to the International Maritime Organization's global sulfur rule for marine fuels.

Between December 24, 2019, and January 21, 2020, Veritas Petroleum Services issued seven bunker alerts relating to sediment issues within VLSFO fuels, it said in a statement made available to S&P Global Platts late Friday.

Steve Bee, VPS group commercial and business development director, said high total sediment potential indicates the possibility long-chain asphaltenes could form a sludge, potentially blocking filters and pipework of the vessel.

Bee added over 8% of VLSFOs tested in 2019 exceed the 0.50% sulfur limit, noting "there is still a compliance matter to be aware of."

One shipowner said, "It's a disaster waiting to happen because, the thing is, a lot of this fuel [VLSFO] hasn't been burnt and consumed yet. It may not just be sediment issues but flash point, too."

The impact of recent bunker quality issues has remained relatively muted on the price of the fuel due to weak market fundamentals with weak demand and the easing of tight barge avail schedules.

Platts assessed Singapore-delivered marine fuel 0.5%S at $565/mt January 31, a 23.6% decrease from a record-high $740/mt on January 6. The Singapore delivered marine fuel 0.5%S premium has fell 52.5% from a record-high $93.45/mt on January 10 to $44.38/mt on January 31.

FUEL MANAGEMENT

Some sources in Singapore said bunker fuel quality issues worldwide could be limited if shipowners and operators exercise more caution, with one shipowner stressing the need to be "very vigilant in the market."

It is imperative to select reliable suppliers so fuel quality is assured, they said, adding suppliers should provide assurance they will adhere to the ISO 8217 requirements.

A shipowner said key will be the testing of bunkers before using them and use of additives to enhance stability and storage handling.

Sources also noted time charterparties contracts should be clearly worded so there is no ambiguity with regards to bunker specifications, sampling procedures and cost sharing in the event of lost time due to inspections and de-bunkering, sources said.

MORE CHANGES

De-bunkering will likely continue in March, according to sources.

The spread of alerts concerning sediment suggests a potentially wider issue concerning the stability of some blended low-sulfur fuel, Beth Bradell, a London-based partner with Hill Dickinson's marine team, said in a statement Thursday.

"Looking ahead, enforcement action and quality issues will remain live topics as the shipping industry adjusts to the sulfur cap. The next pinch point will be March 1, 2020, when the carriage ban takes effect," Bradell said.

"Owners have a little over a month in which to arrange to de-bunker high-sulfur fuel and would be best advised to start planning those operations (if not already in hand) now, so as to avoid the consequences of missing the deadline," she added.