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Bunker fuel quality issues surge as VLSFO use gathers pace: sources

Singapore — Sediment-related bunker fuel quality issues have increasingly come to the global forefront, affecting many ports including Singapore, the world's largest bunkering port, industry sources told S&P Global Platts late last week.

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The development comes at a time when shipowners are already grappling with operational challenges and high bunker fuel bills due to the International Maritime Organization's global sulfur limit rule for marine fuels.

"We have a select suppliers. While, we haven't faced sediment related or other bunker quality issues in recent months, we are hearing a lot of companies facing them in Singapore and elsewhere," a shipowner in Singapore said.

High total sediment potential indicates the possibility that the long-chain asphaltenes held with residual component of a fuel may precipitate from the fuel solution forming a sludge, Veritas Petroleum Services group commercial and business development director told Platts Friday.

This is also linked to the fuel's stability reserve and if the fuel has a poor stability reserve, this inhibits the fuel's capacity to retain asphaltenes in solution. The sludge formed may then block a vessels filters and pipework and starve the engine of fuel, he added.

Between December 24, 2019 and January 21, 2020, VPS, issued seven bunker alerts relating to sediment issues within VLSFO fuels, it said in a statement made available to Platts late Friday.

"In addition, VPS has seen over 8% of sulfur levels within VLSFOs tested in 2019, exceed the 0.50% sulfur limit, therefore there is still a compliance matter to be aware of in relation to a percentage of these fuels," Bee 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," said one shipowner Friday.

Still, the impact of recent bunker quality issues remained relatively muted on the price of the fuel due to weak market fundamentals.

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

The drop in prices is largely attributed to weak demand as well as the easing of tight barge avail schedules. "Most buyers are also postponing their purchase because they are bearish on February because typically, demand is low every February after year-end stockpiling," a bunker supplier said Monday.

Fuel management

Some sources in Singapore said that bunker fuel quality issues worldwide could be limited if shipowners and operators exercised more caution, sources said.

In this regard, it is imperative to select reliable suppliers so that fuel quality is assured, they said, adding that suppliers should provide assurance that they will adhere to the ISO 8217 requirements for the grade ordered.

"We have a system or checks in place and it just comes down to being very vigilant in the market," a second shipowner said.

"Two things come to my mind: testing of bunkers before using them and use of additives. There are a lot of additives in the market that enhance stability and storage handling," the first shipowner said.

Time charterparties contracts should also be clearly worded so that 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.

"With more fuel types and blends coming online, it is also normal to witness some quality issues. The hope is that the issues the industry faced in 2018 has taught the players to be more thorough and prepared on quality," a bunker supplier in Singapore said.

Meanwhile, 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.