The Global Sulphur Cap and Fuel Quality – What can the market expect?

by Chris Fisher, Consultant, Marine Fuel Consultant, Marine Engineer, Brookes Bell first published in Bunkerspot, January 2017

The decision regarding the 0.5% Global Sulphur Cap has now been made, with the earlier date of 2020 selected by the IMO for implementation. While undoubtedly the right move to tackle shipping’s environmental impact, the cap further complicates an already complex marine fuel supply chain, and forces ship owners, operators and charterers to consider how they will achieve compliance once the legislation comes into place.

It is already difficult for ship owners and charterers to be sure whether the fuel they are purchasing is of sufficient quality. Relevant ISO8217 standards are not always stringent enough to prevent fuel-related engine damage, and our marine engineers are increasingly seeing cases in which unusual contaminants have given rise to bunker quality claims and engine damage. An increasing number of bunker quality dispute claims are regarding non-petroleum contamination where bio-derived waste, slops and chemicals in bunker fuel have led to issues. As the bunker fuel ‘pool’ diversifies in terms of types of products available and regional sources, this trend is likely to become more prevalent and problematic. However, it is expected that a further revision of ISO8217 will be published shortly, and it will include specifications for Distillate Bio Fuels grades. This will give buyers the opportunity to select distillate bio fuels or traditional gas oil. Bio products will not be permitted in residual fuels. Bunker suppliers will need to take care to ensure that bio products are not admixed with residual fuels and that distillate bio fuel is only supplied when a customer has agreed to purchase an ISO grade of this type. Buyers and end users need to specify the type of fuel they need and ensure they use the appropriate ISO grade in order confirmations.

Fuel blending claims

 Although the revision of the IS08217 standards will help to clarify the selection and quality of distillate fuels the upcoming 2020 global sulphur cap is likely to cause a significant rise in the number of claims relating to blended products. Over the years, our expert team has noticed a direct correlation between the blending of fuels and the number of bunker claims, and unfortunately, some of these claims do result in engine damage.

When the use of High Sulphur Heavy Fuel Oil is prohibited for all those without a scrubber, we are highly likely to see an increase in the amount of blended fuels used as producers seek to reach the 0.5% sulphur upper limit. In order to achieve this, they are likely to blend unconventional refinery streams to produce lower priced alternative fuels to gas oil.

There are already ten to fifteen alternative ‘hybrid’ low sulphur fuels on the market, targeting vessels operating in existing ECA areas with a 0.1% sulphur cap, and it is impossible to say how far this number will increase as suppliers race to develop low sulphur solutions for the global 0.5% marine fuel sulphur limit.

Current hybrid fuels are a viable option and they generally perform well. However, due to the potential increase in unusual and unconventional blending combinations, the characteristics of these future fuels are unknown and if they are not rigorously tested by suppliers then problems on board ships will increase. In particular suppliers will need to focus on checking the stability of final blends, establishing cold flow properties and for some refinery streams, checking supplies for catalyst content and potential poor ignition quality. As we move closer to the 2020 implementation, this is an issue that the bunker industry must work to address. It is likely that some of the future low sulphur fuels will not meet with the quality characteristics of ISO 8217. This is currently the case with some of the hybrid fuels now on the market.

Preparing for 2020

 It seems that scrubbing systems will be attractive as an alternative to using relatively high priced low sulphur fuel. Owners now have time to evaluate the feasibility of installing scrubbers on existing ships, taking into account the age of the ship, installation and operating costs, and payback time. Demand for scrubbers could be high and this may result in shortages of equipment, especially as 2020 approaches. Owners also need to evaluate the benefits of scrubbers on new builds. The future use of LNG also needs to be considered for new builds.

When a ship owner has worked out a strategy for the type of fuel(s) a ship would be using at the start of 2020 he must then ensure that his charterers and fuel buyers have clear instructions on the quality of fuel(s) to be purchased.

It will be necessary to review and update charterparties so they are much clearer and provide more specific fuel quality requirements. It is not always ship owners who are buying fuel for their vessels. Often, it is charterers, making it difficult for ship owners to have control of the fuel that is being used in their ships.

Sometimes charterers have little understanding of what they are buying, and tend to look for the cheapest fuel without proper reference to charterparty requirements. It is still the case that a large number of bunker suppliers will not agree to supply fuel meeting the 2010 or 2012 ISO Standard and will only agree that the fuel supplied would be compliant with ISO 8217:2005. If the charterparty fuel quality clause calls for ISO:2010 then the charterer is exposed to a risk of a claim that may involve a costly de-bunkering with little or no chance of recovery of costs from the supplier.

Moreover, there are charterparty agreements that offer imprecise fuel quality requirements, using wording such as ‘reasonable quality fuel’, which can leave the charterer exposed to misinterpretation should something go wrong. In such instances, charterers should try their utmost to purchase fuel adhering to the latest ISO8217 2012 standards, or the later version upon publication. Alternatively, charterers should make sure that quality clauses set out in the charterparty are reasonable and that the specific type or grade of fuel stated is widely available. As blended fuels, and their associated issues, become more widely used and available, it will be more important than ever before that charterers have specific guidance about the products that are acceptable to the ship owner.

The use of ISO 8217 fuel specification will not prevent quality claims but it will help to reduce them. As an example, we have come across gas oil supplies with compliant pour points that gave handling problems on board ship. Subsequent testing of Cold Filter Plugging Point (CFPP) showed the formation of wax caused filter blocking at temperatures below 15-20 degrees centigrade. It is known that additives are used to reduce the pour point of fuels but they have no effect on CFPP. Unfortunately ISO 8217 does not specify CFPP. Perhaps all the testing houses should include CFPP as a routine test on distillate products, as they could then advise ship owners on appropriate storage and handling temperatures. Distillate fuels are not normally heated during storage and consumption.

It is likely in the future that some of the low sulphur fuels will not conform with any particular grade of ISO 8217 and buyers will then purchase against hybrid fuel specifications. If this is the case then there will need to be new charterparty fuel quality clauses.

Improving fuel sampling standards

Another method for improving fuel quality in the industry come 2020 would be for suppliers, owners and charterers to put in place better procedures for sampling at the time of delivery. There is a need for consistently high standards of sampling collation and assessment across the shipping industry to reduce the time and costs associated with bunker quality claims. We often find that tests on supplier-issued delivery samples give different results to those of samples taken by the crew. At the moment, sampling processes among owners and charterers when receiving fuel are often inadequate and suppliers do not provide representative samples. All delivery samples should be taken by continuous drip, preferably at the ship’s receiving manifold. Care needs to be taken when producing sub-samples from bulk drip samples. The bulk drip sample must be shaken or mixed to ensure a homogenous sample before this is decanted into sub-sample bottles. Each sub-sample bottle should be filled a little at a time, with several passes to each bottle. Failure to do this can result in very different quality fuel in each of the sub sample bottles.

Finally, we hope to see an increase in the scope of testing of blended fuels by suppliers. As they become used more prevalently, it would be highly beneficial for suppliers to increase their scope of testing on their blend components and finished products, therefore limiting the risk of handling problems and stability issues. In particular they should consider adopting chemical screening, ash and extended element testing and proper evaluation of cold properties. At present it seems that the end user is carrying out more testing than the supply sector.

Marpol Annex VI regulations require that the supplier states on the bunker delivery receipt that the fuel is compliant with the applicable paragraph of regulation 14.1 and regulation 18.3 of the Annex. Regulation 18.3 on Fuel Quality includes, but is not limited to the following:-

1.2 The fuel shall be free from inorganic acid

1.3 The fuel shall not include any added substance or chemical waste that: jeopardizes the safety of ships or adversely affects the performance of machinery or is harmful to personnel or contributes to additional air pollution.

Simply testing bunker fuel blends for key points such as viscosity, density, water and sulphur would not reveal if the fuel is compliant with the above.

Necessary steps to achieving 2020 compliance

As the 2020 deadline draws closer, we will undoubtedly see more issues arising from fuel blending and quality compliance, however there are practical steps that the bunker industry can take to mitigate the risks of engine damage and fuel handling problems. With better sampling and testing of blend components and finished fuels by the suppliers, charterers and operators should be able to confidently buy compliant and suitable fuel. During the transition period to 0.5% sulphur however, extra care should be taken by fuel purchasers to ensure the needs of owners are met and ship owners must provide suitable guidance to the fuel purchaser. If these steps are taken, downtime, engine damage and costs should be reduced, if not eliminated.