supply and blending implication of lsfo...
TRANSCRIPT
Torbjorn Lie29 October 2009
0910
2901
Supply and blending implication of LSFO
Bunker Asia 2009
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
2
Agenda
� Supply and blending implication of LSFO
� Potential quality developments in Asia
� Potential price developments in Asia
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
3
History
� Basic quality of residual fuels used by ships has been remarkable steady for the past 50 years
� Residual fuels with Sulphur content up to 4.5% has been widely used for propulsion since 1950s
� Residual fuels have provided shipping with a low-cost fuel, and refiners with a market for a byproduct of crude oil processing
� Refiners objective has always been to cut residual fuel production to a minimum, but also maximize the use of residues
� Controlling parameters for refiners or blenders has been Viscosity and Density
� Generally residual fuels have been produced with very similar quality and handling characteristics, regardless of bunkering location
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
4
Refinery processes� Atmospheric Residue
- Cut point approximately 350 °C- Many atmospheric residues meet all
specifications of ISO 8217 (incl. Viscosity and Density
- Normally referred to as “straight run”- Feed stock for secondary refining- Availability diminishing due to higher value
� Vacuum Residue- Cut point approximately 550 °C- Most refiners have been making vacuum
residue for years- Meet most specifications in ISO 8217 with
exception of Density and/or Viscosity- … before cutter stock is added
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
5
Fuel oil quality varies…
24-212-310Pour Point °C
881.61 200Vanadium PPM
3.59.82.53.719 000Viscosity cSt @ 40°C
0.111.650.090.265.5Sulphur %
.841.870.820.834.999Density@ 15°C
36.531413810API
ArdjunaIran HeavyBrass RiverBrentBoscanCrude Oil
IndonesiaIranNigeriaUKVenezuela
Residual fuel oil quality varies depending on the crude used and refinery configuration. It will determine, among other things, the Sulphur content…
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
6
“At 4.5%, Sulphur is not a critical spec, but at 1.5% it is”
Sulphur variations
� Sulphur in crude gets concentrated in refinery residues
� Atmospheric Residue has about 85% of the crude’s Sulphur, Vacuum Residue even higher
� Vacuum Residue gives a product that is too high in Density and Viscosity, this is normally addressed by blending
� Meeting a Sulphur limit of 4.5% within these blends are normally not a problem
� Blending residual fuels to meet lower Sulphur targets will cause all other fuel properties to change, especially Density and Viscosity
Dr. Rudy Kassinger, DNVPS
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
7
Sulphur development
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
8
Fuel trendsSulphur trend (port average)
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Am s terdam Antwerp Gibraltar Hong Kong Los Angeles Miam i New York Port Klang Rotterdam Singapore
2005 2006 2007 2008 2009
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
9
Sulphur distribution following SECA 2
Industry advice regarding availability is that worldwide there is sufficient quantity of low sulphur fuel for the anticipated demand in existing ECAs
� The problem seems to be whether the supplies are distributed where they are needed
� Main bunkering ports such as Singapore and Rotterdam are said to have LSFO available; Baltic ports are also reported to have the fuel widely available
� Problem for shipowners is that the SECAs will have to be transited to reach those supplies2.642.64
2.212.21
3.103.10
3.003.00
1.331.33
1.581.58
1.251.25
2.552.55
2.732.73
1.811.81
2.422.42
1.931.93
3.483.48
2.522.52
3.193.19
1.671.67
3.133.13
2.762.76
2.492.49
2.442.44
2.142.14
2.342.34
2.142.14
1.531.53
Aug 11 th – Aug 10th
2.712.71
2.272.27
3.163.16
3.063.06
1.121.12
1.581.58
1.391.39
2.862.86
2.752.75
2.022.02
2.512.51
2.142.14
3.443.44
2.602.60
3.043.04
1.781.78
3.143.14
2.852.85
2.632.63
2.452.45
2.212.21
2.502.50
2.322.32
1.671.67
Aug 11 th – Aug 10 th
Average Sulphur Content [%]
--2.62.6World
--3.03.0West Africa
--2.12.1US Gulf Coast
--2.12.1South Asia
18.218.2South America - West
0.20.2South America - North
--10.210.2South America - East
--10.810.8South Africa
--0.60.6Oceania
--10.510.5North Sea SECA ex. ARA
--3.73.7North Sea SECA ARA
--9.89.8North Atlantic ex. Biscay
1.01.0Middle East
--3.43.4Mediterranean & Black Sea
5.05.0Indian Sub-Continent
--6.46.4Great Lakes
--0.20.2East Asia
--3.23.2East Afrika
--5.55.5Central America
--0.60.6Caribbean
--3.23.2Canada & US West Coast
--6.56.5Canada & US East Coast
--8.08.0Biscay
--8.78.7Baltic SECA
% ChangeRegion
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
10
Abras ives trend (port average)
0
5
10
15
20
25
30
35
40
45
A msterdam A ntw erp Gibraltar Hong Kong LosA ngeles
Miami New Y ork Port Klang Rotterdam Singapore
2005 2006 2007 2008 2009
Fuel trends
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
11
Bunker Alerts 2007 - 2008Issued Subject Location07-Aug-07 High Abrasives Fujairah, UAE
24-Aug-07 Chemical waste Gulf Of Guinea
28-Aug-07 High Density Valparaiso, Chile
31-Aug-07 High Sediment Kalilimenes, Greece
19-Sep-07 High Abrasives Rotterdam & Antwerp
10-Oct-07 High Sediments ST.Pettersburg, Russia
19-Oct-07 High Density Jacksonville
24-Oct-07 Low Sulphur Ventspils, Latvia
07-Nov-07 High Abrasives Naples, Italy
09-Nov-07 High Sulphur Leghorn, Italy
09-Nov-07 High Sediments Singapore
12-Nov-07 High Sediments Port Klang, Malaysia
13-Nov-07 High Abrasives Singapore
15-Nov-07 Chemical waste Balboa, Panama Canal Zone
21-Nov-07 High Sodium Suez, Egypt
21-Nov-07 High Sodium Honolulu, USA
27-Nov-07 Low Flash Point Fuels Singapore
28-Nov-07 Low Flash Point Fuels Tanjung Pelepas
28-Nov-07 High Abrasives Rotterdam, The Netherlands
19-Dec-07 HIGH CCAI FUELS GDANSK, POLAND
24-Dec-07 Used Lubricating Oil Greater ARA Region
28-Dec-07 High Sediment Fuels Antwerp and Ghent, Belgium
29-Jan-08 Chemical waste Marine Diesel Oil ST.Petersburg, Russia
05-Feb-08 High Density Fuels Kaohsiung, Taiwan
06-Feb-08 High Sediment Fuels Port of Callao, Peru
15-Feb-08 High abrasives Miami, USA
18-Feb-08 Low Flash Point Fuels Sydney, Australia
27-Feb-08 High Sediment Fuels Kaohsiung, Taiwan
27-Feb-08 High Water Content in Fuels Vladivostok, Russia
29-Feb-08 Fuels with Elevated Levels of Calcium, Phosphorus and Zinc Kingston, Jamaica
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
12
Regulation and legislation (fuel)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025
Aug 11th
SECA 1, directiveinto force1.5% S
Aug 11th
SECA 2, directiveinto force1.5% S
MarpolAnnex VI ratified
May 19th
MarpolAnnex VI global S limit 4.5%
May 19th
Marpol Annex VI SECA1, S limit 1.5%
Nov 11th
Marpol Annex VI SECA2, S limit 1.5%
Annex VI enteredinto force for theU.S. on January 8, 2009
ECA limit down to 1.00% S
Global S limit down to 3.50% from 4.50%
ECA limit down to 0.10% S
Global S limit down to 0.50% (subject to review)*
Marine gas oil (DMA) at or below 1.5% sulfur; or Marine
diesel oil (DMB) at or below 0.5% sulfur,
July 1, 2009 (CARB)
Marine gas oil (DMA) or marine diesel oil (DMB) at or below 0.1% sulfur, January 1, 2012 (CARB)
ECA along the coast ofUSA and Canada? August, 2012?
* In line with the UK's proposal, the working group also suggested that there should be a review in 2018 to assess fuel availability.
Depending on the outcome of the review, the 0.50% sulphur global standard may be delayed to 2025 instead of 2020.
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
13
2012 new reality…
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
14
Supplies by port
% of DNVPS world total tested samples per port
12.1
7.7
4.5
3.2
2.5
2.4
2.3
2.1
2.0
1.9
1.5
1.4
1.4
1.4
1.3
1.2
1.2
1.2
1.2
1.1
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0
Sing apo re
Ro t t erd am
A nt werp
Fujairah
B usan
Hong Kong
Gib raltar
St . Pet e
Panama Canal
Houst on
A mst erd am
New Y o rk
Hamburg
Piraeus
Los A ng eles
Sant os
M iami
A lg eciras
Durban
Port Klang
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
15
Heavy Fuel Oil Development
More blending of different oil components to optimise sulphur content causes side effects:
� Increased average Density
� Increased average abrasive levels (Al+Si)
� Increase in unstable fuels
� Reduced ignition and combustion quality
� Increased problems with chemical waste
� Increased cases of low flash point
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
16
Fuel oil pricing
HFO 380 cSt
USD 0
USD 100
USD 200
USD 300
USD 400
USD 500
USD 600
USD 700
USD 800
Jan-
02Apr
-02
Jul-0
2O
ct-02
Jan-
03Apr
-03
Jul-0
3O
ct-03
Jan-
04Apr
-04
Jul-0
4O
ct-04
Jan-
05Apr
-05
Jul-0
5O
ct-05
Jan-
06Apr
-06
Jul-0
6O
ct-06
Jan-
07Apr
-07
Jul-0
7O
ct-07
Jan-
08Apr
-08
Jul-0
8O
ct-08
Jan-
09Apr
-09
Jul-0
9O
ct-09
Singapore
Rotterdam
Houston
Source: Bunkerworld
© Det Norske Veritas AS. All rights reserved.
Supply and blending implication of LSFO demand
29 October 2009
17
Safeguarding life, property and the environment
www.dnv.com