Chembulk, ARC prepared for IMO 2020

: Oil products
19/10/22

Shipowners Chembulk Tankers and American Roll-On Roll-Off Carrier (ARC) say they are prepared for bunkering 0.5pc sulphur fuel oil.

The two shipping companies outlined different approaches when procuring 0.5pc sulphur bunkers in talks at the Argus Fuel Oil Summit in Miami, Florida.

American Roll-On Roll-Off has a term contract in Antwerp, its primary fueling port, for the purchase of 0.5pc fuel oil through the first half of 2020 at about $70-$80/t discount to gasoil, said Fred Finger, head of operations for the company.

Chembulk Tankers is buying 0.5pc sulphur fuel oil on a spot basis but gives suppliers ample notices, said Melbourne Pinks, senior vice president of marine fuel services for Chembulk. Chembulk has already been burning low-sulphur fuel from Buenos Aires, Argentina. The company will also carry 0.5pc sulphur fuel in cargo tanks, in addition to their fueling tanks, as cargo when necessary to ensure they do not easily run out of the product.

Chembulk said it will not be filing fuel oil non-availability reports (Fonars) — a self-report on non-compliance to a port and a ships flag country — because there's no guarantee the reports will be accepted by the authorities and could lead to fines and vessel detentions.

ARC is using small quantities of marine gasoil (MGO), around 3-15t, to wash out its fueling tanks from high-sulphur fuel oil (HSFO) in preparation for the regulation. The MGO is then consumed in the main engine as HSFO. The washout can be performed while the vessel is in service and is less costly than manual tank cleaning, which requires a cleaning crew.

When shopping for 0.5pc sulphur fuel oil ARC has encountered wide ranging viscosities of five to 210 centistokes.

Both shipowners said they believe 0.5pc sulphur fuel will not be available at some of the smaller ports globally. Pinks said that supply of the IMO 2020 compliant fuel may be an issue on the Pacific coast of South America where Chembulk vessels often fuel.

ARC and Chembulk are not currently investing in scrubbers. For ARC scrubbers could not be justified because of the older age of its vessels, between 12 and 23 years. Pinks expects HSFO to be limited in availability outside of the bunkering hubs and the high-low sulphur fuel oil price discount may not be as wide as the industry was expecting at the beginning of the year.

A shipping market with lots of scrubbers would also result in depressed vessel freight rates, whereas a market with and without scrubbers will encourage a two-tiered freight market, he said.

About 10-14pc of the global fleet would be outfitted with scrubbers by the end of 2019, said Peter Sand, chief shipping analyst with shipping industry association Bimco. This number would increase to 14-20pc by the end of 2020. Sand expects about one third of the VLCC fleet to be fitted with scrubbers by the end of 2020.

Chembulk Tankers owns 17 tankers and time-charters another 17 tankers. About 70pc of its bunker purchases are on a spot basis and the remainder are on a term basis.

ARC operates ten US-flag roll-on roll-off vessels between the US and northwest Europe. About 60pc of ARC's marine fuel burn is MGO and the rest is HSFO. In 2020 it expects to burn half MGO and half 0.5pc sulphur fuel oil.

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

25/04/14

Australian refiner Viva posts lower sales in Jan-Mar

Sydney, 14 April (Argus) — Australian refiner Viva Energy's January-March sales slumped against a year and quarter earlier, while its Geelong refinery margin (GRM) rebounded slightly despite the impact of a refinery-wide outage in January. Total sales for the first quarter of Viva's fiscal year fell on lower commercial and industrial sales, which dipped by 6pc because adverse weather impacted mining demand. Crude intake of 107,000 b/d at the 120,000 b/d Geelong refinery was up by 6pc on the quarter, but 6pc lower on the year. Viva's energy and infrastructure division was hit by a A$20mn ($12.6mn) loss after an unplanned shutdown at Geelong resulting from a power outage in January. Geelong's October-December output was affected by problems with the refinery's residual catalytic cracker unit, late crude arrivals and minor unscheduled maintenance. The GRM was marginally above breakeven levels, Viva said, despite the January outage. Tariffs imposed by the US on its trading partners have led to a fall in oil prices, which should stimulate consumer demand and support retail margins, and the firm has limited exposure to customers directly dependent on US markets, it said. Viva's upgrade to ultra-low sulphur gasoline at the 120,000 b/d Geelong refinery is on schedule, with supply expected to begin from August to meet the federal government's deadline of December this year. A proposed large-scale advanced soft plastics recycling facility to be co-developed with waste management firm Cleanaway will proceed to initial engineering phase in 2026, Viva said on 9 April. The project aims to convert waste soft plastics into food-grade recycled plastics but requires policy certainty, which is expected once details of Canberra's packaging reform, the Extended Producer Responsibility, are released. By Tom Major Viva Energy results (b/d) Jan-Mar '25 Oct-Dec '24 Jan-Mar '24 q-o-q % ± y-o-y % ± Refining intake 107,000 101,000 112,000 6 -6 Sales 288,000 298,000 297,000 -3 -4 GRM ($/bl) 8 7 12 18 -34 Viva has adjusted volumes to account for its acquisition of OTR retail group on 28 March 2024 Source: Viva Energy Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Keystone oil pipeline to restart by 15 April

25/04/13

Keystone oil pipeline to restart by 15 April

Houston, 13 April (Argus) — The 622,000 b/d Keystone crude pipeline is expected to resume service by 15 April, following a leak in North Dakota that shut deliveries last week. Calgary-based pipeline operator South Bow said the repair and replacement of the leaking section of pipe was taking place over the weekend. Once the company meets the terms of a corrective action order (CAO) issued by the US Pipeline and Hazardous Materials Safety Administration (PHMSA), it will be able to resume service. The pipeline has been off line since early on 8 April, when a leak was discovered in a rural field near Kathryn, North Dakota. An estimated 3,500 bl of crude was released but did not appear to have reached any waterways. "Keystone is targeting restoration of service and energy deliveries by Tuesday April 15, 2025, under the requirements of the CAO," South Bow said. "South Bow will require approval from PHMSA prior to restarting the pipeline." Under the CAO, South Bow must run metallurgical testing of the failed section of pipe, conduct a root cause analysis and meet other requirements. The pipeline system will also have to comply with certain pressure restrictions on Canadian sections of the line. The Keystone system is a major route for Canadian heavy crude destined for both the US midcontinent and the US Gulf coast, delivering about 15pc of the roughly 4mn b/d that the US imports from its northern neighbor. The line runs from the Canadian production and storage hub at Hardisty, Alberta, to Steele City, Nebraska, before splitting in two to head toward Illinois and the Gulf coast. Discounts for Western Canadian Select (WCS) at Hardisty to the CMA Nymex narrowed at the end of last week despite the shutdown, because of low inventories in Hardisty and open pipeline space on Canadian crude pipelines, including Enbridge's 3mn b/d Mainline system to the US midcontinent and the 890,000 b/d Trans Mountain pipeline to the Canadian Pacific coast. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexico suspends Valero fuel import permits

25/04/11

Mexico suspends Valero fuel import permits

Mexico City, 11 April (Argus) — Mexico's tax authority SAT on 9 April suspended US refiner Valero's fuel import permits, the company said today. The company did not specify why its import license was suspended. "Valero is addressing each administrative observation noted in the suspension to clarify the issues. Additionally, [authorities] mistakenly stated that the company does not have valid import permits, which is incorrect since the permits are valid through 2038," the company said. When consulted, Valero told Argus it has no further information to share at this time. In Mexico, Valero holds gasoline, diesel and jet fuel import permits valid through 2038. The company is one of only a handful of private-sector companies with such permits. Shell, Marathon and ExxonMobil hold permits to import only gasoline and diesel. Valero is the leading private fuel importer in Mexico. On 9 April, its sales accounted for 10pc of Mexico's gasoline and diesel demand, according to the company. Private-sector companies started importing fuel into Mexico in 2016 after the market opened to more competition, but under former president Andres Manuel Lopez Obrador's administration, the energy ministry (Sener) cancelled dozens of fuel import permits. Valero is cooperating with the Mexican government and has recently joined a voluntary price cap agreement to keep regular gasoline below Ps24/l ($4.45/USG), the company said, adding that it "implements rigorous traceability and security controls throughout its supply chain." The company stores fuel at four private-sector terminals in Mexico, with over 4mn bl of capacity. The company is also expected to start storing fuel at the new 1.1mn bl OTM terminal in Altamira, Tamaulipas, in the near future. By Cas Biekmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Participants mostly support IMO GHG pricing mechanism

25/04/11

Participants mostly support IMO GHG pricing mechanism

London, 11 April (Argus) — International shipping organisations and market participants mostly support the global greenhouse gas (GHG) pricing mechanism approved today at the International Maritime Organization's (IMO) 83rd Marine Environment Protection Committee (MEPC) meeting, but some raised concerns. The structure approved by the IMO establishes that ships must reduce their fuel intensity by a "base target" of 4pc in 2028 against 93.3 gCO2e/MJ, the latter representing the average GHG fuel intensity value of international shipping in 2008. Emissions above this target will be charged at $380/tCO2e. The levels defined by the approved regulation are achievable, according to a market participant, who said the gradually increasing targets may allow the market to properly adapt to the transition. The International Chamber of Shipping (ICS) secretary general Guy Platten said the sector is already investing billions of dollars in 'green' technology, so the agreement gives certainty that sustainable marine fuels producers need. "The world's governments have now come forward with a comprehensive agreement which, although not perfect in every respect, we very much hope will be formally adopted later this year," he said. The European Shipowners (ECSA) secretary general Sotiris Raptis agreed the draft "is not perfect", but he celebrated progress towards a net zero emissions target, saying "it is a good starting point for further work" and pointing out that it may ensure the necessary investment in production of clean fuels. During a press briefing, IMO secretary general Arsenio Dominguez said ships operating in international waters will be obliged to comply with the regulations after adoption, despite the US' refusal to engage with the discussions . Adoption of the pricing mechanism will be discussed and voted on in October. Offering a counterview, the Global Maritime Forum said the agreed measures may not be strong enough to reach IMO targets. "The GHG intensity targets create uncertainty as to whether the strategy's emissions reduction checkpoints for 2030 and 2040 will be met," it said. "As currently designed, measures are unlikely to be sufficient to incentivise the rapid development of e-fuels such as e-ammonia or e-methanol , which will be needed in the long run due to their scalability and emission reduction potential." It said that failure to invest in these fuels would put at risk the target of at least 5pc zero- and near-zero emission fuel use by 2030 and the industry's entire 2050 net-zero goal. The World Shipping Council's vice president Bryan Wood-Thomas praised the agreement and said one benefit of it is the pricing system that is "more aggressive" if a vessel fails to meet the GHG intensity standard. "But you also have a fee system that gives investors more confidence in actual revenue [from using cleaner fuels]," he said. The Brazilian representative told Argus the fact that some countries thought the agreement was too ambitious while others indicated it was not ambitious enough show the group may have reached a balance that can be possible to comply. About the Brazilian position, the representative said the country "was never against an agreement". "We were only against some aspects of the agreement, and we think that the membership has heard our concerns, and that's why we ended up pretty happy with the results", he said. Brazil voted in favour of the agreement today. By Hussein Al-Khalisy, Madeleine Jenkins, Natália Coelho, and Gabriel Tassi Lara. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Q&A: IMO GHG scheme in EU ETS could be 'challenging'

25/04/11

Q&A: IMO GHG scheme in EU ETS could be 'challenging'

London, 11 April (Argus) — Delegates have approved the global greenhouse gas (GHG) pricing mechanism proposal at the International Maritime Organization's (IMO) 83rd Marine Environment Protection Committee (MEPC) meeting. Argus Media spoke to ministerial adviser and Finland's head representative at the IMO delegation talks, Anita Irmeli, on the sidelines of the London MEPC meeting. What is your initial reaction to the text? We are happy and satisfied about the content of the agreed text, so far. But we need to be careful. This week, all member states were able to vote. But in October, when adaption will take place, only those states which are parties to Marpol Annex VI will be able to vote if indeed a vote is called for, and that changes the situation a little bit. Here when we were voting, a minority was enough — 40 votes. But if or when we vote in October, then we need two thirds of those party to Marpol Annex VI to be in favour of the text. Will enthusiasm for the decision today remain by October? I'm pretty sure it will. But you never know what will happen between now and and the next six months. What is the effect of the decision on FuelEU Maritime and the EU ETS? Both FuelEU Maritime and the EU ETS have a review clause. This review clause states that if we are ambitious enough at the IMO, then the EU can review or amend the regulation. So of course, it is very important that we first consider if the approved Marpol amendments are ambitious enough to meet EU standards. Only after that evaluation, which won't be until well after October, can we consider these possible changes. Do you think the EU will be able to adopt these the text as it stands today? My personal view is that we can perhaps incorporate this text under FuelEU Maritime, but it may be more challenging for the EU ETS, where shipping is now included. What was the impact of US President Donald Trump's letter on the proceedings? EU states were not impacted, but it's difficult to say what the impact was on other states. By Madeleine Jenkins Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more