cockett marine oil platts final_190513
TRANSCRIPT
Marine Fuel Solutions
Cockett Marine Oil Group | www.cockettgroup.com Tel: +971 44 255 100 | Fax: +971 44 255 111 | Email: [email protected]
5th European Bunker Fuels Conference Rotterdam May 2014Chris Turner Group Technical Manager
A New Dawn
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To what extent will European ships move over to gasoil?
How will suppliers and end users have to adapt to the upcoming changes
Trader Perspective to what is just around the corner…
1st January 2015 heralds one of the biggest changes in the history of Bunkering
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So now what?
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Liner / Short Sea routes have opportunities to consider alternatives such as LNG and scrubbing technologies
If they build it… they will come … but when ?
Not enough time for players to act
Any 0.1% FO will be hoovered up by large contracts – unlikely too see this in Spot market
0.1% also suited to Liner routes, significant operational and technical hurdles to jump
Cold hard truth is there is little option available but to burn DMA 0.1% Sulphur
40 % impact in cost for 6% relative increase in Energy
Will 0.1 be available ?
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A. No Problem in 2015.. 2020 a different story
Demand Europe + 20
KMT /day
Sufficient investment • Closure of Simple
refineries
Demand will impact spread• Tightening of
0.1% in relation to Inland grades
Conclusion• Pricing Incentive
will be there for continued conversion needed
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End User Considerations
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Selection and consideration of
suitable cold flow properties
CFPP, Cloud Point considerations
2010 specification v 2005 Specification
Lubricity protection
DMA v DMZ
2 cSt Min v 3 cSt Minimum Viscosity
Most 2 & 4 Stroke OEM require Min Viscosity before Injection of 2 Cst.
Suitable Lube Oils for longer term distillate
use
Selection of correct BN
Important to follow OEM
recommendations
Purchasing : Proactive planning required to take into account voyages and product availability
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Supplier Impacts
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Purchasing
Cash Flow & Payment Terms
Credit lines
Some smaller suppliers may
exit
Supply Chain
Shore Tank preparation
Suitable Segregation on
Barges
Housekeeping
Bonus !
Traditional LS problems will
disappear
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End User Considerations
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• Rapid changes in fuel temperature will increase the likelihood of pump malfunction and seizures.
• No more than 2 Deg C / Minute
Temperature Gradient
• Fuel pump leakage can result in starting problems at low load
• pump seizures and premature wear due to loss of hydrodynamic lubricating oil film
MGO Viscosity Too Low
• Significant risk between Residual fuels and distillates
• Consider use of Asphaltene dispersant/ fuel stabiliser
Compatibility
• Do not return residue or distillate mixtures back to distillate or MDO service tanks
• Prevention and control of Microbial issues
Housekeeping
• Much easier and less costly for port authorities to check
Compliance
Technical : Switching to and from HFO to MGO 0.1 rather than HS -> LS
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End User Considerations
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Capacity / Equipment
Sufficient storage capacity for MGO
consumption expected
Cleaning / to prevent cross contamination
1% of HFO cross over enough to put compliant MGO off spec
Consider tanks / lines / pumps
In practice buffer cargos will be
required combined with
cleaning.
Change over procedures
Develop and document
Preparation : Timings to ensure Marpol compliance as of 1st Jan 2015 00:01
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Trader Perspective
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There is no education like adversity.Benjamin Disraeli
Counterparty Risk
• 10-15 yrs ago bunkering costs 17-20%• End of Market Spike 2008 50-55%• Currently hovering around 70%• transition period potentially difficult, mistakes will undoubtedly occur
Cash Flow Implications
• Immediate impact 30-40% trade finance facilities required• No correlation between higher product value and increased margin• Short term impacts as markets and banks adjust• Margin erosion continues through a universally recognised tough trading period • Will P&L / balance sheets be suitable to ask for 30% more finance in 2015?
Trader Perspective
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Opportunity : Bridging the gap..
Properly evaluating and pricing
counterparty risk
Compete to gain volume•better financing•smaller players marginalised by new pricing impacts
Accelerate trend of better financed independents aggregating more volume•Oil Majors/Nationals stagnate or retreat from bunkers
•Smaller players increasingly Niche or boutique
Conclusions
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Demand can be met `
Reactive industry tending to be in denial
Significant hurdles to be jumped prior to 2015
Trader Ideal partner to help navigate these stormy seas
Start now !
Are we ready?
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Worldwide Bunker Supplies | Trading • Physical • Offshore
Cockett Marine Oil Group | www.cockettgroup.com Tel: +971 44 255 100 | Fax: +971 44 255 111 | Email: [email protected]
THANK YOU