tribute to bob chandran: industry mourns chemoil founder · tribute to bob chandran llewellyn...

www.bunkerspot.com Volume 5 Number 1 February / March 2008

TRIBUTE TO BOB CHANDRAN:Industry mourns Chemoil founder

bunkerspot February / March 2008 3www.bunkerspot.com

Bunkerspot is an integrated news and intelligence service for the international bunker industry. The bi-monthly magazine and 24/7 electronic news service, www.bunkerspot.com, both provide highly-specific information on all aspects of the marine fuels industry. Bunkerspot Magazine (published in February, April, June, August, October and December) annual subscription rate, including unlimited access to the website www.bunkerspot.com, is $430 / £225 / 315. ISSN 1741-6981. Copyright Petrospot Limited © 2008. All rights reserved. Published by Petrospot Limited, a dynamic independent publishing, training and events organisation, focused on providing information resources for the transportation, energy and maritime industries.

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NEWSBunker Markets and Prices 4

Europe 8

Americas 12

Asia Pacific 14

Africa and Mideast 16

TRIBUTE TO BOB CHANDRANLlewellyn Bankes-Hughes commemorates the inspirational life of the late Bob Chandran, CEO of Chemoil Energy 18

Adrian Tolson ref lects on Bob Chandran’s philosophies which have underpinned Chemoil’s development 21

Paul Stebbins, CEO of World Fuel Services, pays tribute to a worth adversary 23

OPERATIONAL ISSUESTom Marian of Buffalo Marine reports on how the introduction of the Transportation Workers Identification Credential is affecting bunker barging activities in US ports 24

BUNKERSPOT WORLD MAPGlobal prices and news at a glance 26

COMPANY PROFILELesley Bankes-Hughes takes a closer look at Aegean Marine Petroleum’s ambitious vessel acquisition strategy ahead of the phase-out of single-hulled vessels, and she assesses its vision for global business growth 28

COUNTRY PROFILEDavid Waterman looks at the key players and supply centres in the Turkish bunker market 34

ENVIRONMENTAL ISSUESStephan Wrage of SkySails argues that the christening of the Beluga SkySails marked a key milestone in the use of sustainable propulsion technologies for the shipping industry 38

Lars Robert Pedersen of A.P.Moller-Maersk looks at the operational and regulatory issues resulting from the requirement to use low sulphur distillate fuels 42

Mark Servidio of Sharp Electronics and Buddy Polovick of the US Environmental Protection Agency extol the virtues for freight shippers and carriers of signing up to the US SmartWay Transport Program 44

ALTERNATIVE FUELSDavid Waterman looks at the potential of Gas-to-Liquids as an alternative fuel for the shipping industry 46

EVENTSEvents and training course diary 48

NETWORKINGBunker people on the move 50

Contents

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Bunker Markets & Prices

200

300

400

500

600Houston 380

Singapore 380

Fujairah 380

Rotterdam 380

F M A M J J A S O N D J

400

600

800

1000Houston MDO

Singapore MDO

Fujairah MDO

Rotterdam MDO

F M A M J J A S O N D J

Bunker prices in most of the world’s key ports rose steadily through December until peaking around the New Year, and then eased off thereafter. At the end of January, 380 centistokes (cst) fuel oil prices in Rotterdam were actually lower than they were at the start of December, dipping below $430 a metric tonne (mt), while marine diesel oil almost came down to its original price over the same period.

Although production costs of crude are said to be twice what they were ten years ago, this alone is not responsible for the prices we are experiencing today. Whether the recent pattern in the price of oil is related to the rumoured recession in the United States, or whether it is due to perceptions of geo-political tensions, is unclear. What is certain, however, is that there is a limit to how much oil can be produced in

order to satisfy growing demand. The International Energy Agency (IEA) last

year predicted that oil production would peak in just five years from now, when it expects a plateau. With this worrying prediction in mind, a suitable alternative energy source for transport needs to be found – and quickly. It is all very well promoting electric power and greater efficiency for the purposes of automotive transport, but in the world of international shipping, only a fuel that can be used in commercial vessels’ compression ignition engines will provide an alternative source of energy in the near future. Furthermore, commercial shipping is already a highly efficient mode of transport.

Leaving environmental considerations aside, any replacement for bunker fuel would have to be readily available. There is potential in producing liquid fuels from abundant reserves

of gas and coal (see article on page 46), but the technology required to do so is complex and expensive. According to the International Maritime Organization (IMO), the annual consumption of bunkers is set to grow from 369 million tonnes today, to 446 million tonnes in 2020. By this time, we may have an annual production of 50 million tonnes of liquid coal and gas – most of which is likely to be absorbed by the automotive markets because of its superior qualities.

The only viable alternative to bunkers in the foreseeable future seems to be biodiesel, which could be used in the compression ignition engines of all commercial vessels. Fuel oil engines may also be able to use unrefined biodiesel, reducing the fuel’s production costs, but research needs to be done into the subject. Biodiesel has recently traded in the $800-$900

PR

ICE

$/t

onne

PR

ICE

$/t

onne


Bunkerspot prices are compiled from the reports of the four brokers whose market reports have consistently proved the most reliable and accurate: Cockett Marine Oil Limited, LQM-Gibson, Glander International Inc., and Davies & Newman Wake Limited. Bunkerspot welcomes market reports from other sources for inclusion on its website www.bunkerspot.com.

GLANDER

Bunker Markets & Prices

a tonne range, putting it in the same price bracket as marine gasoil (MGO). Being virtually free of sulphur, this would also provide a cost-effective alternative to the low-sulphur distillate used in areas such as European Union (EU) ports. There are, however, barriers to biodiesel’s entry to the bunker market. If biodiesel is to be used in a marine application, industry regulators need to carry out tests to develop standards for the fuel, and new settings for the engines that will be using it. The latter requirement is particularly important in order to counter the increased nitrous oxide (NOx) emissions from biodiesel. But as far as we are aware, no such action has been initiated from the relevant organisations.

Since biodiesel is likely to go to automotive markets first (where several governments have placed mandates on the blending of the fuel with petroleum diesel), production may have to increase dramatically before biodiesel becomes available to the bunkering industry. Furthermore, not only do first generation feedstocks such as rapeseed have a lower yield of oil than second generation feedstocks such as algae and jatropha, it is also becoming politically unacceptable to use land for fuel that could be used for food production.

The UK Environmental Audit Committee (EAC) concluded in January that the UK and EU should not have pursued targets to increase the use of biofuels in the absence of robust sustainability standards and mechanisms to prevent damaging land use change. On the contrary, the EU responded that the policy is delivering significant greenhouse gas reductions, and paving the way for second generation biofuels.

No one has proved whether second generation biofuel feedstocks could replace crude oil within the required time-frame. What is clear, however, is that these feedstocks have the potential to produce far more oil than first generation feedstocks, while using far less land and water, and will probably be the best bet to replace bunker fuel as future oil production becomes tighter.

Dec-07 Jan-08 3-7 10-14 17-21 24-28 31-4 7-11 14-18 21-25 28-1

Rotterdam d 435 438 452 453 472 462 437 421 436Gibraltar d 466 471 473 464 482 477 453 443 460Piraeus d 447 452 456 440 463 458 434 428 442

Suez d 476 480 486 472 492 493 481 460 474Fujairah d 484 464 474 475 498 497 474 449 473Durban w n/a n/a n/a n/a n/a n/a n/a n/a n/a

Tokyo d 503 498 505 508 517 523 518 499 526Busan d 493 493 498 521 542 525 487 458 481Hong Kong d 476 481 491 494 508 512 479 465 480Singapore d 466 469 483 485 494 487 465 449 463

Los Angeles w 528 543 501 492 505 501 469 436 450Houston w 466 450 462 457 471 475 462 441 450New York w 473 479 488 488 493 493 473 455 455

Panama w 457 477 483 483 489 493 473 462 469Santos d 457 458 474 473 473 479 463 445 454Buenos Aires d n/a n/a n/a n/a n/a n/a n/a n/a n/a

380 IFO

Dec-07 Jan-08 3-7 10-14 17-21 24-28 31-4 7-11 14-18 21-25 28-1

Rotterdam d 457 463 477 476 496 486 460 445 461Gibraltar d 484 493 494 486 504 496 473 465 481Piraeus d 479 485 489 475 496 489 466 459 473

Suez d 491 502 509 492 517 534 534 534 534Fujairah d 484 485 494 497 514 516 492 481 492Durban w 470 463 479 477 484 495 465 445 464

Tokyo d 511 506 511 523 547 531 526 509 535Busan d 516 515 519 540 563 547 509 480 501Hong Kong d 491 491 501 507 517 523 512 482 492Singapore d 476 479 494 494 504 499 475 480 475

Los Angeles w 537 552 495 503 519 513 481 452 461Houston w 485 467 476 474 488 494 485 462 474New York w 502 509 518 519 522 523 502 484 483

Panama w 505 517 520 517 527 527 513 507 514Santos d 497 498 513 510 513 519 503 485 494Buenos Aires d 526 524 534 536 537 537 536 511 528

180 IFO

Dec-07 Jan-08 3-7 10-14 17-21 24-28 31-4 7-11 14-18 21-25 28-1 Rotterdam 726 735 743 754 769 752 722 709 727Gibraltar 838 845 861 864 877 863 835 822 841Piraeus 810 819 833 832 847 834 806 809 825

Suez 871 867 871 871 871 872 892 910 894Fujairah 796 801 806 809 830 834 827 824 834Durban 816 822 834 837 850 837 817 805 821

Tokyo 726 759 781 777 788 798 788 777 789Busan 784 803 810 827 851 847 824 816 806Hong Kong 786 785 808 811 843 840 818 773 784Singapore 772 775 791 810 829 806 777 758 773

Los Angeles 876 909 900 908 897 915 915 859 917Houston 768 758 787 781 797 809 794 781 789New York 815 818 823 831 857 849 858 837 852

Panama 821 832 839 846 862 870 859 850 873Santos 828 858 864 859 873 845 831 853 857Buenos Aires 832 847 847 846 848 868 863 855 864

MDO


Tribute to Bob Chandran

The passing away of Bob Chandran – one of the most colourful, dynamic, intelligent and humble

characters the global bunker industry will ever see – leaves a huge gap that will never be filled. Chandran was a one-off, a true entrepreneur whose sense of humour and kindness matched his enthusiasm for work and insatiable thirst for knowledge. Bob was an accomplished self-made businessman whose nurturing and leadership of Chemoil to create one of the biggest independent energy companies in the world has been one of the greatest success stories of this industry. But his openness and honesty, his willingness to share his experiences and his ability to inspire those around him, single him out as unique human being.

On a personal note, Bob always lent me invaluable support, previously with BunkerNews and latterly with Petrospot and this magazine, Bunkerspot, and its associated training courses and conferences. He did not need much persuading to become Bunkerspot’s first – and most prolific – columnist when the magazine was launched in February 2004, where he offered a special insight into the bunker, oil and shipping industries and often ruff led a few feathers in the process. Nor did he need to be asked twice to become one of the senior lecturers on the Oxford Bunker Course where he captivated the students twice a year with his stories of success and failure in the quest to grow his company. And, whenever able to do so, he also supported many of the international bunker conferences that we organised, often by providing lively, outspoken and ‘close to the bone’ keynote speeches that few others would have dared present.

Often, the words in his Bunkerspot columns had to be heavily edited, much to his annoyance, not because what he was saying was wrong, but because it was felt that maybe he was giving away too many company secrets or sailing too close to the wind with his outspoken observations on market practices and corporate strategies. In the run-up to the Chemoil IPO, he defied his legal team and colleagues who had ordered him to stop filling his columns with sensitive corporate material for fear

of jeopardising the sale. He ploughed on regardless for a while, but eventually the lawyers won and his creative juices were temporarily suppressed.

Reading back over the many columns Bob wrote in Bunkerspot, it is possible to trace some of the ideas that eventually came to fruition at Chemoil. In his first column, in February 2004, Bob wrote of new trading complexities: ‘Today, buying a cargo of fuel oil in the Baltic and determining its destination after loading gives a large bunker player a real edge. Global storage facilities provide a place to put the oil, but also allow larger players to take advantage of arbitrage opportunities before they really open. If you lay a paper strategy on top of the physical buying, you will also have a substantial advantage. However, this entails a stomach for risk taking’.

A regular discussion point with Bob at the time was his ambition to build, own and operate his own oil storage facilities – something which has now come to fruition with the Helios project in Singapore and ongoing plans for Fujairah and Panama. The desire to have his own storage facilities maybe stemmed from problems he had encountered over the years with third-party storage arrangements in places like Panama and Istanbul. However, it was evident that he recognised that controlling the storage facilities empowered him commercially.

In his June 2004 column, ‘Bigger is better’, Bob provide some insight into what drove him to keep growing his company. Having often been obliged to kowtow to national oil companies and the oil majors, he had experienced first hand the difficulties faced by small companies. He argued that there is little hope for small bunker companies with no financial clout: ‘Small companies can only hope to grow big or else live a life on bended knee’. He asked them: ‘Well, are

Llewellyn Bankes-Hughes commemorates the

inspirational life of the late Bob Chandran, CEO of Chemoil Energy Limited

‘He offered a special insight into the bunker, oil

and shipping industries and often ruffled a few feathers

in the process’

Bob Chandran, Founder, Chief Executive Officer and Executive Chairman of the Chemoil Group of Companies, died at the age of 57 on 7 January 2008 from injuries sustained on 6 January in a helicopter crash near Pekan Baru in the Riau Province in Indonesia. He leaves his wife Vivian and two daughters, Sharon, 31, and Ashley, 20.

Born Robert Viswanathan Chandran in Mumbai, India on 31 May 1950, Chandran began operating as a fuel trader in 1981 and formed Chemoil Corporation in 1982. The group holding company, Chemoil Energy Limited, is now one of the world’s largest integrated physical suppliers of marine fuels, with annual revenues of $4.4 billion.

Chemoil was listed on the Main Board of Singapore Exchange Securities Trading Limited on 14 December 2006. Bob Chandran held 50.46% of the shares. His Japanese trading house partner, Itochu Corp. holds 37.5% of the shares, and both Vivian and Sharon are directors and shareholders.

Before creating Chemoil, Chandran had several years of experience in business development of industrial chemicals, petroleum and machinery. He received degrees, including Masters of Science (specialised in Chemistry) and Master of Business Management, and also completed the Harvard University Owner/President Management Program.

Chandran was a regular speaker at international events and a member of several expert advisory panels to leading universities and companies. For many years, until his death, he was also a highly popular lecturer on the Oxford Bunker Course.

Bob was a member of various professional bodies and committees, such as the International Energy Association and American Petroleum Institute. He also served on the Board of Governors of the Asian Institute of Management, and on the Investment Committee of Worcester College, University of Oxford.

In 2005, Bob Chandran launched a $500,000 fund for entrepreneurs at his former school, the Asia Institute of Management in the Philippines. In November last year, he won Ernst & Young’s Entrepreneur of the Year award for the oil and gas sector.



you worried? Are you scared that you will be wiped out? If you are not, you should be! Either grow organically or become a footnote to the history of the bunker business. I wake up every day with this fear and will never let grass grow under my feet.’ He added: ‘If you don’t grow, you will contract. If you are tired of boarding planes, fighting new battles every day and building new businesses, my advice to you – if you are the owner of the company – is to quit or sell your business. You are standing in the way of your corporation. Your bankers always ask you about your succession planning. Mine is that if one day I wake up and do not want to make my business grow, I will hire someone to run my business for me and take a walk to the lovely woods of retirement.’

Bob always believed that cooperation – or as he called it – co-opetition, was always a better way forward than out and out competition, although he found that the bigger companies often failed to appreciate the smaller firms. Bob always considered Chemoil to be a small firm, despite the rapid growth it was experiencing. In the August 2004 issue of Bunkerspot, Bob asked: ‘How do you build a bridge with your competition? Do them a favour when they need one and offer them an advantage when you have one. There are some guys in big companies that think the small guys like Chemoil owe them these favours. They say thank you but nothing else comes out of it. Well, we will only go that way once. If Chemoil gets nothing in return, we don’t waste our time with that company again.’

Bob often called upon smaller companies to seek out strategic partners to help them grow, a trend which has accelerated in recent years. In April 2006, he wrote: ‘In our industry there are many small companies run by entrepreneurs which are struggling for finances and have no financial clout with their customers, suppliers, terminals or barge companies. These entrepreneurs talk about the joy of the freedom to do what they want and to keep all the profits they generate to themselves. These days, with high volatility and big financial requirements, many companies are barely making a living.’ He added: ‘It is the fear of the unknown that keeps most of these businessmen from exploring strategic partners.’ He ended: ‘It is not the price you get now on the sale of 50%

of your company that is critical – it is what is in store for the future. As a person who has done this in my lifetime, I recommend this route for all one-port bunker suppliers to consider.’

Unlike most writers and commentators, Bob never shied away from naming names. ExxonMobil’s control of ‘70% of the base oil that is used to manufacture marine lubricants’ caused him to worry about the huge amount of inf luence that the newly-

merged major held over the lubes market in 2004. In April 2005, Bob was full of praise for Shell after revealing how, ‘over the last three months’, Shell was managing to offer shipowners on the US Gulf fuel oil at prices lower than the cost of resupply in Houston. ‘I have to congratulate Shell on this brilliant strategy with which it has achieved two objectives. Shell has become a friend of the shipowners by supplying them cheaper bunker fuel and at the same time has made money on the market, especially from the gullible traders who bought the spread

from Shell. This is the best distribution of wealth I have ever seen. One dollar for you, my customer. And $5 for me. Thanks!’ Bob wrote that ‘Shell has some fantastic brain power and has played this game very cleverly’, but predicted that the marketing strategy would not last the course of the year. In fact, shortly after the article, entitled ‘Shell games’, was published, the oil major changed tack amid a f lurry of staff changes in Houston.

Always on the lookout for the next big idea, the next step up the growth ladder for Chemoil, most projects worked for Bob but some did not. It took a couple of failed attempts to crack the Panama market before f inally Chemoil became one its biggest players. A foray into Istanbul didn’t last long, while a pitch at the Sri Lanka market never got past first base. But these disappointments never dampened Bob’s enthusiasm to try to make things happen.

Bob always had an eye on politics and economics and these themes often appeared

‘No matter how well protected you feel, whether in business or in personal life, I have learned that you should never fail to

expect the unexpected’

‘He had the loudest ties that anyone had ever seen: full of colour and always bright and completely impossible to ignore.

That was my Dad’s personality.’

Sharon Chandran



in his columns. In December 2005, he predicted that the US property boom might be on the verge of collapse. ‘The US economy has been fuelled by a housing boom, although this has also been true of the whole world. Residential property values in the developed world have risen by more than 75% ($30 trillion) over the last five years. In other words, it looks like the biggest bubble in history. Low interest rates have allowed Americans to borrow on the appreciated real estate values and spend their wealth on consumer items. With the increase in oil prices and interest rates rising, consumer confidence will disappear. This particular bubble needs very little to burst, but if and when it does, we could be looking at a fully-f ledged recession.’

After a short hiatus, ordered by his team of IPO lawyers, Bob’s columns in Bunkerspot returned in June 2007 with his personal insight into the tortuous process of taking Chemoil into public ownership. This turned out to be one of the most difficult and frustrating experiences of his life. He wrote: ‘There were many days when I wondered, while walking on the streets of the world’s financial centres, whether it was all worth it.’ The first attempt at the IPO, in September 2006, failed and the offer was pulled because Chemoil did not achieve the price it was seeking.

It was not long before Bob was persuaded to try again, but for a few weeks at least he lay low, admitting to feeling embarrassed and unable to face the industry. Billed as the keynote speaker, the highly successful entrepreneur who ought to have taken Chemoil through its IPO by the time it started, Bob emailed me to plead to be excused from his keynote speech at the International Bunker Industry Association’s (IBIA) Annual Convention

in Monaco in October 2006: ‘Dear Friend, I would rather hide for some time’. However, within weeks, the IPO show was back on the road and the company went public in Singapore on 14 December, at a 7.8% multiple of projected 2007 results. Bob wrote ‘Going public was not always a pleasant ride, but at least it has been productive!’

On the Oxford Bunker Course, Bob was always voted the most informative

and interesting speaker, never holding back information and always encouraging his audience to get involved. Twice a year, Bob would f ly half way around the world, economy class, on his own account and take a bus to Oxford to teach newcomers to the industry about bunkers during a power-packed 90-minute lecture. Afterwards, he would mingle with the students before taking a bus back to the airport and boarding another plane to another continent. In his signature black suit, white shirt and brightly coloured tie, Bob would smile mischievously throughout his lecture, providing endless

anecdotes and advice about his experience of being a bunkering entrepreneur. He was a firm favourite on the course and will be desperately missed.

Bob also had a long history of speaking at bunker conferences where he would relish stirring things up, often saying things that no-one else would dare, such as admitting to deliberately manipulating Platts oil prices or criticising one of his main suppliers – as he did in Buenos Aires in a frank speech about Venezuela. But he was always a willing contributor. Whenever I asked him to speak at a conference, his usual answer would be ‘Anything for you Llewellyn… I will be there.’

Bob always had a strong philosophical streak and – perhaps due to his Indian origins – often felt what others might not. In the issue of February 2005, while sitting on a beach contemplating the unprecedented price volatility of 2004, Bob commented: ‘I feel like I have lived through ten years in one year.’

In a typically humble postscript he wrote: ‘I left the Maldives just six hours before the devastating tsunami arrived on 26 December to inundate the islands and wash away entire populations across Asia. No matter how well protected you feel, whether in business or in personal life, I have learned that you should never fail to expect the unexpected.’

I knew that Bob was in the Maldives

when I heard about the tsunami and called repeatedly to check if he was OK. Completely out of character, Bob never answered his mobile phone and I feared the worst. When I eventually did re-establish contact, he told me that he had had no idea that the tsunami had struck until he had arrived back home in Singapore. Maybe it was after he had escaped from the disaster in the Indian Ocean that I began to take more notice of the sign-off on Bob’s emails which, quoting a Longfellow poem, simply said: ‘Strive to leave footprints on the sands of time’. He has.

‘Bob was one of those people who saw greatness

in all of us, a greatness that we didn’t even imagine

we had in us.’

Vivian Chandran

‘There were many days when I wondered, while walking on the streets of the world’s financial centres, whether it was all

worth it’



I joined Chemoil in 1986. It was a very different company then, and many memories have come f looding back.

I was a wine marketer back then, and my wife Margien saw an advertisement in The Wall Street Journal for a job as an oil company marketing manager. I knew nothing about oil, but I applied and went for an interview. What happened was a typical Bob hiring. The interview took less than 30 minutes and I was hired for the job on the same day. I do not know why, but Bob evidently was a good judge of character.

During my first month at Chemoil, Bob called me at home and invited me to go out for a drive. As a brand new employee I felt I could not refuse my new boss and could not turn him down. He collected me in his green Rolls Royce, complete with Chemoil number plates, and drove us all around the hills surrounding San Francisco. Anyone who knew Bob’s driving would realise that this was going to be a hair-raising experience. I was taking my life in my own hands at that point! During the drive, Bob started to give me his philosophy on life and on business, and his favourite phrase, about leaving footsteps on the sands of time, also came up. Frankly, I thought he was out of his mind at the time. But Bob gave me a lesson in what he thought and in what he wanted to do. And he meant what he said and said what he meant.

Bob was already successful when I arrived at Chemoil. I had read an article about Bob, a few weeks before joining, which spoke about Bob as an oilman ‘that JR would be proud of ’. Bob loved the idea of being presented as a hard, rough oilman, but nothing could be further from the truth. There was great kindness in that man.

In those days, the bunker business was very tough, and totally dominated by the oil majors. Bob had a unique vision and saw

this as an opportunity whereas others saw this as a barrier. He recognised quickly that relationships were the key to this business. He was aggressive in developing friends on both the supply side and the customer side of the industry and developing friends among the bunker buying community by providing buyers with a solution to their problems which the competition just ignored.

Bob used to tell a story of a visit he made to Norway in the mid-1980s where he met a shipowner but had nothing to sell him. Bob was a small independent supplier in Los Angeles and he was standing in front of one of the biggest shipowners in the world at that time, Leif Hoegh. He asked the owner ‘What can I do to help you? What can I do to solve your problems?’ The shipowner told him that he had two ships and that none of the oil majors were able to guarantee the fuel specifications that he required. Bob seized the opportunity, and although at the time he had no idea how to make it happen, and none of the expertise or experience, he said ‘I’ll do it’. He made some calls to Los Angeles, confirmed that he would be able to meet the specifications, and did the business. He won himself a customer and a friend who is still there to this day.

The real success of the early days of Chemoil was achieved by aggressively sourcing and engaging the customers. Bob had three core philosophies: innovation, adaptability and a refusal to accept the status quo. These were the philosophies set early in Chemoil and even though the business is infinitely more complex nowadays, they remain at the core in every deal we do, and in every manager who works at the company. We all learned that from Bob.

Working with Bob was always inspiring. Since he died, I’ve been asked what sort of boss was Bob? The media were asking me ‘Was he a hands-on boss or was he a hands-off boss?’ The impression in the market was

Adrian Tolson reflects on Bob Chandran’s

philosophies which have underpinned Chemoil

since he joined 21 years ago

‘The best tribute that we can have for Bob is the continuation of his vision for his company. Bob wanted Chemoil to be the

leading independent supplier of marine fuels in the world and that is what we are going to strive to do.’

Clyde Michael Bandy, Chairman & CEO, Chemoil Energy Limited


that Bob managed every single aspect of our business. But nothing could be further from the truth. Once Bob had confidence in you, and he knew that you shared the same philosophy as he did, he left you alone. He knew that in your heart you would do your best for the company. Not everyone stayed to share that vision, but those who did became Bob’s friends.

The key to Bob’s vision was to make the most of every single day. And in the oil business, Bob found an industry where one day could be a lifetime. Bob was never a great one for formalised planning or budgeting, but every day with Bob and Chemoil was like a new life. I never once came to work wishing I was not coming to work. No matter the issue, I knew there would be fun in the challenge of dealing with the problem.

Bob created an everyday environment within Chemoil where innovation and

creativity would ultimately take us to a greater future and greater goals. The greatest success for Bob and for Chemoil was in achieving these goals. And the greatest thing I will take away after 21 years at the company is Bob’s passion to make the most out of every day he was on this earth. And that I know he did. And any manager who received that enthusiastic daily call with a laundry list of ‘my suggestion to you…’ knew this very well.

Now we move on without Bob. And that will be hard. Bob was a teacher and a mentor, whether he was lecturing students or with his colleagues. His philosophy and vision live on, in everyone who worked with him and in those whose life he touched. His philosophy and vision will also live on in Chemoil and I am sure that great successes are coming to us all. God bless you Bob. Thank you for everything.

‘Bob was brilliant. He had an analytical mind and

was always full of energy and enthusiasm. What I

admired most was that he was a brilliant optimist.’

Antonio Garcia, Co-founder, Chemoil Corporation

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www.bunkerspot.com Volume 5 Number 1 February / March 2008

TRIBUTE TO BOB CHANDRAN:Industry mournes Chemoil founder

www.bunkerspot.com Volume 4 Number 6 December 2007 / January 2008

PHYSICAL ATTRACTION:Chemoil in Singapore, Fujairah and Rotterdam

www.bunkerspot.com Volume 4 Number 5 October / November 2007

BARGING BENCHMARKS:Best practice and best prices

www.bunkerspot.com Volume 4 Number 4 August / September 2007

AT THE HELM:New direction for IBIA?

www.bunkerspot.com Volume 4 Number 3 June / July 2007

BUNKERING IN PANAMA:Gateway to success?

www.bunkerspot.com Volume 4 Number 2 April / May 2007

MEDITERRANEAN BUNKERING:Blue seas, green fuels



The bunker industry was stunned by the news that Bob Chandran, founder and leader of Chemoil

Corporation, had died following a helicopter crash in Indonesia. Our business may be global in scope, but bunkering is a small community and there is not a person among us who did not know Bob in at least one of his many personas: supplier, customer, competitor, public speaker, teacher, commentator and writer. As the shock wore off, his supporters and detractors alike were left to contemplate the loss of one of our industry’s most enduring personalities.

For over 25 years, Bob was the driving force behind Chemoil Corporation which he founded in 1981 as a small regional bunkering company and grew into a global oil trading force. His career chronicled the myriad changes that have shaped and transformed the bunker business from an obscure backwater of the oil industry to the forefront of change in global fuel distribution, strategic procurement and environmental policy. Intelligent, strong-willed, and opinionated, Bob played a vocal role in every phase of that transformation and was recognised as a controversial, but respected leader in the industry. And while he was best known for his role as Chairman of a large global bunker supply company, Bob will be remembered by many of us as a passionate entrepreneur whose innovation and willingness to take risks came to symbolize the dynamism of a restless, fast-growing industry.

I first met Bob in 1983 while working with Mike Kasbar as a bunker broker in New York. Bob was embarked on a mission to build the first global independent bunker supply company while Mike and I dreamed of building the world’s first

globally integrated fuel services company. We grew up together in the bunker industry and, over the years, Bob and I sat on numerous industry panels, spoke at the same conferences, taught at the same courses, and wrote numerous articles for the same trade press. He loved a good debate and for 25 years we enthusiastically argued business and philosophy both privately and in the public domain. Bob was a worthy adversary who revelled in being a contrarian. And no matter how much our views of the world might diverge from time to time, we shared a mutual respect for what we had each achieved and a deep sense of commitment to support the industry that had presented us both with great opportunity.

As an industry personality, Bob will be remembered as a gifted and entertaining public speaker who cared little for convention. Animated, provocative and always funny, Bob enjoyed stimulating public debate on any number of issues. As a businessman, he was ambitious, driven, proud, competitive, and fearless. Through good times and bad, he was willing to risk failure where others would have played it safe. In our personal relationship, I found Bob to be a complex mix of confidence and insecurity; innocence and calculation; openness and caution. What I will remember best were his formidable charm, gift for clever banter and an all-consuming relentless curiosity.

With Bob’s death, his family lost a beloved father and husband and our thoughts and prayers go out to them. His company, Chemoil, lost a dynamic leader and they can count on our support during this difficult time. The bunker industry lost someone whose capacity to surprise us kept life in our business forever interesting and we will miss him.

Paul Stebbins, CEO of World Fuel Services, pays

tribute to Bob Chandran, a worthy adversary

‘Bob’s career chronicled the myriad changes that have shaped and transformed the bunker business from

an obscure backwater of the oil industry to the

forefront of change in global fuel distribution,

strategic procurement and environmental policy’

‘Bob’s vision for the company was to provide a work environment that inspired creativity and innovation, where an

individual could develop and follow his own dreams.’

Lucius Conrad, Vice President Administration, Chemoil Corporation


Operational Issues

On 14 November, mariners, waterfront facility personnel and workers requiring access

to regulated facilities on the Houston Ship Channel began to trickle into the Transportation Workers Identif ication Credential (TWIC) enrolment centre in Houston, Texas. This Transportation Security Agency (TSA)-managed credentialing facility was one of the f irst to debut on the Gulf Coast and represented the culmination of several years of rulemaking efforts. These efforts stemmed from the passage of the Maritime Transportation Security Act of 2002 (MTSA) – an Act passed in direct response to the 9/11 terrorist attacks upon the United States.

The architects of the MTSA clearly recognised that the maritime component of the US economy was its lifeblood. Hence, there was a need to better secure the port infrastructure that pumped hundreds of billions of dollars of commerce to and from America’s shores. The prospect of doing this without derailing a just-in-time ( JIT) economic construct was even more daunting when one considered there were 361 US public ports that required various degrees of maritime security regulatory oversight. Indeed, the challenges will become even greater when one considers that the volume of goods being handled by those ports is expected to double over the next two decades. That volume not only includes tens of millions of containers and hundreds of millions of metric tonnes (mt) of crude oil, but also more than 113 million ferry passengers a year.

The initial steps to secure US ports focused on coalescing exiting technologies and sensor systems in order to fuse intelligence more effectively and also identify potential threats from beyond the sea buoy or within the port itself. This effort was combined with marrying federal, state and local law enforcement resources to sort through and respond to security threats. Simultaneously, owners of US-f lagged vessels and waterfront facilities were required to develop, assess and submit security plans to the US Coast Guard (USCG) for review and

approval. Once implemented, these plans would form the cornerstone of the US government’s overarching strategy to better control how goods and personnel interfaced with regulated waterfront facilities.

The rationale behind the mandated security plans was the notion that by positively controlling the movement of individuals in the vicinity of secure or restricted areas, risks to those areas would be reduced. This is certainly not a new concept; for decades USCG Captains of the Port (COTP) (i.e. the senior USCG official endowed with regulatory authority over US navigable waters in a delineated geographic area) have possessed this authority. In fact, after the United States entered World War Two (WWII), President Franklin Delano Roosevelt authorised necessary actions to protect vessels, harbours, ports and waterfront facilities. This was achieved by the creation of security zones around waterfront facilities and reinforced by the implementation of an identif ication and credentialing system. The latter measure endowed the COTP with the ability to better control the movement of personnel at waterfront facilities by tracking US citizen workers at docks, individuals that had occasional business at docks, temporary guards and anyone else that had a need to enter a restricted waterfront.

Granted, pre-WWII information technology meant that an ambitious credentialing system required hundreds of thousands of hours of labour-intensive searches of f iles and un-collated records. Yet, there was a pressing need to implement such a system due to fears that German and Japanese saboteurs were prowling off load ports throughout the country. This was also compounded by several high profile acts of sabotage that took place in and around New York harbour prior to the US’s entry into WWI.

Perhaps the most infamous act of sabotage took place a quarter of century before President Roosevelt’s declaration of war. During the early morning hours of 30 July 1916, a 23-year old immigrant, Michael Kristoff, began several small f ires on munition-filled rail cars and

Tom Marian of Buffalo Marine reports on how the introduction of the

Transportation Workers Identification Credential is affecting bunker barging

activities in US ports

Buffalo Marine Service Inc. has been operating bunker barges on the US Gulf Coast from more than 70 years.

Contact: Tom MarianTel: +1 713 923 5571Fax: +1 713 923 5304 Email: [email protected]: www.BuffaloMarine.com


Operational Issues

the barge Johnson 17. The Johnson 17 was loaded with 50 metric tonnes (mt) of trinitrotoluene (TNT) and 417 cases of detonating fuses. The ensuing explosions that involved over 1,000 mt of TNT completely destroyed the Black Tom Island depot and the surrounding neighbourhoods and killed four civilians. Ironically, the Johnson 17 had been improperly moored at the Black Tom pier in order to avoid a $25 towing charge. This was not an isolated incident as evidenced by subsequent acts of sabotage, including the January 1917 Kingsland munition-plant explosion, the destruction of the Trenton-based John A. Roebling’s Sons Company factory, and the arrest of three German saboteurs at the rebuilt Black Tom Island facility on 17 February 1917. The memory of these incidents was certainly powerful motivation for WWII government authorities to prevent similar attacks via aggressive security measures which included credentialing.

More than 65 years after the WWII credentialing system was f irst promulgated, the US Department of Homeland Security (DHS) issued the TWIC final rule. This rule was no more than a 21st century edition of a previous era’s credentialing regime. However, the commercial realities of a modern economy mean any ID-based system that controls access to waterfront facilities and vessels must not be disruptive to the movement of personnel and the f low of goods. This is particularly important at sites where thousands of shift employees will be subject to credential verif ication measures.

To that end, the TWIC enrolment process has been designed to ensure that TWIC holders are subjected to a multi-agency background investigation. Moreover, the TWIC includes biometric data (i.e. f ingerprints) that are unique to the holder. The notion was that a facility or vessel operator/owner would have the ability to rely on safeguards behind the TWIC enrolment process. Ideally, if a vendor, contractor or employee presents a valid TWIC at an access point, he or she could gain unescorted access to a secure area. Of course, owner/operators could introduce more stringent escort measures

for non-employees with TWICs; however, the intent has been to reduce escorting and check-in procedures at access points for those holding a TWIC. Current USCG guidance in the TWIC Navigation and Vessel Information Circular (NVIC) even allows the owner/operator of facilities/vessels to permit any person holding a valid TWIC to act as an escort for anyone without a TWIC.

The control notion of the TWIC is underscored by the requirement that a TWIC holder performing escort duties in a secure area can only escort a maximum of f ive individuals. More importantly, the escort must be in a position to prevent a person being escorted from engaging in activity that is contrary to the purpose of the visit.

At this juncture, the TWIC is nothing more than a ‘f lash card’. A current rulemaking initiative is evaluating various card reader prototypes. To date, the challenge has been to construct a robust piece of equipment that reliably operates in a highly-corrosive maritime environment in temperatures ranging from sub-zero to tropical. The card reader must also have the capability to download data from government-maintained databases that tracks the status of current TWIC holders. This would permit the system to recognise a TWIC that has been invalidated due to disqualifying conduct on the part of the TWIC holder.

Given the expansive scope of the TWIC requirement and industry concerns about the vast number of potential applicants, the TSA contracted Lockheed Martin to ramp up enrolment centres throughout the country. These enrolment centres have been established near ports and,

as required, supplemented by mobile enrolment centres where large populations of potential enrollees are located. Thus far, nearly 50 enrolment centres have been opened and experiences from enrollees regarding waiting time vary from port to port. As enrolment unfolds, the local USCG COTP will monitor the number of applicants and determine at what point the TWIC will become mandatory in a given region. Once this date is set, all waterfront facilities will be required to comply with the TWIC regulations.

In the towing world, not all towing vessels are designated as secure areas and therefore would not require unlicensed personnel to be armed with a TWIC. Generally, all towing vessels that are longer than 8 metres and engaged in towing barges carrying regulated products (e.g. certain dangerous cargoes and petroleum products) or engaged in an international voyage are bound by the TWIC requirement. Thus, by 25 September, all US merchant mariners holding a merchant mariner’s document (MMD) will be required to possess a TWIC. While there has been a move afoot to push this date back due to the delayed opening of the TWIC enrolment sites, it is unlikely that this implementation date will be changed. As such, vessel owners and operators are being strongly encouraged by local USCG authorities not to procrastinate on pre-enrolment. Otherwise, USCG-licensed mariners may have their licence suspended or revoked by the USCG if they fail to possess a TWIC by the September deadline. For those mariners without an MMD, they may be subjected to a permanently-escorted situation. Realistically, most employers will simply ensure all individuals being employed on the regulated vessel obtain a TWIC as a condition of employment.

As the September deadline for merchant mariners approaches, momentum continues to grow across a wide population of maritime stakeholders to sign up for a TWIC. This increasing pressure on the enrolment infrastructure will most likely result in processing delays – a situation that will not bode well for those mariners that intend to wait until the last minute to obtain a TWIC.

‘By 25 September, all US merchant mariners holding

a merchant mariner’s document (MMD) will be

required to possess a TWIC’


Company Profile: Aegean Marine Petroleum

‘When the going gets tough, the tough get going’, or, in the case of marine fuel

logistics company Aegean Marine Petroleum Network Inc. (AMPNI), ‘the tough go shopping’. Clichés and puns aside, this New York Stock Exchange (NYSE)-listed company has certainly demonstrated a voracious appetite for buying new double-hulled vessels ahead of the International Maritime Organization (IMO) 2015 deadline for the phasing out of single-hull vessels. Set this strategy against the current climate of spiralling crude oil prices and the necessity, therefore, for any bunker supplier to ensure that it has sufficient levels of working capital to cover large price f luctuations, then the obvious questions to be asked are: can AMPNI’s balance sheet support its ambitious vessel acquisition policy, and when its order book is converted into a considerably expanded f leet by 2010, can the company achieve the requisite increase in market share to sustain this level of vessel ownership?

Week in, week out, the global business press is peppered with articles about the need for companies in virtually every industry sector to achieve end-to-end supply chain control, and, as Steve Leonard, AMPNI’s recently appointed VP of the Americas, acknowledges, this strategy is the driving factor in the company’s forward business plan: ‘It allows us to turn expenses into assets, and if there are problems [along the supply chain], then we can identify them quickly and effectively; our controls are in place.’

AMPNI currently sells and delivers marine fuel to ocean-going and coastal ship operators, as well as traders and other end users through its service centres in Greece, Gibraltar, Singapore, Jamaica, the United Arab Emirates (UAE) and, more recently, offshore UK and West Africa. The Greek market is served through AMPNI’s related company, Aegean Oil, which operates as a physical supplier to all the country’s ports. In Gibraltar, where Aegean sold some 843,073 metric tonnes (mt) in the nine months ending 30 September 2007, the company used to purchase the bulk of its fuel from Chevron’s Fuel and Marine Marketing

(FAMM). However, FAMM has now pulled out of this location, and Aegean buys from a number of suppliers, and holds the fuel in its f loating storage facility, the double-hulled Panamax tanker, the Leader, a recently aquired double-hulled Aframax tanker.

In Fujairah, in the nine months ending 30 September 2007, the company sold some 480,617 mt of marine fuel and it purchases fuel from a number of suppliers in the area. In Jamaica, it has a long-term contract with state refinery Petrojam Ltd, and it sells to customers in Kingston, Ocho Rios and Montego Bay. In the nine months ending 30 September 2007, volume of marine fuel sold totalled 432,566 mt, and the company has stated that it may also look to service other locations in this area.

Aegean only commenced physical supply in Singapore in June 2006, so like-for-like fiscal year (FY) 2006/2007 comparisons are not yet possible. However, a hike in fuel sales from 78,650 mt in the first nine months of FY2006 to 321,984 mt in the comparable period in 2007, indicates that the company is making steady inroads into the Singapore bunker fuel market which has now reached 30 million mt per annum.

In the first of two corporate acquisitions last year, Aegean purchased (from cash f low) Bunkers@Sea, which supplies north west Europe from the Irish coast up to Scandinavia and whose tankers principally load their fuel at Zeebrugge (see Bunkerspot, December/January, page 8). This acquisition also brought two additional tankers into the Aegean f leet, the Sara, an upgraded 7,389 deadweight tonne (dwt) double-hull tanker, and the Vera, a 1985-built single-hull tanker. Aegean has now added the double-hulled tanker Aegean Princess to this service centre and, according to Steve Leonard, Bunkers@Sea is now fully integrated into the company’s operations and is ‘performing very well, beyond our expectations’.

Certainly, this acquisition of a strategic niche player is being seen by industry analysts and commentators as a shrewd move, and is a good illustration of the business model which Aegean seems to have developed after its initial public offering (IPO) at the end of 2006. Its strategy is logical and straightforward: to increase its number of service centres around the world, whilst increasing its market share in its already-

Lesley Bankes-Hughes takes a closer look

at Aegean Marine’s ambitious vessel

acquisition strategy ahead of the phase-out of single-

hulled vessels, and she assesses its vision for

global business growth


strap

established centres.The bunker market is largely the territory

of the independent suppliers who are all (and have to be) somewhat predatory when it comes to chasing after new business. As Leonard points out, there are no real undiscovered niche markets to exploit in the bunker business. It is ‘a very transparent’ sector in terms of sourcing new opportunities, he says, and while Aegean may seek to position itself in additional service centres, it is also dependent on achieving substantial organic growth. ‘We will look at under-serviced markets, or markets that could perform better if serviced differently; whether it is in the Americas, Europe or the Far East.’

So what is Aegean’s trump card in its bid to grow its market share? Taking steps to act quickly on the opportunities thrown up by the phasing out of single-hulled vessels is, the company believes, the way forward in achieving a competitive edge. If ever the introduction of a new maritime regulation presented a unique business opportunity, then the mandate to switch to double hulls would seem to be it (at least from an early-2008 perspective).

Aegean’s decision to go for an IPO at the end of 2006 in order to pay down existing debt and fund a huge order book for double-hull vessels was a bold move. The company raised $185.2 million through the offering, and institutions now hold just over 30% of its shares, with the remainder

held by Leveret International (controlled by Aegean founder Dimitris Melisanidis and John P. Tavlarios) and AMPNInvest. Aegean (and, it must said, every industry analyst and player whose opinions were canvassed for this article) is emphatic that the company is a very different business post-IPO. This, however, can prove to be something of a double-edged sword in considering the company’s future course. The 2006 IPO now affords industry analysts full disclosure of Aegean’s financial position and corporate ambitions. However, those ambitions, at least in terms of its new-build order book, are huge, and it is not easy to predict whether a post-IPO Aegean will be able to garner the level of business/market share to sustain a f leet which, post 2010, will be roughly triple its current size.

At this stage, the company would seem to have stolen a march on some of its competitors by placing orders for a total of

22 new double-hull tankers with the Fujian Southeast Shipyard and the Qingdao Hyundai Shipyard, with an option on an additional nine vessels. Furthermore, it has placed an order for two ‘specialty’ ro-ro tankers with a Romanian shipyard with an option to purchase an additional four. The company’s order book is believed to now account for around 20% of global orders for new double-hull bunker tankers, and this pre-emptive ‘strike’ will inevitably affect its competitors who have been less proactive in ordering new-builds.

Spare building capacity at shipyards is decreasing, and newbuild prices will inevitably be driven up over the coming years, so, while some analysts may question the scale of Aegean’s shopping spree, few question the wisdom of placing early orders. Explaining the background to its acquisition strategy, Steve Leonard notes: ‘Aegean’s management saw and seized the opportunity; there are not a lot of companies that can do this at the moment’. Certainly, undercapitalisation is a problem for a number of marine fuel companies. Constantly escalating fuel prices are leaching their reserves of working capital, and they will thus have to be cautious about increasing their financial exposure by going ahead with new vessel contracts.

Prompt delivery of these new vessels will be key to Aegean’s future plans. The company has not undertaken contracts before with these shipyards, but says that

‘We will look at under-serviced markets or markets that could

perform better if serviced differently; whether it is in

the Americas, Europe or the Far East’



the construction schedule is on track, and that Aegean has put in place technical teams in Piraeus and China to supervise the programmes. The first new-build from Fujian was delivered last July and this, the Milos, has been deployed to Singapore. Delivery of the Kithnos (which will operate out of Fujairah) followed in November as well the 4,600 dwt Serifos which will also operate out of Singapore.

Aegean has clearly set its sights on the bus-iness opportunities generated in Singapore by the double-hull legislation. Leonard estimates that the size of the Singapore f leet will contract by about 25% once single-hulled vessels cannot operate there, so there should be pent-up or, at the very least, ready demand for services offered by companies who are ahead in the double-hull game. Although a relatively new presence in Singapore, Aegean should be well positioned to grow its market share in this region.

It is also worth noting here that while the IMO’s deadline for single hulls is 2015, some countries are bringing forward the provisions of the ban, often in response to severe oil spills in national waters. For example, South Korea has brought forward its deadline to 2010, while refiner GS Caltex is to impose a voluntary ban as early as 2009. The Philippines is adopting an even more hard-line stance on single hulls by prohibiting all such vessels carrying crude oil and bunker fuel from visiting its ports from April this year (see page 14). The feeling among some industry watchers is that this policy may be taken up by other

countries with the inevitable knock-on effect that those companies who have a double-hull acquisition programme already in place should gain a clear edge over their competitors.

Other suppliers may decide to add to their f leet by purchasing vessels in the secondary market, but although Aegean acquired four second-hand double-hulled tankers in 2007 (including the vessels associated with its Bunkers@Sea purchase), this market sector ‘didn’t offer the state of the art vessels we were looking for,’ says Leonard. However, he counters: ‘We are an opportunistic company and will consider any situation presented to us. If we had a specific need for a ship, and the right ship came along, such an opportunity would not be ruled out; we would act on it but it’s not on our agenda right now given our current order book’.

Given the company’s financial performance following its IPO, its balance sheet looks fully able to support its acquisition strategy. At the end of 2007, it had a market capitalisation of

around $1.7 billion, well ahead of some of its competitors who achieve much greater sales revenues. Total revenue for the first nine months of 2007 was $852,282,000, so it should burst through the $1 billion mark for the full year quite comfortably. Obviously, oil price f luctuations can massively boost or depress sales/costs figures for marine fuels businesses, but the company’s bottom line looks strong, with net income rising comfortably year on year from $662,000 in 2002 (if we may be allowed to look at a pre-IPO Aegean!) to $24,225,000 in 2006 and $21,483,000 for the first nine months of 2007.

In the view of one industry commentator ‘Aegean has good liquidity [approximately $30 million available at the end of September 2007], low gearing, and is doing just as well as can be done in this industry’. The company has secured lines of credit to finance its vessel purchases, and acquisition costs will also be partially funded from cash f low. At the end of the third quarter of 2007, it had a $183.4 million senior secured credit facility, and then last November it put in place a $300 million senior secured revolving credit facility underwritten by the Royal Bank of Scotland and HSH Nordbank which is to be used to replace part of the earlier credit facility. A condition of some the company’s lines of credit is that single customers cannot account for more than 10% of overall annual revenues (in 2004, for instance, US Navy contracts accounted for around 24% of annual revenue). While the 10% ceiling is standard banking practice, this does mean

‘If ever the introduction of a new maritime regulation

presented a unique business opportunity, then the mandate to switch to double hulls would seem to be it (at least from an early-2008 perspective)’



that Aegean will have to maintain a broad customer base in future years.

The payment schedule for construction milestones totals some $180,326,000 between 2007-2009 for the double-hulled tankers and $15,708,000 for the specialty tankers. The company does carry a significant tranche of long-term debt, but the debt repayment structure does allow for a considerable level of repayment post-2012 (some $23,811,000 according to the company’s FY2006 report). Once again, this shows that the company will have to realise its ambitions to grow its market share in the relatively short term, so that the debt repayment schedule after the completion of its vessel acquisition programme can be comfortably met.

Before its IPO, Aegean was cautious in its approach to price risk in its fuel purchases. In its offer document the company noted that it was not its policy to fix future prices for delivery of fuel in excess of a week, and that it did not use derivative contracts, swaps or futures to offset price f luctuations in marine fuel. However, at that stage (in late 2006), the company did not rule out using derivatives and other financial instruments to mitigate price risk. Certainly, the company will have to address this possibility as it increases the number of vessels it holds as f loating storage, and it will be interesting to see if and how it changes its oil price risk strategy in the short term.

Aegean’s fourth new double-hulled vessel

was delivered in January, and the Amorgos was due to arrive in Gibraltar during the first week in February. The company is also anticipating delivery of two ro-ro vessels from Romania in the first half of 2008. The first vessel is currently undergoing sea trials and should be delivered in February while delivery of the second vessel is scheduled for April. These unusual shallow draft vessels are of double-hull, double-bottom construction, and have been specif ically designed for deployment around island regions, notably Greece. Onboard road tank wagons (rtws) will leave the ships to make fuel deliveries to gas stations, factories, power stations, or other industrial facilities. Aegean has options to purchase a further four ro-ro vessels, but says that a decision to exercise these options is still under consideration.

Aegean’s attempts to boost market share will also be realised by expanding the number of service centres world-wide. Its second company acquisition in 2007 – that of Portland Bunkers International – gives it another foothold in North West Europe. This marine terminal has four inland storage tanks with a total capacity of 40,000 cubic metres (m3), and Aegean plans to offer lower sulphur marine fuel from here as it is located close to the southern access of the North Sea Sulphur Emission Control Area (SECA). The Portland facility will be up and running in the first quarter of this year and, according to Steve Leonard, a ship has already been designated to operate out of the terminal and is currently undergoing a modification programme.

The company’s decision to establish a foothold in Ghana is a clear indication that expansion into the African market is high on its agenda. ‘It is a very large market for many types of ships – tankers, containers, upstream vessels, and exploration and production (E&P) vessels,’ says Leonard. ‘We are already there with f loating storage, the 68,000 dwt double-hulled Fos, and we are the only one that can offer this – we can make guarantees about fuel availability.’

When asked whether Aegean would be looking at opportunities thrown up by Malta’s decision, under pressure from the European Commission (EC), to open up its petroleum products market to competition, Leonard commented: ‘Malta is an interesting location; like other similar locations, it is

under consideration but we have made no decision at this point.’

Product development is also an area for potential growth. Last October, Aegean launched its own brand of marine lubricants. Alfa Marine Lubricants are currently manufactured in Aspropyrgos in Greece by an Aegean-related company purchased from Texaco (the company is also producing blends on Texaco’s behalf at the facility). In Singapore, the company is sourcing the product through a local manufacturer, and intends to market the product globally: ‘Anywhere you mention, I’ll say “yes” to,’ says Leonard.

So, what sort of a player will a post-IPO Aegean be? The main driver for its future success must be its ability to dovetail its impressive vessel acquisition programme with solid new business growth. The 2006 offering meant that it had to declare its hand over its future expansion plans, and its competitors will be ready to exploit any weak links in its strategy, such as vessel construction delays. However, in the early days of 2008, it appears to be in sound financial health, and, if the need should arise, most analysts agree that Aegean would have no trouble in securing new lines of credit. Balancing expensive acquisition costs with the imperative for a substantially greater market share is a tricky business, but here, at the beginning of 2008, Aegean’s foothold on the financial tightrope has yet to waver.


Spotlight on Turkey

The bunkering areas of Turkey can be divided into five regions: the Turkish Straits, the Marmara Sea,

the Aegean Sea, the Mediterranean and the Black Sea. However, the Turkish Straits and the Marmara Sea are the main bunkering centres, including the ports of Istanbul and Izmit Bay, and together account for approximately 95% of the total market.

The market is dominated by the port of Istanbul due to its location in the Turkish Straits, through which 50,000 ships pass annually, and about 30% of these take on fuel in Istanbul. Ships have to wait for clearance in order to pass through the Strait, and this is one of the reasons they will often choose to take on fuel from Istanbul’s terminals, rather than another Turkish port or the main foreign competitor port – Piraeus. There are seven physical suppliers in Istanbul. Five supply both fuel oil and marine gasoil (MGO) and together account for more than 80% of the total Istanbul market of about 1.5 million metric tonnes (mt) a year. The remaining suppliers only deliver MGO. Istanbul suppliers obtain the vast majority of their fuel from a local refinery producing straight-run, low-density, low sulphur, high-quality fuel oil. Blending is normally done ashore rather than on the barge.

Most players agree that the Turkish bunker market as whole has been expanding for the last two years, and is continuing to do so. As a result, one supplier pointed out, a more realistic figure for current annual fuel sales would be about 1.75 million mt.

Izmit Bay is also a growing bunkering area, attributable to a thriving automobile importing industry and the ability for ships to take on bunkers while working cargo.

The vast majority of Turkish suppliers make deliveries by barge. Turkish regulation requires a pilot and tugboat for all barges over 1,000 gross tonnes (gt), and consequently most barges are below this limit. Another factor inf luencing the presence of smaller barges is that Turkish regulations do not allow for ‘milk run’ deliveries, whereby more than one ship is supplied before returning to the supply point. Barge rates for bunker deliveries in Istanbul and Izmit Bay increased from January this year as a response, suppliers have said, to ‘increased

bunker and running costs’. The new rates are: $750 lump sum for MGO deliveries (up from $500); $1,500 lump sum for fuel oil (up from $1,000); a $1,500 lump sum for fuel oil and MGO deliveries (up from $1,000).

Many suppliers have complained about excessive bureaucracy within the Turkish bunkering industry, and all suppliers have had to obtain licences from the Energy Markets Regulatory Authority (EMRA) since 2004. Suppliers have to send monthly statistical reports to the EMRA, and currently pay a turnover tax of about 50 cents per tonne.

The Turkish Bunker Association (TBA) brings together the key players in the industry, and organises the International Bunker Conference (IBC), last held at the Istanbul Ritz-Carlton in 2006. The next IBC is scheduled for 2009 so as not to coincide with the Posidonia shipping conference to be held in Greece this year.

Due to the new European Union (EU) regulations requiring ships to burn fuel of less than 0.1% sulphur when in port, many Turkish suppliers have started to supply low sulphur MGO to ships destined for EU ports. However, traders say that supply is not currently sufficient to meet demand.

The main players in the market are Anadolu (formerly known as Baytur), Petrol Ofisi, Energy Petrol, CYE Petrol, TBS, Lukoil and Oil Trade.

Anadolu is a key player in the Turkish bunkering market. The company is a physical supplier in Istanbul and trades in all other Turkish ports. Anadolu can supply the main grades of fuel oil – 180 and 380 centistokes (cst) – and MGO by barge from the ports in the Turkish Straits and the Marmara Sea, and can arrange deliveries of MGO elsewhere by road tank wagon (rtw). The company can currently supply 0.2% sulphur MGO, and is planning to supply 0.1% sulphur fuel in the near future. Anadolu currently has 10 barges, and is expecting an addition to its f leet, the Bogazici 15, at the start of 2008. Its 29,000 deadweight tonne (dwt) f loating storage tanker MT Selin K, located in Istanbul, allows for prompt supply around the clock. Anadolu’s product is sourced from Russian ports in the Black Sea.

Petrol Ofisi is another key player, and

David Waterman reviews the key players and supply

centres of the Turkish bunker market

Country


Spotlight on Turkey

currently supplies in Istanbul, Izmit Bay in the Turkish Straits, Izmir in the Aegean (also known as Nemrut Bay), Antalya on the Mediterranean and Trabzon in the Black Sea.

In 2006, Petrol Ofisi opened a terminal in Canakkale (on the Aegean) to provide an alternative supply point to Piraeus for vessels waiting to pass through the Dardanelles. However, the company has since informed Bunkerspot that the terminal will be closing due to bad weather conditions that have not allowed for safe barging.

In January, Petrol Ofisi opened a new terminal in Iskenderun on the Mediterranean. The Iskenderun project was initiated to meet extra demand created as a result of opening of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the extra traffic it generates. Petrol Ofisi has 380 cst fuel oil and MGO available from the new terminal, supplied by two of the company’s 13 barges which have been moved down from Istanbul.

Petrol Ofisi is also planning to build a refinery in the Iskenderun region, and has applied for a licence to begin construction.

Petrol Ofisi supplies the main grades of fuel in Istanbul, and has also started to sell 0.1% sulphur MGO. Its new jetty at the Haramidera terminal, which had not previously been used for bunkering, was finished in November 2007. Because the terminal is only about seven kilometres (km) from the supply point, deliveries can be made at very short notice. Petrol Ofisi keeps physical stocks all around Turkey to ensure efficient delivery. For example, it maintains a supply point in Trabzon, rather than fetching the fuel from Istanbul. The company is a major player in the

wider energy sector and is one of Turkey’s largest corporations, a factor that gives it a competitive edge in the marine fuel market.

Energy Petrol supplies at Istanbul and the main Marmara and Black Sea ports. The company operates seven barges, including the biggest in the Istanbul area – the 1,650 dwt Atam. Energy Petrol supplies about 1,650 ships per year, keeping about 14% of the market. It sources its product from Turkish refineries which, the company says, are ‘known for their high quality straight-run fuel’. The company can supply all grades of fuel oil and MGO, and received its f irst cargo of 0.1% Sulphur MGO in mid-January. Energy Petrol’s founder, Mustafa Muhtaroglu, was the founding chairman of the TBA, is a council member of the International Bunker Industry Association (IBIA), and an assembly member of the Turkish Chamber of Shipping – the most powerful semi-official body in Turkish shipping.

CYE Petrol has a similar market share to Energy Petrol. It can supply all grades of fuel oil from 30 cst to 380 cst and MGO from Istanbul and Izmit Bay. The company makes deliveries using three time-chartered barges, and sources its product from ports on the Black Sea.

TBS is a joint venture between Turkish oil company OPET and Danish supplier O. W. Bunker, and also has a similar market share to Energy Petrol and CYE Petrol. The company supplies all the main grades of fuel oil and MGO in Istanbul, Izmit Bay, Izmir, and Antalya. The supplier started to sell 0.1% sulphur MGO at the beginning of 2008. TBS sources its product from Tupras, a previously state-run refinery that has recently gone through privatisation and is now under the same group as TBS. The company’s General Manager, Sibel Buyuk, is the former Chairperson of the TBA.

Oil Trade only supplies MGO and operates in Istanbul and Izmit Bay. The company makes deliveries using five chartered barges. Product is sourced from Russia. Oil Trade currently sells about 64,000 mt of fuel oil a year.

Lukoil also supplies in Istanbul and Izmit Bay and up until 2007, when the company started branching into fuel oil, also only supplied MGO. The company has 10 barges

Port / Region Bunker suppliers Grades of fuel available Supply infrastructure

Istanbul / Turkish Straits

Anadolu, Petrol Ofisi, Energy Petrol, CYE Petrol, TBS, Lukoil and Oil Trade

IFO 30 cst - 380 cst, MGO, limited 0.1% sulphur MGO

Barge

Izmit Bay / Marmara

Anadolu, Petrol Ofisi, Energy Petrol, CYE Petrol, TBS, Lukoil and Oil Trade

IFO 30 cst - 380 cst, MGO, limited 0.1% sulphur MGO

Barge

Izmir / Aegean Petrol Ofisi, TBS, As-Mira IFO 180 - 380 cst, MGO, limited 0.1% sulphur MGO

Barge, rtw

Antalya, Mediterranean

Petrol Ofisi, TBS, As-Mira IFO 180 - 380 cst, MGO, limited 0.1% sulphur MGO

Barge, rtw

Iskenderun / Mediterranean

Petrol Ofisi IFO 380 cst, MGO Barge

Trabzon / Black Sea Petrol Ofisi MGO Rtw

Key: cst= centistoke; mgo=marine gasoil; mdo= marine diesel oil; mt = metric tonne; rtw = road tank wagon

‘Petrol Ofisi is planning to build a refinery in the Iskenderun region, and

has applied for a licence to begin construction’

Spotlight on Turkey

in the Turkish market, and sources its product from its own refineries in Russia. Lukoil told Bunkerspot that MGO supplies are significantly affected by the seasons, and prices become less competitive in winter when Russian ports become less accessible. Lukoil will deliver fuel all year round – even on national holidays if orders are placed in advance. The company currently commands about a 20% share of Turkey’s MGO market, and says one of its main goals for the future will be to increase its share of the fuel oil market.

AS-Mira Petrol Ltd is both a local supplier and trader. The company makes deliveries at Canakkale on the Aegean, Antalya on the Mediterranean, and at all ports and marinas in between these locations. The company can supply the main grades of fuel oil and MGO, and is now supplying 0.1% sulphur MGO as well. AS-Mira can

make deliveries by one of its two barges or by road tank wagon (rtw), and sources its product directly from the Tupras refinery in Aliaga, on the Aegean.

The Tupras refinery prepares fuel oil products for each individual vessel, blending and heating each order to the required specification. AS-Mira says that this makes its product the best quality in the region. Its two barges, M/T AS Yakit-1 and M/T Aslan-3, can load up to 185 mt of fuel oil and 150 mt MGO; and 250 mt fuel oil and 100 mt MGO, respectively. AS-Mira took over bunkering operations from its parent company, AS-Yakit, which now supplies to the domestic market. In total, the company has 29 years of bunkering experience.

There are a multitude of traders in the Turkish market, but some of the main players are the representative offices of international trade houses, including

Bridge Oil, World Fuel Services, and Bunkers International. Most traders arrange deliveries in all Turkish ports.

Bridge Oil is one of the leading traders in Turkey, selling approximately 400,000 mt of fuel annually. The company is also Istanbul’s oldest trader, and this year will be celebrating its 20th anniversary in the Turkish market.

World Fuel Services operates in Turkey through Tramp Oil, which joined the group three and a half years ago.

Smaller traders include companies such as A&B Petrol, ACT Petrol Ltd, Balkan and Black Sea Shipping Company, Force Twins Shipping Ltd, Istanbul Bunkering & Shipping Ltd, Oran Bunker Ltd, Sima Petrol Ltd, and Triton Marine Fuels Ltd. Brokers include Kaynar Industry and Foreign Trade Co. Ltd.

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Environmental Issues

On 15 December, the world’s f irst commercial cargo vessel equipped with additional

propulsion by a SkySails-System was ceremonially christened by Eva Luise Köhler, wife of the German Federal President, at the Landungsbrücken in Hamburg.

With all components of the towing kite propulsion system installed on deck, the 133 metre (m) Multi Purpose Heavy Lift Carrier MS Beluga SkySails, belonging to the Bremen-based Beluga Group, was now ready to set sail for the very first time. This marked an important milestone in the use of sustainable propulsion technologies at sea.

It is a simple fact: wind is cheaper than oil and the most economic source of energy on the high seas. However, shipping companies have not been taking advantage of this attractive savings potential because, until now, no sail system has been able to meet the requirements of today’s maritime shipping industry.

Now for the first time, SkySails is offering a wind propulsion system based on large towing kites which meets all these requirements.

Depending on the prevailing wind conditions, a ship’s average annual fuel costs can be reduced by 10% to 35% by using the SkySails-System. Under optimal wind conditions, fuel consumption can temporarily be cut by up to 50%. This allows enormous amounts of expensive oil to be saved, conserves petroleum resources as they become ever scarcer in the future and simultaneously reduces climate-damaging emissions.

Reliable, high-performance technologyThe SkySails-System consists of three simple main components: a towing kite with rope; a launch and recovery system; and a control system for automatic operation.

Instead of a traditional sail f itted to a mast, SkySails uses large towing kites for the propulsion of the ship. Their shape is comparable to that of a paraglider. The technical possibilities resulting from the spatial separation of the ship and the ‘sail’ or towing kite give SkySails an entirely new performance spectrum: high performance, high practicability, high safety.

The tethered f lying SkySails can operate at altitudes between 100 m and 300 m, where stronger and more stable winds prevail. By means of dynamic f light manoeuvres, e.g. the figure of eight, SkySails generate two to three times more power per square metre (m2) sail area than conventional sails. It is thus possible to gain significant savings by using comparatively small sail areas.

The launch and recovery system manages the automatic deployment and lowering of the towing kite and is installed on the forecastle. During the launch, a telescopic mast lifts the towing kite, which is reefed like an accordion, from its storage compartment. When it reaches a sufficient altitude, the towing kite then unfurls to its full size and can be launched. A winch releases the towing rope until operating altitude has been reached. The recovery process is performed in reverse order. The entire launch and recovery procedure is carried out automatically and typically takes between 10 and 20 minutes.

The ship’s crew can operate the SkySails-System from the bridge. Launch and recovery as well as emergency actions can be initiated at the push of a button. The SkySails’ automatic control system performs the tasks of steering the towing kite and adjusting its f light path.

All information on the operation status of the system is displayed in real-time on the monitor of the SkySails control panel and is thus easily accessible for the crew.

Their double-wall prof ile gives the SkySails towing kites aerodynamic properties similar to the wing of an aircraft. Thus, the SkySails-System can operate not just downwind, but at courses of up to 50° to the wind as well.

The textile towing kite is easy to stow when folded and requires very little space onboard ship. A folded 160 m2 SkySails, for example, is only the size of a telephone booth. In contrast to conventional sail propulsions, the SkySails-System has no superstructures which may obstruct loading and unloading at harbours or navigating under bridges. Furthermore, the heeling caused by the SkySails-System is minimal and virtually negligible in terms of ship safety and operation.

Due to the compact and universal design, virtually all seagoing cargo ships can be

Stephan Wrage is the chairman of the SkySails executive board and is in charge of sales, public relations, investment relations and business development. SkySails is developing, producing and selling an internationally-patented wind propulsion system based on large towing kites. SkySails believes that its technology will enable ship operations to ‘become more profitable, safer, more sustainable and more independent of declining oil reserves’.

Contact:Stephan WrageSkySails GmbH & Co. KGTel: +49 40 702990Email: [email protected]: www.skysails.com

Stephan Wrage of SkySails argues that the

christening of the Beluga SkySails marked

a key milestone in the use of sustainable propulsion

technologies for the shipping industry



outfitted, or retrofitted, with the SkySails propulsion.

From vision to realityIn 2001, SkySails started with the development of the world’s first practicable towing kite propulsion system for commercial shipping. Then after five years of intense developmental work, the basic research and engineering was completed near the end of 2005. All essential system components successfully underwent trials off the coast of Wismar on the Baltic Sea aboard the 15 m testing platform Jan Luiken.

In early 2006, the final development phase prior to the market launch of the SkySails-System began on board the 55 m buoy-laying vessel MS Beaufort. By the end of 2006, SkySails had scaled the towing kite’s area on this ship all the way up to 160 m2. This marked the first time that the SkySails-System aboard the Beaufort had reached full-scale size.

SkySails was able to establish partnerships with innovative shipping companies at a very early stage. A very close cooperation and

exchange with these potential customers throughout the research and development (R&D) process helped in identifying the particular conditions and demands of the maritime industry concerning an alternative propulsion technology. These insights made it possible for SkySails to develop a custom-tailored technology which meets all requirements of modern shipping.

Beluga Shipping – renowned in the industry as a very innovative company, being willing to leave the beaten path in order

to test promising new technologies and approaches – has been one of these valuable partners throughout the development process and was the first company to sign a sales contract for the system.

As a pilot customer, Beluga Shipping will employ the system during regular shipping operations and gain thorough and detailed practical experience in using it. These experiences and lessons learned by the pilot customers will then f low into the process of optimising the SkySails propulsion for series production. The pilot customer phase, starting with the maiden voyage of the MS Beluga SkySails, thus marks the last step before the start-up of series production of the SkySails-System for cargo ships in 2008.

Given that the SkySails-System demonstrated its suitability for regular shipping operations during the pilot test phase, Beluga Shipping wants to equip more of its currently 47 cargo vessels with the towing kite propulsion. The company already plans on installing the system on two larger vessels currently under construction.

Interest among shipping companies

‘The pilot customer phase starting with the maiden voyage of the MS Beluga SkySails thus marks the

last step before the startup of series production of the SkySails-System for cargo

ships in 2008’



operating cargo vessels is steadily increasing. In addition to the Beluga Group from Bremen, numerous other shipping companies plan to equip one or more of their vessels with SkySails propulsion. This group includes – among others – the shipping companies Wessels and Jüngerhans.

At this stage, SkySails is evolving from an R&D-based technology venture into a manufacturing business company. SkySails has set itself ambitious production goals for the next few years and is now laying the required foundations. Currently, the manufacturing capacity and logistics are being established. This process also entails continual corporate growth: SkySails

presently has 48 permanent employees at its locations in Hamburg and Wismar and plans to employ around 70 members of staff, mainly engineers, by the end of 2008.

After completion of the pilot phase and start-up of series production, R&D work will focus on advancing the technology and increasing its performance. The towing kites for cargo vessels currently offered by SkySails have an effective load of between eight and 32 metric tonnes (mt). The scheduled product programme comprises towing kite propulsion systems with an effective load of up to 250 mt. The system will thus be further scaled up to these sizes within the next few years.

Climate protectionDue to its universal and compact design, virtually all sea-going cargo vessels can be retro- or outfitted with the SkySails propulsion. The SkySails-System can be installed on newly-built ships as well as on existing ships without extensive modifications. The vessels best suited for using the system are cargo ships with an average cruising speed of under 18 knots, as well as super yachts and fish trawlers of over 24 m in length.

This opens up an attractive market for the SkySails-System: Some 60,000 (e.g. bulk carrier, tanker, multipurpose vessels, etc.) of the approximately 100,000 ships world-wide listed in Lloyd’s Register and about 1,100 of the 1,900 newly built vessels joining the world’s merchant f leet each year are predestined to be outfitted with SkySails propulsion.

SkySails has set itself ambitious production goals for the next few years, planning to equip 1,500 ships by the year 2015, and thus it has the potential to make a major contribution to curbing climate change. The systematic and world-wide use of SkySails technology would make it possible to save over 146 million mt of CO2 a year, an amount equivalent to about 15% of Germany’s CO2 emissions.

It is SkySails’ objective as a company to be an example for how working with nature – and not against it – makes business success possible, for its customers and SkySails alike.

By harnessing the most economic and environmentally sound source of energy available on the high seas, the SkySails-System thus provides a very attractive alternative for shipping companies addressing both economic and environmental considerations.

‘The systematic and world-wide use of SkySails

technology would make it possible to save over 146

million tonnes of CO2 a year, an amount equivalent to about 15% of Germany’s

CO2 emissions’



Now that the Baltic and North Sea / English Channel Sulphur Emission Control Areas

(SECAs) are in force, and land-side caps on sulphur emissions have tackled the initial problem of acid rain and deforestation in northern Europe, the concept of more SECAs might already be dead, with smaller, local or regional regulations used instead in coastal areas.

Sulphur was once the ‘beast’ in air emi-ssions, with acid rain causing deforestation in Europe and Scandinavia. However, it now appears that particulate matter (PM) is becoming the main environmental issue. It must be remembered, though, that sulphur emissions are also a PM issue. It is difficult to reduce PM in diesel emissions with sulphur in the fuel, and diesel particulate matter (DPM) is now seen as a serious health issue in ports and in populated areas close to dense shipping activities.

Nitrous oxides (NOx) are also contributing to local air quality issues although reductions in NOx levels tend to lead to reduced engine eff iciency. The trade-off between NOx reduction and increase in carbon dioxide (CO2) must thus be considered. CO2 is now a global issue and should not be addressed from a local perspective. Solutions should be sought globally, via the International Maritime Organization (IMO).

The current process taking place at the IMO to revise MARPOL Annex VI has several possible outcomes. The Chairman of the Working Group for air emissions at Bulk Liquids Group (BLG) 11 said that he could see two very different ways forward. These were either a global uniform distillate fuel requirement with a sulphur limit of 1%, or a differentiated requirement with stringent sulphur limits close to populated areas and more lenient requirements on the high seas.

The Secretary General of the IMO, Efthimios E. Mitropoulos, has instructed a group of experts to review the effects of the various proposals on the table. We contend, however, that one global fuel standard will not satisfy local regulations already existing in different parts of the world. A.P.Moller-Maersk is therefore supportive of the US and Baltic and International Maritime Council (BIMCO) conceptual approach to sulphur reductions in line with the statements from the World Shipping Council.

One might wonder where the next SECA will be designated, but may also wonder if the SECA concept is already dead. The requirements for the designation of a SECA are very stringent and tough to meet, and there is a tendency to adopt SECA-like requirements in local legislation. However, there are many areas that suffer serious air quality issues but which do not suffer from direct sulphur-related effects, and therefore their problems are not necessarily associated with sulphur emissions.

The Baltic and North Sea/English Channel SECAs will stay in place while the concept of coastal zones, close to populated areas, or mini-SECAs, may well be adopted in the revised version of Annex VI.

A differentiated approach to sulphur emissions will require either using low sulphur fuel or by scrubbing in reduction zones.

Is fuel switching the right way to reduce sulphur emissions? A.P.Moller-Maersk believes that a cost/benefit analysis is the right way to determine which is the right solution. Shipowners should have the freedom to choose amongst the various emissions-reduction options to reach their goals.

The disposal of waste water from scrubbers remains an open issue. As the expectations for sulphur reduction in ports is now very high and the criteria for waste water handling remains uncertain, A.P.Moller-Maersk believes that fuel switching is the only viable solution in the short term. However, we should never rule out technology advances in abatement techniques.

The usage of distillate fuels with maximum 0.1% sulphur will be required in European Union (EU) ports and in Californian waters from 2010, then perhaps also in designated coastal areas, especially near ports, from 2011 – this remains a question mark.

What then is the big deal about switching fuels? In ‘the old days’ diesel engines ran on diesel oil. Later on, residual fuels evolved as bunker fuels, but for safety reasons, they were only used at sea. One might argue that not switching fuels was a safety concern.

As technology evolved, shipowners learned how to operate their engines on residual fuels all the time. A generation has now lapsed and with that has gone the knowledge of good practice that had been built up. Today we hear many statements about the safety concerns associated with switching fuels. However, the

Lars Robert Pedersen of A.P.Moller-Maersk looks

at the operational and regulatory issues resulting

from the requirement to use low sulphur distillate

fuels

Lars Robert Pedersen is Director of Regulatory Affairs for A.P.Moller-Maersk,

Contact:Lars Robert PedersenA.P.Moller-MaerskTel: + 45 3363 4482Email: [email protected]: www.maersk.com


industry should not ‘cry wolf ’ on issues such as this because it is something which we know how to tackle and overcome.

From an operational viewpoint, the temperature gradient during the change-over from residual fuel to distillates is critical. No heating whatsoever may be applied to the distillate fuel to ensure lubricity. Standard procedures for switching fuels are contained in all engine builders’ operations manuals.

In California, all A.P.Moller-Maersk container vessels are now switching to 0.2% sulphur distillate on both main and auxiliary engines, 24 nautical miles (nm) from port. This initiative started in March 2006. The company estimates that this alone cuts around 400 metric tonnes (mt) a year of emissions of NOx, SOx and PM. The process is fairly easy to implement, not least because the ships already carry distillate fuels. So far, no serious issues have been observed in terms of engine

operations. As far as we are concerned, this is a test to prove that fuel switching is an option that is available to help reduce air emissions. It is also an alternative to the practice of ‘cold ironing’, which does not necessarily work for everyone. We question the cost-effectiveness for ocean-going ships compared to on-board solutions.

Fuel switching is a mobile solution which travels with the ship and can be deployed anywhere the ship goes.

Also the fuel itself poses challenges when it comes to compliance with sulphur limits. There are a number of important issues that now need to be adhered to: ● Bunker Delivery Notes (BDNs) must be

Annex VI compliant; every supplier must sign the MARPOL sample

● Port State Control must take ISO 4259 into account when judging if an owner is in compliance or not

● the fuel oil suppliers shall set blending targets using ISO 4259; the sulphur limit is a critical limit and the supplier should guarantee compliance

● and we have to remember that exceeding the sulphur limits as proscribed in MARPOL Annex VI and EU Directive 2005/33/EC is a breach of environmental laws. In some countries this is now a criminal offence.

As a major shipping company, A.P.Moller-Maersk does not support one global fuel standard as the answer to air emission reductions. We do not consider fuel switching to be a safety issue that cannot be managed, and we believe in mobile solutions which are independent of shore-side infrastructure. The sulphur limit is critical to operational compliance and fuel suppliers should guarantee the limit of sulphur in the fuel they supply by utilising the advice in ISO 4259 as intended.



Regardless of where one stands on the subject of climate change, we are all

impacted by rising energy prices and our dependence on foreign oil. Since carbon-based energy fuels our economy and carbon dioxide (CO

2) is the by-product, any effort to reduce fuel use will also reduce greenhouse gas emissions. Further reductions in fuel use can also reduce nitrous oxide (NOx) and particulate matter (PM) emissions. Saving fuel, therefore, is a win-win position both for the economy and for the environment. The freight sector is a significant contributor to greenhouse gases, and it is imperative that industry’s logistics and supply chain sectors become involved in environmental awareness. As logistics and supply chain professionals, we can be a significant part of the solution and also help to make our businesses more profitable.

Sharp Corporation ( Japan) and Sharp Electronics USA are working with members of the environmental supply chain community to confront these areas of environmental concern. With its headquarters in Osaka, Japan, Sharp is working towards being an environmentally green company and has introduced what it calls a ‘Super Green Strategy’. All Sharp manufacturing sites have gained ISO14001 Environmental Management System certification and the corporation has established intra-company guidelines for the production of environmentally-conscious product designs.

The company has embraced the philosophy of Environmental Supply Chain Planning which looks at the logistics and supply chain as it relates to the environment, and not just in terms of cost. It is looking at ways of reducing the movement of products by selling directly from factories; it is trying to use modes of transport which will result in the lowest attainable carbon footprint; and it asks its customers to consider combining orders or using weekly shipments where possible. Other corporate initiatives include the use of correct packaging to prevent product damage and subsequent return, and the implementation of a ‘planning from the right place’ concept which aims to reduce

inter-facility transfers.Sharp’s key environmental project,

however, is its participation in the SmartWay Program, a US Environmental Protection Agency (EPA) initiative which the company signed up to in 1994. The programme covers freight movement by truck, rail and sea, and was set up to establish incentives for fuel efficiency improvement and greenhouse gas emission reductions. By 2012, the initiative aims to reduce, between 33-66 million metric tonnes (mt) of CO

2 emissions and up to 200,000 mt of NOx emissions each year. It is also hoped that the scheme will result in annual fuel savings of up to 150 million barrels of oil.

Under the terms of the voluntary programme, freight carriers can apply to become a SmartWay Transport Partner, and shippers then pledge to use SmartWay carriers. In signing up to the programme, carriers must measure their current environmental performance using the SmartWay Transport Fleet Logistics Energy and Environmental Tracking (FLEET) Performance Model for carriers and then commit to improving their performance within three years.

In return, shippers must then assess the current proportion of goods dispatched with SmartWay Transport Partner Carriers using the FLEET Performance Model for Shippers. This model allows a company to quantify the percentage of freight they ship or receive with f leets that are members of the SmartWay Transport Partnership, and it also has the capability to help shippers estimate the CO2, NOx, and PM emissions generated from their entire shipping operations.

For shippers to become SmartWay Transport partners, they must commit to ship at least 50% of their goods using SmartWay carriers, and also assess and commit to improving facility transport emissions within three years.

For Sharp USA, its response to joining the SmartWay Program was to establish an action plan with goals which included having strict pick-up times on Less-Than-Truckload (LTL) shipments, implementing a no-idle policy on trucks when waiting to be loaded, and receiving Customs-Trade Partnership Against Terrorism (C-TPAT)

Mark Servidio, VP, Logistics and

Environmental Supply Chain Planning for Sharp

Electronics USA, and Buddy Polovick of the US

Environment Protection Agency, extol the virtues for freight shippers and

carriers of signing up to the US SmartWay

Transport Program

Mark Servidio is Vice President, Logistics and Environmental Supply Chain Planning with Sharp Electronics Corporation. Sharp is a member of the US EPA SmartWay Program.

Contact:Mark ServidioTel: +1 201 529 9452E-mail: [email protected]

Buddy Polovick is the Chief Shipper Coordinator for the SmartWay Transport Partnership and is based at the National Vehicle and Fuel Emissions Laboratory, Ann Arbor, Michigan. He has worked for the US Environmental Protection Agency for 12 years within the Office of Transportation and Air Quality.

Contact:Buddy PolovickE-mail: Polovick.Buddy@epamail.

epa.gov Web: www.epa.gov/smartway


certification.For Sharp USA, the results of SmartWay

membership have been positive. In 2004/5, 28% of the 85 carriers it used were SmartWay members, and this had risen to 90% by 2006/7. Yet again, in 2004/5 33% of a total of 127,841 mt was shipped with SmartWay

carriers which rose to 98% in 2006/7. The adoption of a non-idle policy and increased usage of intermodal means of transport also resulted in a reduction between 2004-2007 of CO2 emissions (918.2 mt), PM (0.8 mt), NOx (18.5 mt), and a saving of 82,005 gallons of diesel fuel. Sharp also won the 2006 and 2007 SmartWay Excellence Award, the only shipper to have won it twice.

The next step is for more ocean carriers to sign up to SmartWay. This will require a commitment to using low sulphur bunker fuels and looking for other fuel improvements, as a well as a commitment to engine improvements such as the use of slide valves, fuel injection, and exhaust gas recirculation (EGR). A move to using scrubbers, catalysts, bonnets and other after-treatments should also be on the agenda, as

well as considering other innovations such as cold-ironing, speed reduction and hull coatings.

As a company, Sharp is receiving more and more enquiries from consumers asking what we are doing to address environmental issues. Some 52 freight shippers and 15 shipper-carriers have now signed up to the SmartWay scheme, and we must all be committed to finding long term solutions and introducing more sustainable operations. We would like to see a SmartWay transport programme introduced across the European Union (EU), but it is important that companies aim to exceed the current requirements which have been mandated and that they realise that their competitors are also aware of these issues so that they must take a lead in tackling environmental concerns in order to stay ahead.

‘Some 52 freight-shippers and 17 shipper-carriers

have now signed up to the SmartWay scheme, and we must all be committed to

finding long term solutions and introducing more

sustainable operations’

Progress steered by experience Sin Soon Hock Sdn Bhd (198240-P) 2-7-23 Harbour Trade Centre. Gat Lebuh Macallum, 10300 Pennang. Malaysia.

T: +604-2626028/2626029 F: +604- 262 2915/264 3025 E : [email protected]

S i n S o o n H o c k S d n . B h d . i s a f u l l y - i n t e g r a t e d m a r i n e L o g i s t i c s s e r v i c e c o m p a n y p r o v i d i n g v a l u e - d r i v e n s e r v i c e s t h a t g o f a r b e y o n d m e r e t r a n s p o r t a t i o n . F o u n d e d i n 1910 , S i n S o o n H o c k S d n . B h d . h a s r i s e n t o t h e t o p o f i t s f i e l d b y d e v e l o p i n g i n n o v a t i v e s e r v i c e s a n d s o l u t i o n s t h a t p u s h t h e s t a t e o f t h e a r t . F r o m a s t r o n g f o o t h o l d o n l o c a l s h o r e s , w e a r e a d v a n c i n g i n t o i n t e r n a t i o n a l m a r k e t s t o e m e r g e a s a m a j o r g l o b a l p l a y e r .To f u l f i l l t h i s v i s i o n , w e a r e f o c u s e d o n c o n s o l i d a t i n g o u r c o m p e t e n c i e s f o s t e r i n g i n n o v a t i o n s , a n d o f f e r i n g s e r v i c e s & s o l u t i o n s t h a t s e a m l e s s l y c o m b i n e o u r e x p e r t i s e a n d e x p e r i e n c e i n m a r i n e l o g i s t i c s .O u r d i v e r s e f l e e t i n c l u d e s t h e A n c h o r H a n d l i n g Tu g ( A K T ) , d u m b b a r g e , o i l b a r g e , w a t e r b a r g e , p o n t o o n , p a s s e n g e r b o a t s a n d o i l t a n k e r s w h i l e o u r c o m p r e h e n s i v e r a n g e o f c o r e s e r v i c e s i n c l u d e s ;• M o v i n g o f d r y a n d l i q u i d b u l k s i n i n t e r - m o d a l o r m u l t i m o d a l m o d e • S u p p l y o f f u e l s• B u n k e r i n g • S h i p c h a n d l e r i n g • S h i p c h a r t e r i n g • D r y d o c k i n g • R e p a i r & m a i n t e n a n c e f o r a w i d e a r r a y o f v e s s e l s • Va r i o u s t u g a n d b a r g e s e r v i c e s • O f f s h o r e t r a n s p o r t a t i o n a s s o c i a t e d s e r v i c e s • M a r i n e e n g i n e e r i n g w o r k s


Alternative Fuels

Natural gas provides an abundant source of energy, with an estimated 6,000 trillion cubic

feet of reserves in the world. With increasing pressure on oil reserves, rising crude prices, desires for energy security and concerns over greenhouse gas emissions, natural gas would make an attractive alternative to petroleum in many transport sectors. Composed primarily of methane, it produces significantly lower levels of nitrogen oxides (NOx), sulphur oxides (SOx), and particular matter (PM), as well as reducing carbon dioxide (CO

2) emissions.

As far as liquefied natural gas (LNG) is concerned, applications to the marine sector have been limited, primarily because the gas has to be kept at a very low temperature (-160ºC) which demands heavy containment tanks and insulation. This, in turn, requires regular refuelling. Consequently, in its natural state, methane gas has not been an attractive alternative fuel to most large-scale shipping.

As stated in previous Bunkerspot articles about alternative fuels, any new fuel would have to solve the supply-and-demand (or chicken-and-egg) problem in order to be taken up by f leet owners (see Bunkerspot, December/January, page 40). Any alternative fuel would not only have to be cost effective, but would have to work as direct replacement for the petroleum products that fuel the compression ignition (CI) engines used in the vast majority of ships. Furthermore, in order to facilitate the gradual introduction of a new fuel, it would have to blend well with existing marine fuel.

Gas-to-Liquids (GTL) fuel goes at least some way to meeting these demands. The process, discovered by German professors Franz Fischer and Hans Tropsch in the 1920s, uses ‘syngas’ (short for synthetic gas) which can be produced from hydrocarbons such as natural gas. This syngas is then converted into longer chains of hydrocarbons such as kerosene or diesel. In the latter case, the end product is a crystal-clear gasoil of exceptional quality that can be used in conventional CI engines with no adjustments needed. Syngas – and therefore synthetic diesel – can be produced from many other different sources, such as biomass or coal. Indeed, countries

with huge coal resources such as China and the US are paving the way towards large-scale Coal-to-Liquids (CTL) production in order to provide greater energy security, and for this reason CTL production is expected to be much larger than GTL.

Although the end product is identical regardless of the feedstock, the cleaner the source of fuel, the cleaner the process will be. Biomass would provide one of the cleanest sources of synthetic diesel due to its carbon neutrality. In terms of fossil fuels, however, it is much easier on the environment to use a source like natural gas rather than a source such as coal.

GTL has the potential to be cost-effective because it can utilise remote supplies of natural gas that would otherwise require long-distance pipelines or conversion to LNG in order to reach markets. One third of the world’s gas reserves are considered to be stranded – if this were converted into liquids it would be greater in size than Saudi Arabia’s oil reserves.

Although there is no shortage of potential GTL fuel, the cost building of a commercial-scale GTL plant is vast. For example, ExxonMobil abandoned its 154,000 barrels a day (b/d) Palm project in Qatar because the estimated costs rocketed from an initial f igure of $7 billion to more than $15 billion.

At present, the main players in the GTL field are Shell and South Africa’s Sasol (the latter being supported by Sasol-Chevron). Both Sasol and Shell are developing GTL plants in Qatar with a 140,000 b/d, and a 34,000 b/d expected production respectively. There are also companies such as Syntroleum that are looking into integrated oil/GTL offshore f loating production vessels capable of utilising stranded gas that would normally be f lared-off in order to access the trapped oil below.

Shell built the world’s first medium-scale GTL plant in 1993 at Bintulu, Malaysia which has a capacity of 14,700 b/d. Blends of GTL fuel from this plant are already available to some automotive markets. Shell launched its V-Power Diesel in 2002, and it is now sold at more than 4,900 sites in Thailand and Europe.

Since GTL diesel can act as a direct replacement for petroleum diesel, it solves the chicken-and-egg issue by fitting in with

David Waterman looks at the potential of Gas-to-

Liquids as an alternative fuel for the shipping

industry

‘GTL has the potential to be cost-effective because

it can utilise remote supplies of natural gas that

would otherwise require long-distance pipelines or conversion to LNG in order

to reach markets’


Alternative Fuels

the existing supply infrastructure and it does not require additional storage facilities like LNG does. Furthermore, because of the greater stability of GTL fuel in comparison with conventional diesel, it can last in storage for at least two and a half years with no significant degradation.

Compared to petroleum diesel, the emissions from GTL diesel are much lower, with 6% less NOx, 26% less PM, 91% less carbon monoxide (CO), 63% less unburned hydrocarbons, and 1.5% less CO2. Taking into account the whole of the production processes, GTL diesel has the same carbon footprint as its petroleum counterpart, and the environmental benefits are focused on the other emission reductions. Because the fuel is virtually free of sulphur – less than 5 parts per million (ppm) – SOx emissions are effectively zero. This would have obvious advantages for the shipping industry, which increasingly has to meet limitations in NOx and SOx emissions.

According to Sasol-Chevron: ‘Most CI engines are not able to operate at maximum eff iciency due to emission limitations. Because of the emissions benefits associated with combustion of GTL diesel, it is possible to operate under a more efficient control strategy with the use of this fuel.’ Consequently, because of the reduction in NOx emissions from the use of GTL, it is likely that a ship engine using the fuel could be adjusted for better performance, while meeting the MARPOL Annex VI limits at the same time.

Adjusting the timing of an engine would also take full advantage of a GTL’s higher cetane number – which is more than 74, compared to around 40 for MGO. Although a high cetane number is no bad thing, it does mean that it is far more valuable as fuel for higher-performance vehicles. When Bunkerspot asked one marine fuel expert if the high cetane number would suit a marine fuel application, they replied: ‘Where do you want to go? The Moon!’ It seems that GTL may be simply too good to be sold on the usual bunker markets. All products in the bunkering industry are sold close to their specifications, and selling GTL at a similar price to standard MDO would be giving away quality free of charge.

What may be a much more appropriate use for GTL, in the marine context, is as a

fuel to be used in areas that demand more environmentally-friendly fuel than usual. GTL is non-toxic and readily biodegradable, and Sasol-Chevron told Bunkerspot that the damage caused by spilling the fuel at sea would be very limited. Furthermore, the reduction in emissions would make it ideal for areas that demand cleaner air. For example, effective from 1 January, ships operating in European Union (EU) territory are now required to use fuel with less than 0.1% sulphur content (see page 10). The International Maritime Organization (IMO) is also considering one option to reduce sulphur emissions which would introduce similar rules to be applied to coastal waters world-wide. GTL fuel, being virtually free of sulphur, would provide one way of meeting these requirements.

Currently, the main option for achieving these emission levels is ultra-low sulphur MGO (0.1%), which is currently trading at around $800 a metric tonne (mt). Both Shell and Sasol-Chevron have declined to provide any price indication of GTL fuel, and it can be assumed that its present production costs mean that it could not compete with MGO 0.1% in the near future. However, in the longer term, as more stranded gas reserves are utilised, GTL may be able to compete with MGO 0.1% in price and availability.

If not, GTL diesel may still serve a purpose as a blending component in the marine sector. According to Sasol-Chevron: ‘The properties of GTL diesel make it an ideal blending component to upgrade lower-quality middle-distillate streams to on-road diesel quality. This could be particularly valuable in Europe where ref inery configurations make upgrading these streams increasingly diff icult and expensive. On a volume basis alone, GTL will allow refiners to increase their diesel output’. Consequently, GTL diesel may become valuable as a blending component for MGO as a more cost-effective way of obtaining the low sulphur distillate required for use in areas such as the EU.

Sasol-Chevron told Bunkerspot that GTL fuel could theoretically be used as a cutterstock for fuel oil, as it could replace MGO in most applications. But it may be illogical to use such a high-quality distillate to blend with residual fuel, and the MGO application seems far more viable.

Shell has been conducting tests of GTL fuel onboard a ferry in the province of North Holland in the Netherlands. The tests, conducted in conjunction with New Energy Docks, represent the first maritime trial of GTL fuel, and were carried out on the vessel’s auxiliary engine using GTL diesel from Shell’s Bintulu plant. New Energy Docks told Bunkerspot that, aside from reductions in emissions, the test results showed lower operational cost, less engine pollution, and three decibels less noise. The next step is to test GTL on the ferry’s main engine, and the long term aim is to use biomass-to-liquids (BTL) fuel which will be produced by Choren in Germany later this year. International companies like Shell, Daimler and Volkswagen are key shareholders of Choren.

Clearly there are many benefits to using GTL diesel as an alternative fuel for the shipping industry; including its ultra-low sulphur content, biodegradability, and blending compatibility. But the availability of this super-fuel, at least for the foreseeable future, will remain limited. As an alternative to fuel oil, biodiesel would be much more viable in the short-term, being in much greater supply and sharing some of the benefits of GTL fuel (see previous article in the December/January issue of Bunkerspot).

If GTL did ever become widely available as a replacement for bunker fuel, it seems likely that ships’ CI engines could be adjusted to make best use of the fuel’s characteristics. But as with any new fuel, these settings would have to be approved by the International Council on Combustion Engines (CIMAC) before ship operators would start adjusting their engines. There would also need to be International Organisation for Standardisation (ISO) specifications before large-scale trading in GTL would take place in the marine market.

Although GTL could certainly be used as a direct replacement for MGO, GTL is a far superior product than any petroleum diesel. Consequently, GTL diesel is likely to go to other, more profitable sectors before bunker barges start supplying pure GTL. In the short-term however, there may well be potential for using the synthetic fuel as a blending component to obtain the 0.1% sulphur MGO that will inevitably be in high demand for years to come.


Events

FEBRUARYUNITED KINGDOM: Managing and Avoiding Bunker Claims7-8 February, LondonOrganised by Lloyd’s List Events at the Lloyd’s Maritime Academy, London. Contact: Maritime Customer ServicesTel: +44 20 7017 5511Fax: +44 20 7017 4745Email: [email protected]: lloydsmaritimeacademy.com/lm1980

UNITED KINGDOM: The IBIA Dinner 200818 February, LondonThe 14th annual International Bunker Industry Dinner takes place at the Hilton Hotel on Park Lane.Contact: Anne ChambersTel: +44 2380 226 555Fax: +44 2380 221 777Email: [email protected]: www.ibia.net

MARCHGREECE: The Piraeus Bunker Course 5-6 March, PiraeusTaking place at the Piraeus Marine Club, this information-packed training course focuses on fuel standards, sampling and treatment onboard, quality and quantity, credit analysis, commercial, legal and operational issues. The course provides a practical and ‘hands-on’ approach that encourages delegate participation and the sharing of individual experiences. Delegates will also witness a live bunkering operation. The course is organised by Petrospot Ltd and is led by Chris Fisher, Managing Director of Bunker Claims International. Contact: Luke Hallam EvansTel: +44 1295 814455Fax: +44 1295 814466Email: [email protected]: www.petrospot.com/events/piraeus

LATVIA: Biofuel – A New Market Niche13-14 March, RigaOrganised by Vostock Capital, this event takes place at the Reval Ridzene Hotel.Contact: Oksana Fedoseyeva Vostock Capital UKTel: +44 20 7394 3090Fax: +44 20 7231 1600Email: [email protected]: www.vostockcapital.com

LATVIA: Bunker Fuel Delivery Disputes Resolution13-14 March, RigaA workshop examining bunker disputes.

Organised by Vostock Capital.Contact: Oksana Fedoseyeva Vostock Capital UKTel: +44 20 7394 3090Fax: +44 20 7231 1600Email: [email protected]: www.vostockcapital.com

UNITED STATES: Shipping 200817-19 March, Stamford, ConnecticutPresented by the Connecticut Maritime Association, this major annual shipping event, held at the West Stamford Hotel, is entitled Four Virtues: People, Safety, the Environment and Profits. Contact: Lorraine Parsons, Event DirectorTel: +1 203 406 0109Fax: +1 203 406 010Email: [email protected]: www.shipping2008.com

APRILNETHERLANDS: Bunker Experience14-17 April, Vlaardingen, RotterdamOrganised by Vergo Consultancy at the Delta Hotel, Vlaardingen, this hands-on training course is limited to 18 delegates.Contact: Goris VermeulenTel: +32 484 168780Fax: +31 847 474573Email: [email protected]: www.bunkerexperience.com

MAYUNITED KINGDOM: The Oxford Bunker Course 12-16 May, OxfordThis highly-popular five-day intensive residential course covers technical, operational, commercial, financial and legal aspects of bunkering. Detailed case studies, demonstrations, lectures, practical exercises and discussion groups, plus comprehensive course literature, provide a thorough grounding in the industry. This course is also celebrated for its exceptional networking experiences.Contact: Luke Hallam EvansTel: +44 1295 814455Fax: +44 1295 814466Email: [email protected]: www.petrospot.com/events/oxford

UNITED STATES: Maritime Week Americas 2008 19-23 May, South Beach, Miami, FloridaThe inaugural Maritime Week Americas will feature a range of seminars, courses, and conferences, split into specialised streams covering bunkering operations, environmental, legal, commercial issues and maritime and port security. A substantial exhibition, port visits, and a spectacular networking programme offer unique

opportunities to meet the experts and to do business. Contact: Luke Hallam EvansTel: +44 1295 814455Fax: +44 1295 814466Email: [email protected]: www.petrospot.com/events/maritime

JUNEGREECE: Posidonia2-6 June, AthensEmail: [email protected]: www.posidonia-events.com

SEPTEMBERUNITED KINGDOM: The Oxford Bunker Course 8-12 September, OxfordA five-day intensive residential course covering technical, operational, commercial, financial and legal aspects of bunkering. Contact: Luke Hallam EvansTel: +44 1295 814455Fax: +44 1295 814466Email: [email protected]: www.petrospot.com/events/oxford

OCTOBERSINGAPORE: SIBCON 200815-17 October. Venue, programme and contact details to be finalised.

NOVEMBERSOUTH AFRICA: The IBIA Annual Convention 200824-27 November, Cape TownNow in its fifth year, the IBIA Annual Convention takes place at the Westin Grand Cape Town Arabella Quays Hotel. Comprising one- and two-day training courses, an exhibition, and an issue-led conference designed to spark discussion and debate, this is the only forum where your Association invites you to have your say. Organised by Petrospot on behalf of IBIA.Contact: Luke Hallam EvansTel: +44 1295 814455Fax: +44 1295 814466Email: [email protected] Web: www.petrospot.com/events/

To list details of bunker related events contact:Tel: +44 1295 814455Fax: +44 1295 814466Email: [email protected]

EuropeOceanConnect has opened an office in Hull, manned by Steve Wilson and Chris Todd. Contact: Ocean Connect UK Ltd, Kingston House, Priory Park, Saxon Way, Hessle, Hull HU13 OJL, England. Tel: +44 1482 628 160; Fax: +44 1482 629 209, Email: [email protected]. Wilson: Mob: +44 7795 325 459; Email: [email protected]. Todd: Mob: +44 7795 324 787; Email: [email protected].

KPI-Bridge Oil has bought London-based broker Davies and Newman Wake Ltd. Contact: KPI-Bridge Oil, 3rd Floor, 36 Broadway, London SW1H 0BH, England. Tel: +44 20 7799 4420; Fax: +44 20 7799 4421. Email: [email protected].

Intermediate Fuel Oil Ltd has moved to Ellesmere Coach House, Church Road, Wortham IP22 1PT, England. Contact: Charles Twitchen. Tel: +44 1379 890 440; Fax: +44 709 220 8615; Mob: +44 7766 683 101; Email: [email protected].

Anders Bønnelykke and Jeanette Jensen have joined A/S DAN-BUNKERING Ltd’s trading team in Middelfart, Denmark. Tel: +45 6441 5401; Fax: +45 6441 5301. Bønnelykke: Direct: +45 6421 5472; Mob: +45 6037 3936; Email: [email protected]. Jensen: Direct: +45 6421 54312; Mob: +45 6037 3959; Email: [email protected].

Jim Jensen has joined A/S DAN-BUNKERING Ltd’s trading team in Copenhagen. Tel: +45 3345 5410; Direct: +45 3345 5431; Mob: +45

3054 8935; Fax +45 3345 5411; Email: [email protected].

Michael H. V. Nielsen has joined A/S Global Risk Management Ltd, a subsidiary of A/S Dan Bunkering Ltd, as a Risk Manager. Tel: +45 8838 0005; Email: [email protected]. Robert Svarer Olsen has joined the company as an Oil Risk Manager. Tel: +45 8838 0011; Email: [email protected].

Thomas Worsoe has joined O.W. Risk Management in Copenhagen. Tel: +45 9812 7277; Direct: +45 3945 6052; Mob: +45 5116 6967; Email: [email protected] Kolff has relocated from O.W. Bunker (Netherlands) BV to O.W. Bunker Switzerland S.A. Tel: +41 22 839 4435; Mob: +41 79 289 0037; Email: [email protected].

Rakesch Muthreja has joined Wrist World Wide Trading GmbH in Hamburg as a bunker trader. Tel: +49 40 3255 900; Direct: +49 40 3255 9063; Mob: +49 1729 849 637; Fax: +49 40 330 471; Email: [email protected].

Patricia Gardet-Cadet has been appointed the European Sales and Marketing Manager of Chemoil Europe BV, a division of Chemoil Energy Ltd, in Rotterdam, the Netherlands. Tel: +31 10 292 9933; Email: [email protected].

Cem Ozoral of Istanbul-based Anadolu AS has been elected the new President of the Turkish Bunker Association. The new Board of Directors includes Yesim Muhtaroglu of Energy Petrol (Vice President), Sibel Buyuk of TBS (Secretary), Mustafa Yılmaz of Dto Petrol (Treasurer) and Mustafa Aslan of

Asmira Petrol (Member).

Mideast and AfricaInternational Bunkering (Middle East) DMCC,

part of Denmark’s A/S United Shipping

& Trading Co., has appointed Carsten K.

Ladekjær as Managing Director, replacing

Devedas Felix, who has resigned. Tel: +971

4 309 7933; Fax: +971 4 332 7460; Email:

[email protected].

Mlamli Figlan has joined O.W. Bunker South

Africa Pty Ltd in Cape Town as a bunker

trader. Tel: +27 21 425 6342; Mob: +27 836

339 374; Fax: +27 21 425 9080; Email: Mlfi@

owbunker.com.

Asia PacificJenny Hwang and Winter Shao have

joined A/S DAN-BUNKERING’s Shanghai

Representative Office as marketing

executives. Contact: Tel: +86 21 6135 2700;

Fax: +86 21 6135 2701. Jenny Hwang:

Direct: +86 21 6135 2704; Mob: +86 1502

1007 612; Email: [email protected].

cn. Winter Shao: Direct: +86 21 6135 2707;

Mob: +86 1502 1007 611; Email: WSH@dan-

bunkering.com.cn.

AmericasKeith Richardson, Managing Director

of Chemoil Latin America in Panama,

has relocated to Chemoil’s Americas

headquarters in San Francisco, working as

a trader. Tel: +1 415 268 2740; Email: Keith.

[email protected]. Richardson is

replaced in Panama by Andres Galavis,

previously of Petroleos de Venezuela SA.

Tel: + 507 265 5081; Mob: +507 6679 3374;

Email: [email protected].

Networking

To list details of bunker related moves contact: Tel: +44 1295 814455, Fax: +44 1295 814466, Email: [email protected]

MIAMI, FLORIDA, USA 19-23 MAY 2008

Outstanding Programme Exceptional Networking!

Maritime Week Americas 2008 is a major new event designed to draw together the key players in the marine fuels and maritime and port security sectors from within the Americas and beyond.

Don’t miss the comprehensive four-day programme of high-level workshops, sharply-focused seminars and unique training courses, together with a full conference programme covering bunkering operations, the environment, commercial issues, legal issues, and port and maritime security.

View full details & register online at: www.petrospot.com/events/maritimeFor further info either Call: +44 1295 814455 or Email: [email protected]


strap

An estimated 1.3 million tonnes of oil enter the sea worldwide each year through the combined

impact of natural seepage, extraction, transport and consumption. While the largest contributor is natural seepage, accounting for about 46%, the world is currently focusing on the increasing amounts of maritime traffic and oil exploration which are the most obvious causes of oil pollution through discharges and spills from ships, tankers and pipelines. While accidents will inevitably occur from time to time, the focus of this article is on combating oil pollution caused by possibly malicious actions.

There is a growing movement to work towards a global philosophy whereby the polluter pays to clean up any damage that may be caused to the environment. This has garnered the support of the major corporations who are concerned about issues of reputation as well as the triple bottom line and corporate social responsibility.

In this context, when BMT was asked to develop an ocean surveillance system for a client working in Indonesian waters, one of the key requirements was to implement a system which would pro-actively address issues of liability and reputation. Utilising Synthetic Aperture Radar (SAR) imaging, which is highly cost-effective and already in widespread use, the ocean surveillance service offers routine surveillance and analysis of the area in which the client is operating and is able to capture proof of the polluters and determine the causes of any oil spills in Indonesia’s West Java Sea.

Following an effective six-step methodology, BMT’s Ocean Surveillance system starts by planning the acquisition of imagery through the pre-programming of RADARSAT -1 (24 days cycle, all-weather imaging and day and night acquisition). It then downlinks the scenes and pre-processes the image data at RADARSAT -1 networked ground stations, after which Near-Real Time (NRT) data processing of data will recreate the scene before the information is analysed and interpreted. After conducting the interpretation and forensic analysis, the service database will be updated and maintained to include archives. Finally, profile reports will be provided

through Simple Messaging Service (SMS), email and a dedicated secure web service.

The deployment of the BMT surveillance system can enable polluters to be tracked down using the information provided by SAR imaging. The cost-effective provision of such information can also provide a knowledge base to support those who seek to discharge their corporate social responsibilities and those who wish to ensure compliance with the concept of ‘the polluter pays’

Another benefit of the system is that a profile report of the target area can be generated and forwarded to the client corporation thus allowing it to manage the information it has about the polluted area and, consequently, better manage its reputation and mitigate liability to protect its company brand.

Routine satellite oil pollution surveillance also offers environmental security and serves both public and private interests. If a report was forwarded to the relevant government, then the transgressors could be watched and they could be ordered to pay for their actions. This would be a model of fair application as it would raise awareness of the issue and encourage people to clean up their act voluntarily.

Over a period of 24 months, the system has proved to be so successful and able to deliver such high-resolution information, that BMT’s client has actually cancelled an existing contract for helicopter surveillance of their subsea pipelines. Apart from significant cost savings by using the satellite surveillance services, fuel consumption is reduced alongside carbon emissions, thereby cutting down on air pollution and saving energy.

BMT has also developed a ground-breaking technology oil spill model capable of predicting the movement, spreading, weathering and shoreline impact of spilt

John Williams outlines BMT’s environmentally-friendly approach to oil

spill detection

‘The deployment of the BMT surveillance system can enable polluters to be

tracked down using the information provided by

SAR imaging’

strap

oil under the inf luence of current f lows, meteorology and waves. The Oil Spill Information System (OSIS) has been developed by BMT and NCEC combining complementary expertise in spill behaviour, oceanography and marine systems development. Now in its latest version (4.0) the system is used worldwide by oil companies, national governments and response organisations for use in emergency response, planning and training.

Knowledge of the movement, behaviour and shoreline impact of an oil spill is fundamental to the planning of a successful response. The model builds on 30 years of research into oil spill behaviour in the laboratory and at sea, coupled with over 15 years of modelling experience. In emergency situations, ease of use and speed are paramount to enable a rapid

response. Its development has been guided by feedback from its extensive user base in marine terminals, offshore oil installations, oil spill response vessels and emergency response centres and has been used to aid the clean up of oil spills across the globe as well as aiding forward crisis planning.

The model is unique as it factors in a range of issues including:● trajectory, spreading, weathering and

beach impact models● stochastic modelling (wind rose and

time series modes)● true coastline and object beaching● spill move tool● automatic computation of tidal and

residual f low fields● differential particle size oil spreading● colour contouring of oil thickness &

dispersion● sub-sea dispersed oiling visualisation● dispersant use time windows

prediction● integrated database of international oil

types

Through the use of high-end technology, governments and the maritime industry are slowly getting to grips with issue of oil pollution – both accidental and intentional. As these technologies develop those who fail to maintain the highest of standards in the growing shipping traffic and oil exploration arenas will f ind themselves slowly pushed out of the market – and paying a high price for the failure to meet international standards.

‘Routine satellite oil pollution surveillance

also offers environmental security and serves

both public and private interests’

tribute to bob chandran: industry mourns chemoil founder · tribute to bob chandran llewellyn...

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