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New Maritime Fuel Rules: Industry Frets About Cost, Strategy, Supply

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There are studies and reports from classification societies, scientific organizations and governmental agencies assuring maritime industries that carbon-heavy fuel is peaking and will be replaced by 2050, if not by 2035, with zero carbon power alternatives. No question, they chorus, shipping can meet the IMO goals of a 50% reduction in 2008 levels of GHS by 2050.

But as the hot breath of various deadlines bear down upon them, with the 2020 sulfur cap in the forefront, ship owners, operators and financiers are starting to worry aloud.

Their unease is driven by several things: regulators’ banking on a belief that there will be as yet unknown discoveries that will provide solutions, a feared lack of infrastructure or supply sufficient to fuel eco-conscious vessels, and the financial burden of making the switch – especially if they choose the wrong strategy and or standards change down the road after they’ve committed to a solution. Oh, and those solutions will have to be geared to meet the demands of specific vessel categories, and increasingly, environmentally-conscious financiers who have requirements of their own in order to secure loans.
Among the complaints that have surfaced:

• Engine Failure: The potential for engine failure in hybrid vessels if fuels get mixed during the switch over.

• Scrubbers: One alternative to expensive low sulfur fuel, they are expensive themselves, don’t necessarily fully resolve or dispose of pollutants, and are seen as a short-term investment solution that will have to be replaced sooner than later.

• Limits: That some options under scrutiny today are limited to certain markets, can only be used in conjunction with another solution, and or are not powerful enough (i.e. batteries and fuel cells) to be used for anything beyond short-sea shipping or specific route-bound passenger vessels (ferries and tour boats).

• Cost: How they are going to pay for these upgrades and changes in fuel? And which solutions will investors and insurers favor – key in an industry running on multi-millionn dollar vessels with multi-decade lifespans that take multiple years to produce. And whose greatest expense currently is fuel.

One alternative to expensive low sulfur fuel, they are expensive themselves, don’t necessarily fully resolve or dispose of pollutants, and are seen as a short-term investment solution that will have to be replaced sooner than later.

• Limits: That some options under scrutiny today are limited to certain markets, can only be used in conjunction with another solution, and or are not powerful enough (i.e. batteries and fuel cells) to be used for anything beyond short-sea shipping or specific route-bound passenger vessels (ferries and tour boats).

• Cost: How they are going to pay for these upgrades and changes in fuel? And which solutions will investors and insurers favor – key in an industry running on multi-million dollar vessels with multi-decade lifespans that take multiple years to produce. And whose greatest expense currently is fuel.

Shipping giant A.P. Moller-Maersk A/S predicts the sulfur emissions cap will explode annual fuel costs industry wide by at least $50 billion. The company expects its share will total $2 billion in 2020, and it’s not willing to shoulder that cost alone. It plans to charge clients separately for fuel for the first time starting in 2020.

ING Bank announced that it will be looking to steer its clients and lending activities toward support for the Paris Climate Agreement’s “well-known below two-degree goal.” It will use a tool called the Terra Approach to measure “the needed shift in technology against the actual technology clients are using today and plan to use in the future.” ING says banks have a responsibility to finance “positive change,” and it plans to do just that, steering clients toward investments in environmentally-driven upgrades and strategies. Shipping, take note.  

And, throwing a possible monkey wrench into the move toward low-sulfur last month was a group of flag states and shipping organizations, including BIMCO, Intertanko, Intercargo, Panama, Liberia and some island states, who joined together to request a “test phase” be established before the implementation of the 0.5% cap on sulfur-carrying fuels for vessels without a scrubber system. They cite fuel safety and quality concerns.

Source:marinelink

Statkraft makes 132MW Brazilian hydro play

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Statkraft is to acquire eight hydro projects in Brazil totalling almost 132MW from EDP Energias do Brasil for an undisclosed price.

The projects, which are located in the state of Espirito Santo, will be taken over by Statkraft Energias Renovaveis, subject to regulatory approvals.

Statkraft executive vice president Jurgen Tzschoppe said: “This acquisition is a good fit with our strategy to build scale profitably in the markets where we are already present. ”

“It also positions Statkraft well for further development in Brazil, a key growth market for Statkraft.”

Statkraft owns 81% of Statkraft Energias Renovaveis with the Brazilian pension fund FUNCEF owning the remaining 19%. 

Statkraft Energias Renovaveis currently owns six hydropower plants and four wind farms.

In addition, Statkraft has a minority ownership in four other hydropower plants, for a total portfolio of 318MW in Brazil.

The acquisition of the eight hydropower plants will bring Statkraft's fleet in the country to around 450MW.

Source:renews

Tough road ahead for Chinese yards: Yangzijiang

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It has been 10 years since the onset of the 2008 global financial crisis, which also marked the start of a prolonged downturn for China’s once bustling and sprawling shipbuilding sector. Ren Yuanlin, executive chairman of Yangzijiang Shipbuilding, foresees that the outlook for Chinese yards will continue to be tough.

Between 2009-2016, more than 140 Chinese shipbuilding enterprises have shut down, while more than 90 others have merged or been acquired.

“Today, a mere 4% of shipbuilders in China account for 64% of newbuild orders,” Ren said in an interview. “More than 1,000 shipyards are still registered as being in business in China. But those that have done deliveries or won orders in the past one year number at just slightly more than 100. In my opinion, there are really only 30-40 active yards,” he said.

“These numbers will only shrink further. Many subsidiary yards of state-owned enterprises have merged; privately-owned yards are going through a consolidation phase.”

Ren recalled that Yangzijiang had acquired Changbo yard and Xinfu yard in 2010 and 2012 respectively, resulting in its bigger scale today.

The prospects for privately-owned Chinese yards are tough as the local market has always been dominated by the two giant state-owned enterprises – China State Shipbuilding Corporation (CSSC) and China Shipbuilding Industry Company (CSIC). There is now another heavyweight state-owned shipbuilder Cosco Shipping Heavy Industry established in December 2016.

In regional competition, Japan’s shipbuilding market still retains a reputation for quality even as the sector has weakened significantly. South Korea, on the other hand, continues to pose serious competition as the Korean government and banks are pumping in money to salvage the ailing shipbuilders, Ren said.

But the global shipbuilding market will continue to be concentrated in Northeast Asia, as Ren did not believe any sizable market share will shift back to Europe or to a new region such as Southeast Asia.

Ren pointed out that the weather of Southeast Asia is too hot which would raise operational costs. Southeast Asia also lacks a mature and extensive equipment supply chain, as well as a lack of business capital and labour.

Looking ahead, a near-term recovery for shipbuilding is unlikely. Rather, the market is much like in a ‘L’ shape – a stable weak market after the plunge. “We are unlikely to see another super peak, neither should we expect a further weakening of the market,” Ren observed. “Even though shipbuilding is a sunset industry now, the sun will never disappear on the market.”

Even as more shipyards are expected to exit, the fact is that shipbuilding capacity has not been drastically compromised. Ren said this is because the active yards have been upgrading and streamlining their operations to raise the efficiency of capacity output.

Yangzijiang, for example, had required two to three years to complete the construction of a 10,000-teu containership a few years ago. Today it only needs 12 months to finish the job, according to Ren.

He added that as long as the oceans do not dry up, there will be demand for ships and shipbuilding. Moreover, the shipping market is going through a technological transformation requiring more environmentally-friendly and bigger ships, leading to the phasing out of many existing vessels including those that have not reached the end of their operational lifespan.

Source:seatrade-maritime

Sovcomflot Tanker ‘Gagarin Prospect’ Successfully Completes First Commercial Voyage On LNG

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Sovcomflot crude oil tanker Gagarin Prospect, operating on LNG fuel, successfully completed her voyage across the Baltic and North Seas from Primorsk to Rotterdam where she safely delivered a cargo of 104,815 tonnes of crude oil. For the pioneering vessel, it marked her first export delivery of Russian crude oil under a long-term time-charter contract between SCF and Shell.

Gagarin Prospect is the world’s first Aframax crude oil tanker designed to operate on LNG as the primary fuel. She is the lead ship of the next generation of tankers, which will set a new standard of navigation safety and quality.

Switching to cleaner-burning LNG fuel allows Sovcomflot to significantly reduce its impact on the natural environment. This is particularly important for ships in high-traffic areas such as the Baltic and North Seas where these ‘Green Funnel’ tankers will primarily operate.

Sovcomflot is gradually switching its conventional tanker fleet from traditional heavy fuel oil to LNG. This is to reduce its environmental footprint and to comply with tightening sulphur and nitrogen oxide emissions regulations, including the IMO’s global 0.5% sulphur cap, which takes effect in 2020.

Tankers fuelled with LNG emit zero sulphur oxide (SOx) and particulates. They emit 76 per cent less nitrogen oxides (NOx) and 27 per cent less carbon dioxide (CO2), than similar vessels operating on heavy fuel oil.

Source:marineinsight

USPA presented to international and Ukrainian companies current dredging projects in the ports

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SE “Administration of the seaports of Ukraine” on October 22 held in Odessa Dredging day-2018. To the representatives of 10 foreign and Ukrainian companies from the Netherlands, Belgium, Denmark, China and Ukraine were presented projects of capital and operational dredging in Ukrainian ports, canals and inland waterways, the realization of which will start in 2019 and will continue in the next few years. The total amount of work on the submitted projects is 16.335 million m3.

“Conducting of the capital and operational dredging in the ports is one of the main tasks that the state put for USPA. In the past two years, we have managed to ensure that the world’s leading companies began to participate in tenders for the capital dredging in Ukrainian ports. This allowed us to achieve savings on the capital dredging projects in the ports of Yuzhniy and Chernomorsk in the amount of more than 400 million UAH,” said the head of the USPA, Raivis Veckagans.

According to his words, in 2019 the implementation of large capital projects in the ports of Yuzhniy and Chernomorsk will be continued. At the same time, more than 50% of the planned capacity for implementation fall at the operational dredging. “Dredging Day is aimed at establishing an open dialogue with potential contractors. Our goal is to ensure transparency of the upcoming competitions, to attract the maximum number of participants to participate in them.

We provide all the necessary information so that the dredging companies can plan their work and take into account the projects of the USPA in the Ukrainian ports when mobilizing and redeploying their dredging fleet in 2019,the head of the USPA stressed. Also, experts of USPA are ready to provide all the necessary information on the preparation of documents for that all companies that submitted applications for participation in competitions could take part in them.

The planned scope of work on projects that submitted to potential contractors is 16.335 million m3, which is in two times higher than in the current year. Dredging Projects in the ports were presented by the heads of branch offices of the USPA, which told the participants of meeting about the specifics of work in each of the water areas.

In 2019, the next stages of capital dredging planned in the ports of Chernomorsk and Yuzhny. According to the project for reconstruction of the operating area of the 1st bucket of the Dry Estuary of the Illichevsky branch office of the USPA with an increase the depth up to 15 m (4-5 construction lines) the scope of work is 1,115 million m3. The planned term of realization is 4 months.

Within the framework of the reconstruction of water approaches, maneuvering areas and operational water areas, taking into account the prospective cargo turnover of the Yuzhny seaport (the first stage of construction. The second and fourth launch complexes) the scope of work will be 6.339 million m3. The term of realization is 21 months.

Projects to maintain passport depths proposed to the participants of Dredging day-2018 will be carried out in the ports of Kherson, Reni, Izmail, Odessa, Berdiansk, Mariupol, as well as on the Bugsko-Dneprovsko-Limansky channel; Kiev, Kamensky, Kanevsky, Kremenchugsky, Dneprodzerzhinsky, Dnieper and Kakhovsky reservoirs. The planned scope of operational dredging in seaports, canals and inland waterways is 8.88 million m3.

Representatives of the Dutch companies such as Jan De Nul nv, Van Oord, Royal Boskalis Westminster, of the Belgian company Deme, of the China Harbor Engineering Company Ltd, of the Danish company Rohde Nielsen, of the Ukrainian companies such as “Specialized technical bureau Azimuth” LLC “Ukrstroyservis”, LLC “Tis –Hydrotechnic”, LLC “Complex-Delta” took part in the Dredging Day-2018, organized by the Ukrainian Sea Port Authority.

Source:hellenicshippingnews

Austria’s OMV Postpones Decision On Black Sea Offshore Investment

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Austria's energy group OMV has postponed an investment decision on its Black Sea exploration project until next year because the Romanian government took too long to set the framework conditions, its chief executive said.

The exploration of the Black Sea Neptun block is a joint venture between OMV's Romanian subsidiary Petrom and U.S. major ExxonMobil, and includes the first deep-water exploration well in Romanian waters.

Romania's lower house of parliament approved the much-awaited offshore hydrocarbons legal framework earlier on Oct. 24, but Rainer Seele said at a panel discussion in Vienna that it came too late.

"We cannot make an investment decision at Petrom in this quarter as planned," the CEO said, adding that OMV first had to evaluate the conditions for what the company has described as a "billion euro investment", and will now decide next year.

Under the bill, which must be signed into law by President Klaus Iohannis, holders of current offshore petroleum agreements with Romania will be levied the current level of royalties, taxes and gross production thresholds.

It also stipulates that companies involved in production operations in Romania's offshore perimeters, would need to sell at least 50% of yearly gas output in the country.

"We are very concerned regarding the fact that we will be restricted in the marketing of the gas," Seele said. "The freedom in the marketing of the gas is very important."

Source:epmag

Mitsubishi Shipbuilding Holds Christening Ceremony For Next-Gen LNGC

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Mitsubishi Shipbuilding Co., Ltd., a Group company of Mitsubishi Heavy Industries, Ltd. (MHI) based in Yokohama, held a christening ceremony for a next-generation LNG (liquefied natural gas) carrier under construction for MOG-X LNG Shipholding S.A., a wholly owned subsidiary of Mitsui O.S.K. Lines, Ltd. (MOL).

The ship, named “LNG JUNO,” is the third “Sayaringo STaGE” type vessel, and is Mitsubishi Shipbuilding’s newest carrier to feature significant improvements in both LNG carrying capacity and fuel performance through adoption of a more efficient hull structure and an innovative hybrid propulsion system. The LNG JUNO will go into service transporting LNG for purposes such as the Freeport LNG Project in the U.S. state of Texas, in which Osaka Gas Co., Ltd. is participating.

The well-attended christening ceremony was held at the Koyagi Plant of MHI’s Nagasaki Shipyard & Machinery Works, with a representative of the ship’s owner among those present. Takehiro Honjo, Representative Director and President of Osaka Gas, proclaimed the formal christening. Mrs. Honjo performed the ceremonial rope cutting.

The LNG JUNO features LOA (length overall) of 297.5m, a width of 48.94m, depth of 27.0m, and draft of 11.5m. Deadweight capacity is approximately 80,300 tons—the largest within the Sayaringo series—and the total holding capacity of the tanks is 180,000m³. The launching took place on March 17, 2018. Construction was performed by Mitsubishi Heavy Industries Marine Structure Co., Ltd. a Nagasaki-based MHI Group company. The new vessel’s name borrows from Juno, the ancient Roman goddess of marriage who manifests an image of peace and happiness.

The Sayaringo STaGE is a successor to the “Sayaendo,” a vessel highly acclaimed for its improved Moss-type spherical tanks and outstanding reliability. The adoption of the apple-shaped tanks and hybrid propulsion system functionality in the new Sayaringo STaGE has enabled a significant increase in LNG carrying capacity and overall fuel efficiency.

STaGE, an acronym deriving from “Steam Turbine and Gas Engines,” is a hybrid propulsion system combining a steam turbine and engines that can be fired by gas. Efficient use of the engines’ waste heat to drive the steam turbine results in substantial improvement in propulsion efficiency, enabling high-efficiency navigation throughout a full range of speeds.

Going forward, Mitsubishi Shipbuilding and Mitsubishi Heavy Industries Marine Structure will continue to contribute to stable energy supplies and environmental conservation through the construction of next-generation LNG carriers that offer superlative fuel efficiency and sustainable performance.

Source:marineinsight

Gates for World’s Largest Sea Lock Headed for Amsterdam

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The approaches to Amsterdam will soon feature the largest set of sea locks in the world. The new lock chamber at IJmuiden on Holland's North Sea Canal will measure more than 1,600 feet long, 230 feet wide and 60 feet deep (with somewhat smaller working limits for vessel size). 

The three massive steel gates for this lock measure 235 feet long, 80 feet tall and 36 feet thick each, and they weigh about 2,900 tonnes. All three are now under way from South Korea to the Netherlands aboard the heavy lift ship Talisman. Two will be used for the inner and outer locks and one will be held in reserve. 

In preparation for the gates' arrival, contractors have begun an operation to sink the lock gate chamber of the outer lock head. The process involves intentionally washing sand out from underneath the massive, concrete lock gate chamber in a controlled manner, sinking it into the seabed like a caisson. 

A consortium made up of construction firms BAM-PGGM, VolkerWessels and DIF is building the lock for Netherlands public works ministry Rijkswaterstaat on a $570 million contract. The project was slated for completion by 2020, but Rijkswaterstaat says that the project has been delayed by 27 months, with a cost overrun of about $35 million. Initial operations are now expected in early 2022.

Source:maritime-executive

 

IBIA at MEPC 73: IMO’s high sulphur fuel carriage ban remains on track March 2020

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The adoption of a ban on the carriage of bunkers above 0.50% sulphur looks set to go ahead despite a number of countries seeking a delay. A majority of countries attending the 73rd session of the IMO’s Marine Environment Protection Committee (MEPC 73) have expressed support for adopting it and for it to take effect as early as possible, namely from 1 March, 2020.

Renewed doubts about the implementation of the 2020 sulphur limit have been sown by media reports ahead of MEPC 73. The meeting discussed a proposal from Bangladesh calling for a delay to implementing the carriage ban, citing concerns about the availability, safety and cost of compliant fuels. It said the ban should not be adopted “until the economic availability and sufficient supply of low sulphur fuel oil is ensured” with a particular emphasis on the damaging effect of the expected cost increase.

Several developing countries supported the proposal from Bangladesh, but a clear majority of countries wanted the carriage ban to go ahead without delay. Formal adoption is expected once the regulatory text, being finalised by a drafting group, is presented to the Committee in plenary either on Thursday or Friday.

IBIA made a statement to MEPC 73 during discussion of the proposal as follows:
We sympathise with the fears of developing countries, the least developed countries and small island developing states that higher transport cost may have a negative impact on their economies.

However, the paper from Bangladesh seems to suggest that delaying the high sulphur fuel oil carriage ban equals a delay to the implementation of the 2020 sulphur limit. This is not the case. It is simply a tool facilitate enforcement of the global sulphur limit more effectively. It is feared that without effective enforcement, the temptation to cheat will be enormous, putting those that do comply at a huge commercial disadvantage.

We would like to remind the Committee that warnings about the substantial economic impact and market disruption that could be expected as a result of the 0.50% sulphur limit were presented and discussed at MEPC 70. That meeting was also invited to consider a proposal for a phased introduction of the 0.50% sulphur limit as opposed to a global limit taking effect from a specific date. Nevertheless, as we know, a clear decision was made at MEPC 70. That decision gave us certainty so that we all know what we have to prepare for. The ship has sailed and the destination is 2020.

Industry planning and preparations are already well underway with substantial investments being made both in the refinery sector and among shipowners to meet the 2020 deadline. If we move the target now, those preparations will be thrown into disarray.

We do understand fears that there could be insufficient availability of good quality compliant fuels. However, ships that encounter genuine non-availability situations should be able to use the standardised fuel oil non-availability report to be developed by IMO in line with Regulation 18.2 of MARPOL Annex VI to prove that they were unable to obtain compliant fuel.

The statement was regarded by many as a good summary and reminder. Indeed, concerns have been expressed by many about potentially setting a precedent for IMO to backtrack on regulatory decisions that have already been made by its decision-making committees such as MEPC.

Source:portnews

Port of Oakland’s TraPac Terminal Opens at Night for Truckers

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The Port of Oakland's TraPac marine terminal has introduced full service night gates for truckers amidst a record season for the port. 

The move to expand beyond traditional daylight hours is intended to ease daytime crowding and accelerate containerized cargo deliveries. TraPac, Oakland’s second-largest terminal, will operate night gates for freight haulers every Monday-through-Thursday. The move replaces twice-a-week night gates at TraPac. “We are getting ahead of the demand,” said TraPac Operations Vice President Brian Bauer.  “Drivers, cargo owners and carriers associated with TraPac will see improved performance and know we are ready for growth.”

Night gates are the latest in a series of 2018 changes at TraPac. Earlier this year, the terminal opened a new entrance gate complex for harbor truckers. Next month, TraPac will complete a two-year expansion to double the size of its Oakland footprint.

TraPac is the second marine terminal in Oakland to open at night for harbor truckers. Oakland International Container Terminal, Oakland's largest, introduced extended hours two years ago. 

The night services come as the Port of Oakland is experiencing a record-breaking peak season. This September was the busiest for import cargo in its 91-year history, with import volumes increasing five percent over September 2017. August also saw an all-time record. Total container volume – which includes imports, exports and empty containers – is up 3.4 percent this year. If the trend holds, Oakland would break its all-time total volume record established in 2017.

Source:maritime-executive

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