March 24, 2019

facebook twitter linkedin tumblr google pinterest

ExxonMobil Eyes Marine Fuels Business Expansion As IMO 2020 Deadline Looms

ExxonMobil Eyes Marine Fuels Business Expansion As IMO 2020 Deadline Looms
Spread the love


As the shipping world scrambles to get ready for the International Maritime Organization’s IMO 2020 ruling, oil major ExxonMobil’s marine fuels outfit is “digging deep” to be at the forefront of the emerging low sulfur market.

The IMO, a United Nations’ body responsible for the safety and environmental performance of the shipping sector, has ruled that from January 1, 2020, marine sector emissions in international waters be slashed to reduce sulfur emissions by over 80%, which can be achieved by switching to lower sulfur fuels.

ARTICLE CONTINUES AFTER ADVERTISEMENT

The current maximum fuel oil sulfur limit of 3.5 weight percent (wt%) is to be reduced to 0.50 wt%, which is as much a challenge for shipping companies as it is for their fuel vendors. It is a hotly discussed topic at IHS Markit’s CERAWeek 2019 conference; a major annual energy industry fixture being held in Houston, U.S. from March 11 to 15.

IMO 2020 rule is as much a challenge for shipping companies as it is for their fuel vendors © POFPort of Fujairah, UAE

But according to Luca Volta, Marine Fuels Venture Manager at ExxonMobil (NYSE:XOM), the oil major views the impending low-sulfur marine fuels climate as an emerging opportunity and not an operational problem.

“We will be ready with the products and point of sales by the third quarter of 2019. That’s when we expect marine customers will start to bunker as the deadline of January 1, 2020 approaches,” Volta told Forbes.

ExxonMobil Fuels had been preparing for a low sulfur climate since 2015 and when finality was achieved on the IMO ruling, the oil major rapidly set wheels in motion: “Our choices of marking points of sales and support infrastructure largely related to where we can deploy a cost effective supply chain. Product moves easily but then the cost effectiveness of the supply chain comes into play.

“Logically we can deploy an effective supply chain where ports are in proximity of our manufacturing assets. This is where we are focusing our first wave of IMO 2020 compliant fuels.”

Initially ExxonMobil has named the ports of Antwerp, Rotterdam, Genoa, Marseilles, Singapore, Laem Chabang (Thailand) and Hong Kong, where compliant fuels would be available, with locations in North America to follow. However, Singapore was the obvious choice to get the drive going.

ARTICLE CONTINUES AFTER ADVERTISEMENT

“Singapore is the largest bunkering fuel market in the world, and from ExxonMobil’s standpoint we also have one of our largest manufacturing facility there [in Jurong]. Capacity expansion at the site means we are also going increase our capability to produce marine gasoil and fuels.”

Volta stressed that ExxonMobil wants to be at the forefront of a competitive and changing marine fuels environment. “That means aspiring for the widest possible IMO 2020 compliant fuels provision. The top ten global ports account for 50% of bunkering fuels, and the next ten account for a mere 5%, followed by a plethora of other ports.

“It will be challenging for all of them to adapt; but all the top ten ports will have product available. ExxonMobil wants to be a significant player in this post IMO 2020 marine bunker and fuel market, and we are digging deep to make it happen.”

IMO 2020 presents a multi-dimensional problem that needs addressing and ExxonMobil has done that by going back to basics. “We formulate some of the low sulfur fuels through science, rather than just manufacture those fuels. Our compliant [0.50%] sulfur fuels range from RMD80 to RMG380 with a density of between 900 and 970 at 15 degrees Celsius, and catalytic fine content meeting ISO 8217:2017 parameters. The compatibility characteristics of these fuels leverage ExxonMobil’s proprietary technology.”

ARTICLE CONTINUES AFTER ADVERTISEMENT

Volta admitted there were operational challenges. “Marine fuels do have some latitude over say ground transportation and aviation fuels. While both transportation and aviation fuels have several stringent parameters, in the case of shipping fuels two keenly regulated aspects are sulfur and flash, where we worked with the industry to make it happen on combustion and compatibility properties.”

Luca Volta, Marine Fuels Venture Manager at ExxonMobil, says the oil major views the impending low sulfur marine fuels climate as an emerging opportunity and not an operational problem.EM/WS

But how is the shipping industry gearing up as the deadline approaches? “There are operational anxieties. But I’ve got say that I am seeing very detailed compliance plans being instituted by shipping companies. The largest of these, especially publicly-listed ones, are reporting an advanced state of preparedness even if this information is not widely available.

“However, that’s not true of everyone. I think that small shipping companies are facing challenges in what is a very conservative industry that looks at the here and now, rather than tomorrow. We are giving IMO 2020 help and guidance to those who work with us.”

ARTICLE CONTINUES AFTER ADVERTISEMENT

For an industry facing a seismic change, anecdotal evidence also points to an exponential rise in the use of scrubber systems or scrubbers – air pollution control devices that can be used to remove some particulates and/or gases from exhaust streams.

Volta agreed with the anecdotal evidence and said ExxonMobil will work with shipping customers opting to go down that route. “However, that exponential rise in the deployment of scrubbers is from a relatively low base. The latest market projections point to a couple of thousand scrubbers by 2020. Let’s say these projections miss the mark by 100% and that there will 4,000 ships fitted with scrubbers.

“What is a figure of 4,000 ships in a global context with 55,000 ships moving about the world’s shipping lanes? Many Very Large Crude Carriers (VLCCs) and large ore carriers are indeed fitting scrubbers and such customers matter, but we are still talking less than 10% of a potential serviceable customer base.”

However, ships powered by LNG have a great potential, especially for newly built additions to the global fleet, again rising from a low base, Volta added.

“Today bunker consumption is around 5 million barrels per day (bpd) and we see that increasing to more than 8 million bpd by 2040. Notionally, when we look at the fuel mix – 10% will be LNG, 20% will be distillate fuel oil, and the remainder will be residual in nature from high to low sulfur. We are heading to the ‘0.50 world’ and not sitting back.”



Source link

More from my site

About The Author

Related posts

Leave a Reply