MOLFETAS SHARES HER VIEWS ON 2020 DISRUPTION IN THE REFINING INDUSTRY
Senior Bunker & Lubricants Trader, Lina Molfetas, presented at the latest Greek Energy Forum seminar hosted by Platts on 23rd October 2019, sharing her views on the bunker industry’s adaptation to the 0.5% fuel blends.
Presenting a demand overview for fuel oil supply in the Middle East, Molfetas stated that the estimated 0.5% fuel demand in the region in 2020 could be as high as 1.3 mil MT/month. Middle East refineries has invested significantly in the expansion of the refining sector, although at the time of speaking only two majors had confirmed VLSFO availability in the region.
Another fuel availability challenge highlighted by Molfetas with an overview of the +20 of the available blend components, is the complexity of blends for VLSFO and their likely availability in most ports in 2020. Each component has individual characteristics in terms of density, sulphur content, viscosity etc. depending on crude feeds and the refinery configuration. The 3 broad categories of the 0.5% fuel blends; Napthenic, Paraffinic and Straight Run should not comingle to avoid stability or quality issues so the ship’s crew need to know which category has been used prior to taking new bunkers. The vessel’s next preferred refuelling port may only have availability of particular categories of blends which are not necessarily compatible with the current fuel on board, potentially adding costs due to using alternative ports or compliant fuels.
“As a shipowner or charterer, it is very important to familiarize yourself with the composition of the blends, this information must also be shared with your crew because moving forward, the compatibility of the blends will have a direct impact on the vessel’s performance and operating costs.”
Molfetas also commented on the anticipated fuel price increases of up to 30-40% compared to today, depending on local availability. Together with the anticipated restrictions on availability, the driving factor for prices will be the increased demand for compliant low sulphur fuels and distillates as most vessels will not be fitted with scrubbers. Assuming this price increase, the market would need an additional $2-4BN liquidity per month. Consequently, future access to trade credit will not be as easy as it is today. Credit for buyers will be more closely monitored and the liquidity of traders will impact both buyers and suppliers. Well-resourced traders will want to choose their counter parties carefully and transparency will become more important than ever.
The seminar also featured a panel discussion and a Q&A where members of the audience were able to express their views and insights.
Senior Bunker & Lubricants Trader, KPI Bridge Oil London
Tel: +44 77 1378 3764