As a service and solution provider for marine fuels, KPI OceanConnect had to deal with the IMO 2020 regulations. Boris Gronenberg, Managing Director at the Hamburg site, spoke to HANSA about the market requirements his company had to adapt to
What impact did the tightening of the SOx limits at the beginning of 2020 have on your portfolio, especially on lubricants?
Boris Gronenberg: As our partners’ demand [ds_preview]for an array of fuels grows, so has the demand for a variety of lubricants. We’re working hand in hand with our counterparts to ensure they’ve got what they need to meet regulatory requirements and environmental targets. It’s not unusual for one of our clients in the Baltic, for example, to regularly sail in and out of areas with both 0.10 % and 0.50 % sulphur limits. To ensure that their ships are operating at maximum effectiveness, they need lubes that best match their bunkers.
Regardless of the compliance route chosen by shipowners – bunkering low sulphur fuels or installing exhaust gas cleaning systems (scrubbers) – IMO 2020 has had a dramatic effect on how marine engine lubricants are formulated and used. The use of one type of fuel oil by the majority of the global fleet accompanied by one type of lubricant is outdated.
Did you have to change your portfolio? If so, were there any difficulties with the lubricant manufacturers in the process?
Gronenberg: The short answer is ›yes‹. We’re constantly working with our partners to make sure they’ve got the best quality lubes for their ships, and as a consequence, the number of products we can offer has grown substantially. But to properly understand the state of the market you need to consider the bigger picture.
The post-2020 fuel landscape posed different challenges for cylinder oil lubricant use to those previously faced by OEMs. Previously, the use of cylinder oils based on a 70 base number (BN) chemistry has been favoured. However, changes in engine machinery, operational profiles and the types of fuel used have posed a greater corrosive risk in the engine cylinders in the past decade.
Moreover, the operational profiles of engines have changed over the past 10–15 years from vessels running at high speed, high load to running at low speed, low load. Feed rates have reduced, and lubrication systems have become more efficient. This has created a significant impact on optimal cylinder oil use and in some cases with lower liner surface temperatures, allowing cold corrosion to form.
More recently, 100–140 BN cylinder oils have been needed to protect newer engines against cold corrosion under part-load conditions for those burning higher sulphur fuels. The BN level of the lubricant must be matched, and the correct feed rate applied to meet the fuel sulphur level content. As a general rule, the lower the fuel’s sulphur content, the lower the BN level required. Choosing the right cylinder oil with the correct BN and feed rate can be particularly challenging for shipowners navigating the shift to bunkering different types of fuel.
How has the current pandemic affected your business?
Gronenberg: Over the last 18 months there has been no shortage of challenges for shipowners and operators, and we’ve been doing everything we can to support them throughout this difficult period. Our team’s hard work and expert counsel have been recognised this year by both new and well-established clients, and as we announced in June this has led to a growth in our market share and volume growth of 26.5 % since 2019/20.
However, when you look at the macro-situation, there are a number of additional dynamics to consider. While most of the immediate challenges of IMO 2020 may have passed, the marine fuels market has evolved considerably; with customers continuing to face unique challenges depending upon their regional transit profile, choice of post-2020 compliant fuels, and procurement strategy.
The past year has highlighted that some bunker companies aren’t in good financial health, and this is due at least in part to Covid-19. Warren Buffett once said that ›only when the tide goes out do you discover who’s been swimming naked,‹ and with the increasing media coverage there have been far too many incidents: invoices not being paid, barges being arrested, and trading desks unresponsive. The reality is that counterparty risk assessment has become more important than ever in the current climate.
Are there any issues, that you will have to deal with more in the near future?
Gronenberg: At the beginning of 2020 and in the lead up to the new regulation, there were concerns that there wouldn’t be enough compliant fuels to meet both land and maritime demand. But the reality is that there were only 55 FONARs filed to the IMO in 2020. And, perhaps more significantly, IMO has not received any reports of safety issues linked to VLSFO since the rules came into effect.
The bigger concern for our clients in the past year has been inadvertent non-compliance, and we’ve worked consultatively with them and our fuel suppliers to ensure that any bunkers we offer meet the relevant ISO 8217 standard and will pass muster with port state controls.
As we approach 2030 and 2050 there are going to be no shortage of challenges. It’s times like this that having a trusted partner that has the technical expertise, local knowledge and global experience really make a difference to your operational success.
Interview: Anna Wroblewski
