A.P. Møller – Maersk said it is entering into a joint initiative with the Dutch fuel storage company Royal Vopak in advance of the International Maritime Organization (IMO) requirement that ships reduce sulfur emissions by using bunker fuel with a sulfur content of 0.5 percent or less, beginning in 2020.
Maersk said it will become the anchor tenant in modified facilities at Vopak’s Europoort terminal in Rotterdam, one of a half dozen “tank farms” that Vopak has in the Dutch port.
The facility will allow for “safely blending, storing and handling different fuel types to ensure full compliance with the 0.5 percent sulfur cap,” said Maersk.
Maersk is a Vopak customer today. Maersk stores fuel it owns in tanks it leases from Vopak and Vopak operates the terminals.
Maersk said the Vopak facility in Rotterdam will deliver approximately 20 percent of the fuel it uses, about 2.3 million tonnes per year.
Maersk says the IMO requirement will be a “game changer for the entire industry.”
While companies do have the option of powering their ships with fuel such as LNG (which is predominantly methane and therefore naturally free of sulfur) or continuing to burn high-sulfur fuel and installing scrubbers on their ships to remove the sulfur from their engine exhaust, few ships are expected be powered with LNG or equipped with scrubbers by 2020.
Søren Skou, the chief executive officer of A.P. Møller – Maersk, said Friday during a phone call with investment analysts, “I don’t think it’s feasible to retrofit ships with LNG propulsion.”
While Maersk “may invest in a few scrubbers simply to understand the technology,” he said, “We don’t like the solution.
“We think that the sulfur should be taken out of the fuel at the refinery where you have the big process plants to do so,” he explained. “For us to build washing plants (scrubbers) on 700 ships simply does not make any sense to me.”
Lejla Charif, a press officer at Maersk, explained that the partnership was based on the fact that Maersk was required to make a commitment for 0.5 percent fuel to Vopak and Maersk was looking for a major facility to commit to building the necessary infrastructure which will enable the blending of 0.5 percent fuel.
“By being a founding member, we have committed to each other, hopefully ensuring that the necessary infrastructure work will proceed on schedule and meet our requirements. We believe that our commitment will encourage other players to follow us,” she said.
“We trust that this initiative will put to rest some of the concerns the industry has on fuel availability as well as secure our continued competitiveness in the market,” said Niels Henrik Lindegaard, head of Maersk Oil Trading, a division of A.P. Møller – Maersk.
Maersk said that there are “reservations and challenges relating to fuel handling and compatibility and this project plays a key role in providing A.P. Møller – Maersk with supply chain assurance looking at both quality and quantity of the compliant fuel.
Hari Dattatreya, global oil director at Vopak, said, “With A.P. Møller – Maersk as an anchor customer, Vopak demonstrates the focus to position itself in the 0.5 percent sulfur fuels bunker market.”
The company has 66 terminals around the world and is “dedicated to serve our customers to comply with the IMO 2020 regulations in the key global bunker hubs around the world,” Dattatreya said.
Vopak said last week that at its fuel oil hub terminals in Rotterdam, Singapore and Fujairah in the United Arab Emirates, its priority “was to invest for new market requirements.”
It is building infrastructure for the segregation and blending of low-sulfur fuel. It said the terminals in those three ports “will be fully ready to support new market requirements” resulting from the IMO rule.
Vopak also has fuel oil bunker terminals in Los Angeles, Panama, Algeciras and Hamburg. It has a 50 percent terminal in the Gate terminal in Rotterdam that supplies LNG for use as fuel on ships.