Stricter controls on the global bunker industry are inevitable
AS THE bunkering community here will be well aware, Singapore has led the way in bringing regulation to the marine fuel-supply industry. Licensing came long ago, followed by mandatory mass flow meters (MFM). Moreover, a good few companies have learnt – to their cost – that the Maritime and Port Authority (MPA) of Singapore will crack down hard on those engaged in malpractice.
However, globally, the bunker business is often portrayed as a sector where dubious practices and questionable ethics are easily found.
Having written about bunkering for the thick end of 30 years, and having worked closely with the International Bunker Industry Association (IBIA), I believe that is far from an accurate overall picture. Bunkering is a huge industry which, by and large, carries out its business of fuelling the world’s commercial fleet in a straightforward and professional manner.
Nevertheless, there are issues pertaining to standards that need addressing. Some of these were highlighted in a recent report by a company called FuelTrust, which describes itself as a software-as-a-service (SaaS) green technology company “dedicated to creating a trusted and sustainable fuel ecosystem for the maritime industry”.
The group recently issued a report examining bunker discrepancies in the maritime industry, which includes examples of “unethical practices and fraudulent activities related to bunkering”.
FuelTrust found that between 2021 and 2022, more than 39 per cent of global bunkers exhibited a fuel content difference of 2 per cent or more when compared with the amounts stated in their delivery paperwork.
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The primary issue it identified was “the introduction of water into the fuels during the journey from onshore storage tanks to the ship’s bunker tank”. It said this typically involved an increase in water content from 0.1 per cent to above 0.25 per cent, which, although below the regulated threshold, still resulted in average losses of US$14,910 per affected delivery.
FuelTrust asserted that “the maritime fuel market has a long history of not being transparent. Bunker fuels account for more than 50 per cent of a vessel’s operational expenses, meaning fraudulent practices and inadequate supply-chain management can significantly affect the profitability of vessel owners and charterers, and fuel suppliers”.
Limited transparency is actually something rather pervasive in parts of the global shipping industry, and is not unique to bunkering.
The FuelTrust report also had fuel quality in its sights. It read: “Even fuel considered ‘on-spec’ (meeting specified quality standards) experiences volume or content issues, leading to financial losses or engine problems.
“In the past year, over 600 vessels were disabled through fuel problems, despite the fuel being ‘on-spec’, resulting in estimated global supply-chain losses exceeding US$5 billion. Both fuel suppliers and shipowners incurred financial losses, which are difficult to detect and make claims against.”
FuelTrust has a solution. Its chief executive officer and co-founder commented: “This new research across the global bunkering market emphasises the need for better transparency. By providing visibility, traceability and security throughout the fuel supply chain, FuelTrust is improving operational efficiency, helping to reduce environmental impact, and fostering trust among all stakeholders.”
That is one approach, but another is to ensure that regulation, such as through licensing, keeps standards high and punishes malpractice.
It just so happens that this week, IBIA issued a statement that supports greater transparency in the bunker industry, with the Coriolis MFM as one of the solutions.
A joint IBIA and BIMCO survey in 2022 established a strong desire from the industry to increase transparency between suppliers and buyers, reduce quantity disputes, and create a level playing field for suppliers and buyers.
IBIA is convinced the benefits of the MFM have been proven in the port of Singapore. MPA has mandated the use of the MFM system for custody transfer of all marine residual fuel oils since 2017, and since 2019 for all distillates.
It added: “Supporting the implementation of the MFM has been the development of Singapore Standards and mandatory application SS648:2019, which has provided a holistic approach in bunker assurance measurement, while maintaining a high-level integrity of the MFM system, through a robust standardisation and audit regime, along with continual industry engagement in developments of the standards and regulations.”
IBIA is now on something of a mission to push for the acceptance of international standards on MFMs.
It acknowledged that some bunker ports already have in place national or regional legislation on measuring instruments such as MFMs, for use in general trade or custody transfer, and that these MFMs meet the prescribed requirements to ensure their readiness for oil and gas measurement. However, it cautioned that these requirements may not necessarily be specific to bunker fuel measurement, mainly due to the complexity of bunker fuel and its operational transfers.
IBIA wants to see global adherence to the International Standard Organization’s ISO22192:2021, which offers a unified approach, ensuring the MFM system installed on a specific bunker tanker conforms to the requirements of a bunker operation.
Based on the experience and knowledge gained from bunker stakeholders, ISO22192 was developed to enhance the efficiency of bunkering operations, promote best practices in bunker fuel measurement, and provide the fundamental principles, requirements and procedures of the MFM system.
The standard focuses on the metering operation providing the procedures and requirements of handling the MFM system in a bunker delivery operation. The guidelines also ensure that the MFM system continues to maintain its conformity to the prescribed requirements through equipment metrological verification and regular certification by independent inspection companies, thereby further strengthening confidence and assurance in ports that adopt MFMs for bunkering.
IBIA said its Bunker Licensing and MFM Working Group supports all ports in their implementation of MFMs. An international standard such as ISO22192 will harmonise MFM practices and requirements, thus avoiding confusion among industry stakeholders.
Singapore has been at the forefront of bunker licensing and adopting mandatory MFMs, but not everywhere has been receptive to this approach. Licensing is being introduced gradually in North European ports, but the moves are meeting resistance.
In other places, such as Turkey, licensing and close control of deliveries by the authorities have long been facts of life for bunker suppliers, but they see no need for MFMs.
However, it is difficult to disagree with IBIA’s view that licensing and MFMs are inevitable.
It noted: “In today’s digital landscape, the adoption of MFMs will support the further use of the electronic Bunker Delivery Note (BDN) which was formally approved at (the International Maritime Organization’s) Marine Environment Protection Committee. MFMs are an important solution to streamline digitalisation for end-to-end bunker operations as this can support real-time measurement and operational information needed for the use of electronic BDNs.”
In conclusion, IBIA said: “In this respect, it is expected that other international bunker ports will need to consider the adoption of MFMs to remain relevant, and utilising an established and harmonised international standard offers a strong solution in this direction.”
None of this will come as a surprise to the Singapore bunkering community. They are more or less already there.
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