Ecology, supply pose challenges to bunkering

The bunker fuel industry is expected to face some major environmental challenges in the next few years as the EU and the US tighten their emission rules.

The EU and US have asked marine fuel consumers to go in for fuel with lower sulphur content.

The bunker industry is also facing another major challenge on the supply front. The industry is expected to go through a consolidation process as the number of bunker suppliers has increased multifold in recent times and is far more than the industry can accommodate.

While Singapore, the Asian hub of the bunker industry with over 100 suppliers, is already going through the phase of consolidation, Fujairah, which has just seven suppliers, may also face some merger or acquisition.

On the environment front, upcoming changes in emission rules are expected to affect barges using high sulphur content bunker as fuel.

According to James Hill, general manager of Avin International Bunker Supply SA, the vessels and barges in the Middle East region using bunker with 2.5 to 3.00 per cent sulphur content may be forced in the near future to switch to low sulphur content bunker fuel by a strong environmental lobby.

Strict emission rules adopted by the EU have already forced European barges to switch to bunker with 0.2 per cent sulphur content.

According to a recent estimate, vessels and barges emit on an average 30,000 tonnes of sulphur. The total annual bunker supply worldwide is estimated at over 140 million tonnes.

The single-skin barge is another major issue which the industry will have to deal with in the near future. A large number of single-skin barges are being used by suppliers to transport bunker fuel across the world. The Middle East region in particular has a large number of single-skin barges being used for bunker supply, according to Hill.

The bunker industry's problems are not just limited to environmental issues. All the major bunker centres except Fujairah have been facing the problem of an increasing number of suppliers.

Singapore, with over 100 suppliers, has recently announced that it will not issue new licences for bunker supply any more as the market is not able to accommodate more suppliers.

Fujairah, which is the largest bunker fuel centre in the Middle East region, has just seven suppliers. However, even in Fujairah, many expect further consolidation.

Though Captain Mousa Murad, general manager, Fujairah Port Authority, denies any such possibility, an industry source suggests that Fujairah might witness a merger of two important suppliers during the next few months.