TRIBUTE to BOB CHANDRAN: Industry Mourns Chemoil Founder

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www.bunkerspot.com Volume 5 Number 1 February / March 2008

TRIBUTE TO BOB CHANDRAN: Industry mourns Chemoil founder

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NEWS Bunker Markets and Prices 4 Europe 8 Head Office: Americas 12 Petrospot Limited Petrospot House Sommerville Court Asia Pacific 14 Trinity Way Adderbury Africa and Mideast 16 Oxfordshire OX17 3SN England Tel: +44 1295 81 44 55 TRIBUTE TO BOB CHANDRAN Fax: +44 1295 81 44 66 Email: [email protected] Llewellyn Bankes-Hughes commemorates the inspirational life of the late Bob Chandran, Website: www.bunkerspot.com CEO of Chemoil Energy 18 Publishing Manager / Editor Ian Taylor Adrian Tolson reflects on Bob Chandran’s philosophies which have underpinned Tel: +44 1295 81 44 55 Mobile: +44 7876 70 45 41 Chemoil’s development 21 Email: [email protected] Paul Stebbins, CEO of World Fuel Services, pays tribute to a worth adversary 23 Publisher Llewellyn Bankes-Hughes Tel: +44 1295 81 44 55 Mobile: +44 7768 57 44 30 OPERATIONAL ISSUES Email: [email protected] Tom Marian of Buffalo Marine reports on how the introduction of the Transportation Associate Editor Workers Identification Credential is affecting bunker barging activities in US ports 24 Lesley Bankes-Hughes Tel: +44 1295 81 44 55 Email: [email protected] BUNKERSPOT WORLD MAP Reporter David Waterman Global prices and news at a glance 26 Tel: +44 1295 81 44 55 Email: [email protected] COMPANY PROFILE Advertising and Sales Ian Taylor Lesley Bankes-Hughes takes a closer look at Aegean Marine Petroleum’s ambitious vessel Tel: +44 1295 81 44 55 Email: [email protected] acquisition strategy ahead of the phase-out of single-hulled vessels, and she assesses its vision for global business growth 28 Events Manager Luci Llewellyn-Jones Tel: +44 1295 81 44 55 Mobile: +44 7775 92 42 24 COUNTRY PROFILE Email: [email protected] David Waterman looks at the key players and supply centres in the Turkish bunker market 34 Events and Marketing Executive Alison Parsons Tel: +44 1295 81 44 55 ENVIRONMENTAL ISSUES Email: [email protected] Stephan Wrage of SkySails argues that the christening of the Beluga SkySails marked a key Subscriptions and Events Sales Manager Luke Hallam Evans milestone in the use of sustainable propulsion technologies for the shipping industry 38 Tel: +44 1295 81 44 55 Mob: +44 7815 86 73 52 Lars Robert Pedersen of A.P.Moller-Maersk looks at the operational and regulatory issues Email: [email protected] resulting from the requirement to use low sulphur distillate fuels 42 Accounts Miles Walsh Mark Servidio of Sharp Electronics and Buddy Polovick of the US Environmental Tel: +44 1295 81 44 55 Protection Agency extol the virtues for freight shippers and carriers of signing up to Email: [email protected] the US SmartWay Transport Program 44 Cover Photo: Courtesy of Llewellyn Bankes-Hughes ALTERNATIVE FUELS David Waterman looks at the potential of Gas-to-Liquids as an alternative fuel for the shipping industry 46

EVENTS Events and training course diary 48

NETWORKING Bunker people on the move 50

Bunkerspot is an integrated news and intelligence service for the international bunker industry. The bi-monthly magazine and 24/7 electronic news service, www.bunkerspot.com, both provide highly-specific information on all aspects of the marine fuels industry. Bunkerspot Magazine (published in February, April, June, August, October and December) annual subscription rate, including unlimited access to the website www.bunkerspot.com, is $430 / £225 / %315. ISSN 1741-6981. Copyright Petrospot Limited © 2008. All rights reserved. Published by Petrospot Limited, a dynamic & independent publishing, training and events organisation, focused on providing information resources for the transportation, energy and maritime www.bunkerspot.com industries. Disclaimer: Bunkerspot is an editorially independent magazine and electronic news information service. The information contained in the magazine and website is presented in good faith. Opinions expressed are not necessarily those of Petrospot Limited, which does not guarantee the accuracy A one-year subscription is only of the information contained in Bunkerspot. Nor does Petrospot accept responsibility for errors or omissions or their consequences. £225/$430 for both the magazine No part of Bunkerspot may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, and unlimited website access photographic, recorded or otherwise, without the prior written permission of the publisher. Designed by Matthew Stuart. bunkerspot February / March 2008 www.bunkerspot.com 3 Bunker Markets & Prices

MONTHROLLINGPRICECHARTS #34&UEL/IL

600 Houston 380

Singapore 380 500 Fujairah 380

400 Rotterdam 380 PRICE $/tonne

300

200 FMAMJJASONDJ

-ARINE$IESEL/IL

1000 Houston MDO

Singapore MDO

800 Fujairah MDO

Rotterdam MDO

PRICE $/tonne 600

400 FMAMJJASONDJ

0OWERINGSHIPSAFTERTHEPEAKOILPOINT Bunker prices in most of the world’s key order to satisfy growing demand. of gas and coal (see article on page 46), but ports rose steadily through December until The International Energy Agency (IEA) last the technology required to do so is complex peaking around the New Year, and then eased year predicted that oil production would peak and expensive. According to the International off thereafter. At the end of January, 380 in just five years from now, when it expects a Maritime Organization (IMO), the annual centistokes (cst) fuel oil prices in Rotterdam plateau. With this worrying prediction in mind, a consumption of bunkers is set to grow from were actually lower than they were at the start suitable alternative energy source for transport 369 million tonnes today, to 446 million tonnes of December, dipping below $430 a metric needs to be found – and quickly. It is all very well in 2020. By this time, we may have an annual tonne (mt), while marine diesel oil almost promoting electric power and greater efficiency production of 50 million tonnes of liquid coal came down to its original price over the same for the purposes of automotive transport, but and gas – most of which is likely to be period. in the world of international shipping, only a absorbed by the automotive markets because Although production costs of crude are said fuel that can be used in commercial vessels’ of its superior qualities. to be twice what they were ten years ago, this compression ignition engines will provide an The only viable alternative to bunkers in alone is not responsible for the prices we are alternative source of energy in the near future. the foreseeable future seems to be biodiesel, experiencing today. Whether the recent pattern Furthermore, commercial shipping is already a which could be used in the compression in the price of oil is related to the rumoured highly efficient mode of transport. ignition engines of all commercial vessels. Fuel recession in the United States, or whether it is Leaving environmental considerations aside, oil engines may also be able to use unrefined due to perceptions of geo-political tensions, is any replacement for bunker fuel would have biodiesel, reducing the fuel’s production costs, unclear. What is certain, however, is that there to be readily available. There is potential in but research needs to be done into the subject. is a limit to how much oil can be produced in producing liquid fuels from abundant reserves Biodiesel has recently traded in the $800-$900

4 www.bunkerspot.com February / March 2008 bunkerspot Bunker Markets & Prices

a tonne range, putting it in the same price Dec-07 Jan-08 bracket as marine gasoil (MGO). Being virtually 380 IFO 3-7 10-14 17-21 24-28 31-4 7-11 14-18 21-25 28-1 free of sulphur, this would also provide a cost-effective alternative to the low-sulphur Rotterdam d 435 438 452 453 472 462 437 421 436 Gibraltar d 466 471 473 464 482 477 453 443 460 distillate used in areas such as European Piraeus d 447 452 456 440 463 458 434 428 442 Union (EU) ports. There are, however, barriers to biodiesel’s entry to the bunker market. If Suez d 476 480 486 472 492 493 481 460 474 Fujairah d 484 464 474 475 498 497 474 449 473 biodiesel is to be used in a marine application, Durban w n/a n/a n/a n/a n/a n/a n/a n/a n/a industry regulators need to carry out tests to develop standards for the fuel, and new Tokyo d 503 498 505 508 517 523 518 499 526 Busan d 493 493 498 521 542 525 487 458 481 settings for the engines that will be using it. Hong Kong d 476 481 491 494 508 512 479 465 480 The latter requirement is particularly important Singapore d 466 469 483 485 494 487 465 449 463 in order to counter the increased nitrous oxide (NOx) emissions from biodiesel. But as far as Los Angeles w 528 543 501 492 505 501 469 436 450 Houston w 466 450 462 457 471 475 462 441 450 we are aware, no such action has been initiated New York w 473 479 488 488 493 493 473 455 455 from the relevant organisations. Since biodiesel is likely to go to automotive Panama w 457 477 483 483 489 493 473 462 469 Santos d 457 458 474 473 473 479 463 445 454 markets first (where several governments Buenos Aires d n/a n/a n/a n/a n/a n/a n/a n/a n/a have placed mandates on the blending of the fuel with petroleum diesel), production may have to increase dramatically before biodiesel becomes available to the bunkering industry. 180 IFO Dec-07 Jan-08 Furthermore, not only do first generation 3-7 10-14 17-21 24-28 31-4 7-11 14-18 21-25 28-1 feedstocks such as rapeseed have a lower Rotterdam d 457 463 477 476 496 486 460 445 461 yield of oil than second generation feedstocks Gibraltar d 484 493 494 486 504 496 473 465 481 such as algae and jatropha, it is also becoming Piraeus d 479 485 489 475 496 489 466 459 473 politically unacceptable to use land for fuel that Suez d 491 502 509 492 517 534 534 534 534 could be used for food production. Fujairah d 484 485 494 497 514 516 492 481 492 The UK Environmental Audit Committee Durban w 470 463 479 477 484 495 465 445 464 (EAC) concluded in January that the UK and Tokyo d 511 506 511 523 547 531 526 509 535 EU should not have pursued targets to increase Busan d 516 515 519 540 563 547 509 480 501 the use of biofuels in the absence of robust Hong Kong d 491 491 501 507 517 523 512 482 492 sustainability standards and mechanisms to Singapore d 476 479 494 494 504 499 475 480 475 prevent damaging land use change. On the Los Angeles w 537 552 495 503 519 513 481 452 461 contrary, the EU responded that the policy Houston w 485 467 476 474 488 494 485 462 474 is delivering significant greenhouse gas New York w 502 509 518 519 522 523 502 484 483 reductions, and paving the way for second Panama w 505 517 520 517 527 527 513 507 514 generation biofuels. Santos d 497 498 513 510 513 519 503 485 494 No one has proved whether second Buenos Aires d 526 524 534 536 537 537 536 511 528 generation biofuel feedstocks could replace crude oil within the required time-frame. What is clear, however, is that these feedstocks Dec-07 Jan-08 have the potential to produce far more oil than MDO 3-7 10-14 17-21 24-28 31-4 7-11 14-18 21-25 28-1 first generation feedstocks, while using far less land and water, and will probably be the Rotterdam 726 735 743 754 769 752 722 709 727 Gibraltar 838 845 861 864 877 863 835 822 841 best bet to replace bunker fuel as future oil Piraeus 810 819 833 832 847 834 806 809 825 production becomes tighter. Suez 871 867 871 871 871 872 892 910 894 Fujairah 796 801 806 809 830 834 827 824 834 Durban 816 822 834 837 850 837 817 805 821

Tokyo 726 759 781 777 788 798 788 777 789 Busan 784 803 810 827 851 847 824 816 806 Hong Kong 786 785 808 811 843 840 818 773 784 Singapore 772 775 791 810 829 806 777 758 773

Los Angeles 876 909 900 908 897 915 915 859 917 GLANDER Houston 768 758 787 781 797 809 794 781 789 New York 815 818 823 831 857 849 858 837 852

Bunkerspot prices are compiled from the Panama 821 832 839 846 862 870 859 850 873 reports of the four brokers whose market Santos 828 858 864 859 873 845 831 853 857 reports have consistently proved the Buenos Aires 832 847 847 846 848 868 863 855 864 most reliable and accurate: Cockett Marine Oil Limited, LQM-Gibson, Glander International Inc., and Davies & Newman Wake Limited. Bunkerspot welcomes market reports from other sources for inclusion on its website www. iÞ\ÊÊÊ`ÊqÊ`iÛiÀi`ÊÊÊUÊÊÊÜÊqÊiÝÜ >ÀvÊÊÊUÊÊÊÉ>ÊqÊÌÊ>Û>>LiÊÊÊUÊÊÊ`ÊqÊ>ÀiÊ`iÃiÊ bunkerspot.com.

6 www.bunkerspot.com February / March 2008 bunkerspot Tribute to Bob Chandran 3ANDSOFTIME

Llewellyn Bankes-Hughes he passing away of Bob Chandran of jeopardising the sale. He ploughed on commemorates the – one of the most colourful, regardless for a while, but eventually the Tdynamic, intelligent and humble lawyers won and his creative juices were inspirational life of the late characters the global bunker industry temporarily suppressed. will ever see – leaves a huge gap that Reading back over the many columns Bob Bob Chandran, CEO of will never be filled. Chandran was a wrote in Bunkerspot, it is possible to trace Chemoil Energy Limited one-off, a true entrepreneur whose some of the ideas that eventually came to sense of humour and kindness matched fruition at Chemoil. In his first column, in his enthusiasm for work and insatiable February 2004, Bob wrote of new trading thirst for knowledge. Bob was an complexities: ‘Today, buying a cargo of accomplished self-made businessman fuel oil in the Baltic and determining its whose nurturing and leadership of destination after loading gives a large bunker Chemoil to create one of the biggest player a real edge. Global storage facilities Bob Chandran, Founder, Chief Executive Officer independent energy companies in the provide a place to put the oil, but also allow and Executive Chairman of the Chemoil Group of world has been one of the greatest larger players to take advantage of arbitrage Companies, died at the age of 57 on 7 January success stories of this industry. But his opportunities before they really open. If you 2008 from injuries sustained on 6 January in openness and honesty, his willingness lay a paper strategy on top of the physical a helicopter crash near Pekan Baru in the Riau to share his experiences and his ability buying, you will also have a substantial Province in Indonesia. He leaves his wife Vivian to inspire those around him, single him advantage. However, this entails a stomach and two daughters, Sharon, 31, and Ashley, 20. Born Robert Viswanathan Chandran in Mumbai, out as unique human being. for risk taking’. India on 31 May 1950, Chandran began operating On a personal note, Bob always lent as a fuel trader in 1981 and formed Chemoil me invaluable support, previously with Corporation in 1982. The group holding company, BunkerNews and latterly with Petrospot ‘He offered a special Chemoil Energy Limited, is now one of the world’s and this magazine, Bunkerspot, and its insight into the bunker, oil largest integrated physical suppliers of marine associated training courses and conferences. fuels, with annual revenues of $4.4 billion. He did not need much persuading to become and shipping industries and Chemoil was listed on the Main Board of Singapore Exchange Securities Trading Limited Bunkerspot’s first – and most prolific – often ruffled a few feathers on 14 December 2006. Bob Chandran held columnist when the magazine was launched in the process’ 50.46% of the shares. His Japanese trading in February 2004, where he offered a special house partner, Itochu Corp. holds 37.5% of the insight into the bunker, oil and shipping shares, and both Vivian and Sharon are directors industries and often ruffled a few feathers and shareholders. in the process. Nor did he need to be asked A regular discussion point with Bob at Before creating Chemoil, Chandran had several twice to become one of the senior lecturers the time was his ambition to build, own years of experience in business development of industrial chemicals, petroleum and machinery. on the Oxford Bunker Course where he and operate his own oil storage facilities – He received degrees, including Masters of captivated the students twice a year with something which has now come to fruition Science (specialised in Chemistry) and Master of his stories of success and failure in the with the Helios project in Singapore and Business Management, and also completed the quest to grow his company. And, whenever ongoing plans for Fujairah and Panama. Harvard University Owner/President Management able to do so, he also supported many of The desire to have his own storage facilities Program. the international bunker conferences that maybe stemmed from problems he had Chandran was a regular speaker at international we organised, often by providing lively, encountered over the years with third-party events and a member of several expert advisory panels to leading universities and companies. For outspoken and ‘close to the bone’ keynote storage arrangements in places like Panama many years, until his death, he was also a highly speeches that few others would have dared and Istanbul. However, it was evident that popular lecturer on the Oxford Bunker Course. present. he recognised that controlling the storage Bob was a member of various professional Often, the words in his Bunkerspot facilities empowered him commercially. bodies and committees, such as the International columns had to be heavily edited, much In his June 2004 column, ‘Bigger is better’, Energy Association and American Petroleum to his annoyance, not because what he was Bob provide some insight into what drove Institute. He also served on the Board of Governors saying was wrong, but because it was felt him to keep growing his company. Having of the Asian Institute of Management, and on the Investment Committee of Worcester College, that maybe he was giving away too many often been obliged to kowtow to national University of Oxford. company secrets or sailing too close to the oil companies and the oil majors, he had In 2005, Bob Chandran launched a $500,000 wind with his outspoken observations on experienced first hand the difficulties faced fund for entrepreneurs at his former school, the market practices and corporate strategies. by small companies. He argued that there Asia Institute of Management in the Philippines. In the run-up to the Chemoil IPO, he is little hope for small bunker companies In November last year, he won Ernst & Young’s defied his legal team and colleagues who with no financial clout: ‘Small companies Entrepreneur of the Year award for the oil and had ordered him to stop filling his columns can only hope to grow big or else live a life gas sector. with sensitive corporate material for fear on bended knee’. He asked them: ‘Well, are

18 www.bunkerspot.com February / March 2008 bunkerspot Tribute to Bob Chandran

you worried? Are you scared that you will be wiped out? If you are not, you should be! Either grow organically or become a footnote to the history of the bunker business. I wake up every day with this fear and will never let grass grow under my feet.’ He added: ‘If you don’t grow, you will contract. If you are tired of boarding planes, fighting new battles every day and building new businesses, my advice to you – if you are the owner of the company – is to quit or sell your business. You are standing in the way of your corporation. Your bankers always ask you about your succession planning. Mine is that if one day I wake up and do not want to make my business grow, I will hire someone to run my business for me and take a walk to ‘He had the loudest ties that anyone had ever seen: full of the lovely woods of retirement.’ colour and always bright and completely impossible to ignore. Bob always believed that cooperation – or as he called it – co-opetition, was always That was my Dad’s personality.’ a better way forward than out and out competition, although he found that the Sharon Chandran bigger companies often failed to appreciate the smaller firms. Bob always considered of your company that is critical – it is what from Shell. This is the best distribution Chemoil to be a small firm, despite the rapid is in store for the future. As a person who of wealth I have ever seen. One dollar for growth it was experiencing. In the August has done this in my lifetime, I recommend you, my customer. And $5 for me. Thanks!’ 2004 issue of Bunkerspot, Bob asked: ‘How this route for all one-port bunker suppliers Bob wrote that ‘Shell has some fantastic do you build a bridge with your competition? to consider.’ brain power and has played this game very Do them a favour when they need one and Unlike most writers and commentators, cleverly’, but predicted that the marketing offer them an advantage when you have Bob never shied away from naming names. strategy would not last the course of the one. There are some guys in big companies ExxonMobil’s control of ‘70% of the base year. In fact, shortly after the article, entitled that think the small guys like Chemoil owe oil that is used to manufacture marine ‘Shell games’, was published, the oil major them these favours. They say thank you lubricants’ caused him to worry about the changed tack amid a flurry of staff changes but nothing else comes out of it. Well, we huge amount of influence that the newly- in Houston. will only go that way once. If Chemoil gets nothing in return, we don’t waste our time with that company again.’ ‘No matter how well protected you feel, whether in business Bob often called upon smaller companies or in personal life, I have learned that you should never fail to to seek out strategic partners to help them grow, a trend which has accelerated in recent expect the unexpected’ years. In April 2006, he wrote: ‘In our industry there are many small companies run by entrepreneurs which are struggling merged major held over the lubes market Always on the lookout for the next big for finances and have no financial clout with in 2004. In April 2005, Bob was full of idea, the next step up the growth ladder their customers, suppliers, terminals or barge praise for Shell after revealing how, ‘over for Chemoil, most projects worked for Bob companies. These entrepreneurs talk about the last three months’, Shell was managing but some did not. It took a couple of failed the joy of the freedom to do what they want to offer shipowners on the US Gulf fuel attempts to crack the Panama market before and to keep all the profits they generate oil at prices lower than the cost of resupply finally Chemoil became one its biggest to themselves. These days, with high in Houston. ‘I have to congratulate Shell players. A foray into Istanbul didn’t last long, volatility and big financial requirements, on this brilliant strategy with which it has while a pitch at the Sri Lanka market never many companies are barely making a living.’ achieved two objectives. Shell has become a got past first base. But these disappointments He added: ‘It is the fear of the unknown friend of the shipowners by supplying them never dampened Bob’s enthusiasm to try to that keeps most of these businessmen from cheaper bunker fuel and at the same time has make things happen. exploring strategic partners.’ He ended: ‘It is made money on the market, especially from Bob always had an eye on politics and not the price you get now on the sale of 50% the gullible traders who bought the spread economics and these themes often appeared

bunkerspot February / March 2008 www.bunkerspot.com 19 Tribute to Bob Chandran

anecdotes and advice about his experience ‘Bob was one of those of being a bunkering entrepreneur. He was a firm favourite on the course and will be people who saw greatness desperately missed. in all of us, a greatness Bob also had a long history of speaking at that we didn’t even imagine bunker conferences where he would relish stirring things up, often saying things that we had in us.’ no-one else would dare, such as admitting to deliberately manipulating Platts oil prices Vivian Chandran or criticising one of his main suppliers – as he did in Buenos Aires in a frank speech about Venezuela. But he was always a in his columns. In December 2005, he willing contributor. Whenever I asked him predicted that the US property boom might to speak at a conference, his usual answer be on the verge of collapse. ‘The US would be ‘Anything for you Llewellyn… I economy has been fuelled by a housing will be there.’ boom, although this has also been true Bob always had a strong philosophical of the whole world. Residential property streak and – perhaps due to his Indian values in the developed world have risen origins – often felt what others might not. In by more than 75% ($30 trillion) over the the issue of February 2005, while sitting on last five years. In other words, it looks like a beach contemplating the unprecedented the biggest bubble in history. Low interest price volatility of 2004, Bob commented: rates have allowed Americans to borrow on ‘I feel like I have lived through ten years in the appreciated real estate values and spend in Monaco in October 2006: ‘Dear Friend, I one year.’ their wealth on consumer items. With the would rather hide for some time’. However, In a typically humble postscript he wrote: increase in oil prices and interest rates rising, within weeks, the IPO show was back on ‘I left the Maldives just six hours before the consumer confidence will disappear. This the road and the company went public devastating tsunami arrived on 26 December particular bubble needs very little to burst, in Singapore on 14 December, at a 7.8% to inundate the islands and wash away entire but if and when it does, we could be looking multiple of projected 2007 results. Bob wrote populations across Asia. No matter how at a fully-fledged recession.’ ‘Going public was not always a pleasant ride, well protected you feel, whether in business After a short hiatus, ordered by his but at least it has been productive!’ or in personal life, I have learned that you team of IPO lawyers, Bob’s columns in On the Oxford Bunker Course, Bob should never fail to expect the unexpected.’ Bunkerspot returned in June 2007 with his was always voted the most informative I knew that Bob was in the Maldives personal insight into the tortuous process of taking Chemoil into public ownership. This turned out to be one of the most difficult ‘There were many days when I wondered, while walking on and frustrating experiences of his life. He the streets of the world’s financial centres, whether it was all wrote: ‘There were many days when I wondered, while walking on the streets of worth it’ the world’s financial centres, whether it was all worth it.’ The first attempt at the IPO, in September 2006, failed and the offer was and interesting speaker, never holding back when I heard about the tsunami and pulled because Chemoil did not achieve the information and always encouraging his called repeatedly to check if he was OK. price it was seeking. audience to get involved. Twice a year, Completely out of character, Bob never It was not long before Bob was persuaded Bob would fly half way around the world, answered his mobile phone and I feared the to try again, but for a few weeks at least he economy class, on his own account and take worst. When I eventually did re-establish lay low, admitting to feeling embarrassed a bus to Oxford to teach newcomers to the contact, he told me that he had had no idea and unable to face the industry. Billed as industry about bunkers during a power- that the tsunami had struck until he had the keynote speaker, the highly successful packed 90-minute lecture. Afterwards, he arrived back home in Singapore. Maybe it entrepreneur who ought to have taken would mingle with the students before was after he had escaped from the disaster Chemoil through its IPO by the time taking a bus back to the airport and boarding in the Indian Ocean that I began to take it started, Bob emailed me to plead to another plane to another continent. In his more notice of the sign-off on Bob’s emails be excused from his keynote speech at signature black suit, white shirt and brightly which, quoting a Longfellow poem, simply the International Bunker Industry coloured tie, Bob would smile mischievously said: ‘Strive to leave footprints on the sands Association’s (IBIA) Annual Convention throughout his lecture, providing endless of time’. He has.

20 www.bunkerspot.com February / March 2008 bunkerspot Tribute to Bob Chandran /NEOFAKIND

Adrian Tolson reflects joined Chemoil in 1986. It was a very this as an opportunity whereas others saw on Bob Chandran’s different company then, and many this as a barrier. He recognised quickly that I memories have come flooding back. relationships were the key to this business. philosophies which have I was a wine marketer back then, and He was aggressive in developing friends on my wife Margien saw an advertisement both the supply side and the customer side of underpinned Chemoil in The Wall Street Journal for a job as the industry and developing friends among since he joined 21 years an oil company marketing manager. I the bunker buying community by providing knew nothing about oil, but I applied buyers with a solution to their problems ago and went for an interview. What which the competition just ignored. happened was a typical Bob hiring. The Bob used to tell a story of a visit he made interview took less than 30 minutes and to Norway in the mid-1980s where he met I was hired for the job on the same day. a shipowner but had nothing to sell him. I do not know why, but Bob evidently Bob was a small independent supplier in Los was a good judge of character. Angeles and he was standing in front of one During my first month at Chemoil, Bob of the biggest shipowners in the world at called me at home and invited me to go that time, Leif Hoegh. He asked the owner out for a drive. As a brand new employee ‘What can I do to help you? What can I do I felt I could not refuse my new boss and to solve your problems?’ The shipowner told could not turn him down. He collected me him that he had two ships and that none of in his green Rolls Royce, complete with the oil majors were able to guarantee the fuel Chemoil number plates, and drove us all specifications that he required. Bob seized around the hills surrounding San Francisco. the opportunity, and although at the time Anyone who knew Bob’s driving would he had no idea how to make it happen, and realise that this was going to be a hair-raising none of the expertise or experience, he said experience. I was taking my life in my own ‘I’ll do it’. He made some calls to Los Angeles, hands at that point! During the drive, Bob confirmed that he would be able to meet the started to give me his philosophy on life and specifications, and did the business. He won on business, and his favourite phrase, about himself a customer and a friend who is still leaving footsteps on the sands of time, also there to this day. came up. Frankly, I thought he was out of his The real success of the early days of Chemoil mind at the time. But Bob gave me a lesson was achieved by aggressively sourcing and in what he thought and in what he wanted engaging the customers. Bob had three core to do. And he meant what he said and said philosophies: innovation, adaptability and a what he meant. refusal to accept the status quo. These were Bob was already successful when I arrived the philosophies set early in Chemoil and at Chemoil. I had read an article about Bob, a even though the business is infinitely more few weeks before joining, which spoke about complex nowadays, they remain at the core Bob as an oilman ‘that JR would be proud in every deal we do, and in every manager of’. Bob loved the idea of being presented who works at the company. We all learned as a hard, rough oilman, but nothing could that from Bob. be further from the truth. There was great Working with Bob was always inspiring. kindness in that man. Since he died, I’ve been asked what sort of In those days, the bunker business was boss was Bob? The media were asking me very tough, and totally dominated by the ‘Was he a hands-on boss or was he a hands- oil majors. Bob had a unique vision and saw off boss?’ The impression in the market was

‘The best tribute that we can have for Bob is the continuation of his vision for his company. Bob wanted Chemoil to be the leading independent supplier of marine fuels in the world and that is what we are going to strive to do.’

Clyde Michael Bandy, Chairman & CEO, Chemoil Energy Limited

bunkerspot February / March 2008 www.bunkerspot.com 21 Tribute to Bob Chandran

that Bob managed every single aspect of creativity would ultimately take us to a ‘Bob was brilliant. He had our business. But nothing could be further greater future and greater goals. The greatest an analytical mind and from the truth. Once Bob had confidence in success for Bob and for Chemoil was in you, and he knew that you shared the same achieving these goals. And the greatest thing was always full of energy philosophy as he did, he left you alone. He I will take away after 21 years at the company and enthusiasm. What I knew that in your heart you would do your is Bob’s passion to make the most out of admired most was that he best for the company. Not everyone stayed to every day he was on this earth. And that share that vision, but those who did became I know he did. And any manager who was a brilliant optimist.’ Bob’s friends. received that enthusiastic daily call with a The key to Bob’s vision was to make the laundry list of ‘my suggestion to you…’ knew Antonio Garcia, Co-founder, Chemoil Corporation most of every single day. And in the oil this very well. business, Bob found an industry where one Now we move on without Bob. And that day could be a lifetime. Bob was never a great will be hard. Bob was a teacher and a mentor, one for formalised planning or budgeting, but whether he was lecturing students or with his every day with Bob and Chemoil was like a colleagues. His philosophy and vision live on, new life. I never once came to work wishing in everyone who worked with him and in I was not coming to work. No matter the those whose life he touched. His philosophy issue, I knew there would be fun in the and vision will also live on in Chemoil and challenge of dealing with the problem. I am sure that great successes are coming to Bob created an everyday environment us all. God bless you Bob. Thank you for within Chemoil where innovation and everything.

‘High quality information and true value for money’

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www.bunkerspot.com Volume 4 Number 2 April / May 2007 www.bunkerspot.com Volume 4 Number 3 June / July 2007 www.bunkerspot.com Volume 4 Number 4 August / September 2007

MEDITERRANEAN BUNKERING: BUNKERING IN PANAMA: AT THE HELM: Blue seas, green fuels Gateway to success? New direction for IBIA?

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www.bunkerspot.com Volume 4 Number 5 October / November 2007 www.bunkerspot.com Volume 4 Number 6 December 2007 / January 2008 www.bunkerspot.com Volume 5 Number 1 February / March 2008

BARGING BENCHMARKS: PHYSICAL ATTRACTION: TRIBUTE TO BOB CHANDRAN: Best practice and best prices Chemoil in Singapore, Fujairah Industry mournes Chemoil founder and Rotterdam s)")!!NNUAL#ONVENTION s3ULPHUR%MISSIONS s%NVIRONMENTAL)SSUES s0ORT3ECURITY s5+"UNKERING0ROFILE s3POTLIGHTON"IOFUELS s(ARNESSING7IND0OWER s-ARITIME7EEK!MERICAS s4ERMINAL6ETTING s'AS 4O "UNKERS s0EOPLEAND0LACES s4!-!2!!RBITRATION s"UNKERINGIN4URKEY s.EWSAND%VENTS s%NERGY3ECURITY s0EOPLEAND0LACES s"UNKERINGIN#ANADA s.EWSAND%VENTS s0EOPLEAND0LACES s.EWSAND%VENTS

Subscribe today! Sign up on www.bunkerspot.com Tribute to Bob Chandran 0ASSIONATEENTREPRENEUR

Paul Stebbins, CEO of he bunker industry was stunned globally integrated fuel services company. World Fuel Services, pays by the news that Bob Chandran, We grew up together in the bunker Tfounder and leader of Chemoil industry and, over the years, Bob and I tribute to Bob Chandran, Corporation, had died following a sat on numerous industry panels, spoke at helicopter crash in Indonesia. Our the same conferences, taught at the same a worthy adversary business may be global in scope, but courses, and wrote numerous articles for bunkering is a small community and the same trade press. He loved a good there is not a person among us who debate and for 25 years we enthusiastically did not know Bob in at least one of argued business and philosophy both his many personas: supplier, customer, privately and in the public domain. Bob competitor, public speaker, teacher, was a worthy adversary who revelled in commentator and writer. As the shock being a contrarian. And no matter how wore off, his supporters and detractors much our views of the world might diverge alike were left to contemplate the from time to time, we shared a mutual loss of one of our industry’s most respect for what we had each achieved and ‘Bob’s career chronicled the enduring personalities. a deep sense of commitment to support the For over 25 years, Bob was the driving industry that had presented us both with myriad changes that have force behind Chemoil Corporation which great opportunity. shaped and transformed he founded in 1981 as a small regional As an industry personality, Bob will be the bunker business from bunkering company and grew into a global remembered as a gifted and entertaining oil trading force. His career chronicled public speaker who cared little for an obscure backwater the myriad changes that have shaped and convention. Animated, provocative and of the oil industry to the transformed the bunker business from always funny, Bob enjoyed stimulating forefront of change in an obscure backwater of the oil industry public debate on any number of issues. As to the forefront of change in global fuel a businessman, he was ambitious, driven, global fuel distribution, distribution, strategic procurement and proud, competitive, and fearless. Through strategic procurement and environmental policy. Intelligent, strong- good times and bad, he was willing to risk environmental policy’ willed, and opinionated, Bob played a vocal failure where others would have played it role in every phase of that transformation safe. In our personal relationship, I found and was recognised as a controversial, Bob to be a complex mix of confidence but respected leader in the industry. And and insecurity; innocence and calculation; while he was best known for his role as openness and caution. What I will Chairman of a large global bunker supply remember best were his formidable charm, company, Bob will be remembered by gift for clever banter and an all-consuming many of us as a passionate entrepreneur relentless curiosity. whose innovation and willingness to take With Bob’s death, his family lost a risks came to symbolize the dynamism of a beloved father and husband and our restless, fast-growing industry. thoughts and prayers go out to them. His I first met Bob in 1983 while working company, Chemoil, lost a dynamic leader with Mike Kasbar as a bunker broker and they can count on our support during in New York. Bob was embarked on a this difficult time. The bunker industry mission to build the first global independent lost someone whose capacity to surprise us bunker supply company while Mike and kept life in our business forever interesting I dreamed of building the world’s first and we will miss him.

‘Bob’s vision for the company was to provide a work environment that inspired creativity and innovation, where an individual could develop and follow his own dreams.’

Lucius Conrad, Vice President Administration, Chemoil Corporation

bunkerspot February / March 2008 www.bunkerspot.com 23 Operational Issues 3ECURITYONTHECARDS

Tom Marian of Buffalo n 14 November, mariners, approval. Once implemented, these plans Marine reports on how waterfront facility personnel would form the cornerstone of the US Oand workers requiring access government’s overarching strategy to the introduction of the to regulated facilities on the Houston better control how goods and personnel Ship Channel began to trickle interfaced with regulated waterfront Transportation Workers into the Transportation Workers facilities. Identification Credential is Identification Credential (TWIC) The rationale behind the mandated enrolment centre in Houston, Texas. security plans was the notion that by affecting bunker barging This Transportation Security Agency positively controlling the movement of activities in US ports (TSA)-managed credentialing individuals in the vicinity of secure or facility was one of the first to debut restricted areas, risks to those areas would on the Gulf Coast and represented be reduced. This is certainly not a new the culmination of several years of concept; for decades USCG Captains rulemaking efforts. These efforts of the Port (COTP) (i.e. the senior stemmed from the passage of the USCG official endowed with regulatory Maritime Transportation Security authority over US navigable waters Act of 2002 (MTSA) – an Act passed in a delineated geographic area) have in direct response to the 9/11 terrorist possessed this authority. In fact, after attacks upon the United States. the United States entered World War The architects of the MTSA clearly Two (WWII), President Franklin Delano recognised that the maritime component of Roosevelt authorised necessary actions the US economy was its lifeblood. Hence, to protect vessels, harbours, ports and there was a need to better secure the port waterfront facilities. This was achieved infrastructure that pumped hundreds of by the creation of security zones around billions of dollars of commerce to and waterfront facilities and reinforced by from America’s shores. The prospect of the implementation of an identification doing this without derailing a just-in- and credentialing system. The latter time (JIT) economic construct was even measure endowed the COTP with the more daunting when one considered ability to better control the movement there were 361 US public ports that of personnel at waterfront facilities by required various degrees of maritime tracking US citizen workers at docks, security regulatory oversight. Indeed, the individuals that had occasional business challenges will become even greater when at docks, temporary guards and anyone one considers that the volume of goods else that had a need to enter a restricted being handled by those ports is expected waterfront. to double over the next two decades. Granted, pre-WWII information That volume not only includes tens of technology meant that an ambitious millions of containers and hundreds of credentialing system required hundreds millions of metric tonnes (mt) of crude of thousands of hours of labour-intensive oil, but also more than 113 million ferry searches of files and un-collated records. passengers a year. Yet, there was a pressing need to implement The initial steps to secure US ports such a system due to fears that German focused on coalescing exiting technologies and Japanese saboteurs were prowling and sensor systems in order to fuse offload ports throughout the country. intelligence more effectively and also This was also compounded by several Buffalo Marine Service Inc. has been operating bunker identify potential threats from beyond high profile acts of sabotage that took barges on the US Gulf Coast from more than 70 the sea buoy or within the port itself. place in and around New York harbour years. This effort was combined with marrying prior to the US’s entry into WWI. federal, state and local law enforcement Perhaps the most infamous act of Contact: resources to sort through and respond to sabotage took place a quarter of century Tom Marian security threats. Simultaneously, owners before President Roosevelt’s declaration Tel: +1 713 923 5571 of US-flagged vessels and waterfront of war. During the early morning hours Fax: +1 713 923 5304 facilities were required to develop, assess of 30 July 1916, a 23-year old immigrant, Email: [email protected] and submit security plans to the US Michael Kristoff, began several small Web: www.BuffaloMarine.com Coast Guard (USCG) for review and fires on munition-filled rail cars and

24 www.bunkerspot.com February / March 2008 bunkerspot Operational Issues

the barge Johnson 17. The Johnson for non-employees with TWICs; however, as required, supplemented by mobile 17 was loaded with 50 metric tonnes the intent has been to reduce escorting and enrolment centres where large populations (mt) of trinitrotoluene (TNT) and 417 check-in procedures at access points for of potential enrollees are located. Thus far, cases of detonating fuses. The ensuing those holding a TWIC. Current USCG nearly 50 enrolment centres have been explosions that involved over 1,000 mt guidance in the TWIC Navigation and opened and experiences from enrollees of TNT completely destroyed the Black Vessel Information Circular (NVIC) even regarding waiting time vary from port Tom Island depot and the surrounding allows the owner/operator of facilities/ to port. As enrolment unfolds, the local neighbourhoods and killed four civilians. vessels to permit any person holding a USCG COTP will monitor the number Ironically, the Johnson 17 had been valid TWIC to act as an escort for anyone of applicants and determine at what point improperly moored at the Black Tom pier without a TWIC. the TWIC will become mandatory in a in order to avoid a $25 towing charge. This given region. Once this date is set, all was not an isolated incident as evidenced waterfront facilities will be required to by subsequent acts of sabotage, including ‘By 25 September, all US comply with the TWIC regulations. the January 1917 Kingsland munition- merchant mariners holding In the towing world, not all towing plant explosion, the destruction of the vessels are designated as secure areas and Trenton-based John A. Roebling’s a merchant mariner’s therefore would not require unlicensed Sons Company factory, and the arrest document (MMD) will be personnel to be armed with a TWIC. of three German saboteurs at the rebuilt required to possess a Generally, all towing vessels that are Black Tom Island facility on 17 February longer than 8 metres and engaged in 1917. The memory of these incidents was TWIC’ towing barges carrying regulated certainly powerful motivation for WWII products (e.g. certain dangerous cargoes government authorities to prevent similar and petroleum products) or engaged in attacks via aggressive security measures The control notion of the TWIC is an international voyage are bound by which included credentialing. underscored by the requirement that a the TWIC requirement. Thus, by 25 More than 65 years after the TWIC holder performing escort duties in September, all US merchant mariners WWII credentialing system was first a secure area can only escort a maximum holding a merchant mariner’s document promulgated, the US Department of of five individuals. More importantly, the (MMD) will be required to possess a Homeland Security (DHS) issued the escort must be in a position to prevent a TWIC. While there has been a move afoot TWIC final rule. This rule was no more person being escorted from engaging in to push this date back due to the delayed than a 21st century edition of a previous activity that is contrary to the purpose opening of the TWIC enrolment sites, era’s credentialing regime. However, of the visit. it is unlikely that this implementation the commercial realities of a modern At this juncture, the TWIC is nothing date will be changed. As such, vessel economy mean any ID-based system that more than a ‘flash card’. A current owners and operators are being strongly controls access to waterfront facilities rulemaking initiative is evaluating encouraged by local USCG authorities and vessels must not be disruptive to the various card reader prototypes. To date, not to procrastinate on pre-enrolment. movement of personnel and the flow of the challenge has been to construct a Otherwise, USCG-licensed mariners may goods. This is particularly important at robust piece of equipment that reliably have their licence suspended or revoked by sites where thousands of shift employees operates in a highly-corrosive maritime the USCG if they fail to possess a TWIC will be subject to credential verification environment in temperatures ranging by the September deadline. For those measures. from sub-zero to tropical. The card mariners without an MMD, they may To that end, the TWIC enrolment reader must also have the capability be subjected to a permanently-escorted process has been designed to ensure to download data from government- situation. Realistically, most employers that TWIC holders are subjected to a maintained databases that tracks the will simply ensure all individuals being multi-agency background investigation. status of current TWIC holders. This employed on the regulated vessel obtain a Moreover, the TWIC includes biometric would permit the system to recognise a TWIC as a condition of employment. data (i.e. fingerprints) that are unique to TWIC that has been invalidated due to As the September deadline for merchant the holder. The notion was that a facility disqualifying conduct on the part of the mariners approaches, momentum or vessel operator/owner would have the TWIC holder. continues to grow across a wide population ability to rely on safeguards behind the Given the expansive scope of the TWIC of maritime stakeholders to sign up for a TWIC enrolment process. Ideally, if a requirement and industry concerns about TWIC. This increasing pressure on the vendor, contractor or employee presents a the vast number of potential applicants, enrolment infrastructure will most likely valid TWIC at an access point, he or she the TSA contracted Lockheed Martin result in processing delays – a situation could gain unescorted access to a secure to ramp up enrolment centres throughout that will not bode well for those mariners area. Of course, owner/operators could the country. These enrolment centres that intend to wait until the last minute introduce more stringent escort measures have been established near ports and, to obtain a TWIC.

bunkerspot February / March 2008 www.bunkerspot.com 25 Company Profile: Aegean Marine Petroleum $OUBLEVISION

Lesley Bankes-Hughes hen the going gets tough, (FAMM). However, FAMM has now pulled takes a closer look the tough get going’, or, out of this location, and Aegean buys from a ‘Win the case of marine fuel number of suppliers, and holds the fuel in its at Aegean Marine’s logistics company Aegean Marine floating storage facility, the double-hulled Petroleum Network Inc. (AMPNI), ‘the Panamax tanker, the Leader, a recently ambitious vessel tough go shopping’. Clichés and puns aquired double-hulled Aframax tanker. acquisition strategy ahead aside, this New York Stock Exchange In Fujairah, in the nine months ending (NYSE)-listed company has certainly 30 September 2007, the company sold some of the phase-out of single- demonstrated a voracious appetite 480,617 mt of marine fuel and it purchases hulled vessels, and she for buying new double-hulled vessels fuel from a number of suppliers in the area. ahead of the International Maritime In Jamaica, it has a long-term contract with assesses its vision for Organization (IMO) 2015 deadline for state refinery Petrojam Ltd, and it sells the phasing out of single-hull vessels. to customers in Kingston, Ocho Rios and global business growth Set this strategy against the current Montego Bay. In the nine months ending 30 climate of spiralling crude oil prices September 2007, volume of marine fuel sold and the necessity, therefore, for any totalled 432,566 mt, and the company has bunker supplier to ensure that it has stated that it may also look to service other sufficient levels of working capital to locations in this area. cover large price fluctuations, then Aegean only commenced physical supply the obvious questions to be asked are: in Singapore in June 2006, so like-for-like can AMPNI’s balance sheet support its fiscal year (FY) 2006/2007 comparisons are ambitious vessel acquisition policy, and not yet possible. However, a hike in fuel sales when its order book is converted into from 78,650 mt in the first nine months of a considerably expanded fleet by 2010, FY2006 to 321,984 mt in the comparable can the company achieve the requisite period in 2007, indicates that the company increase in market share to sustain this is making steady inroads into the Singapore level of vessel ownership? bunker fuel market which has now reached Week in, week out, the global business 30 million mt per annum. press is peppered with articles about the need In the first of two corporate acquisitions for companies in virtually every industry last year, Aegean purchased (from cash sector to achieve end-to-end supply chain flow) Bunkers@Sea, which supplies north control, and, as Steve Leonard, AMPNI’s west Europe from the Irish coast up to recently appointed VP of the Americas, Scandinavia and whose tankers principally acknowledges, this strategy is the driving load their fuel at Zeebrugge (see Bunkerspot, factor in the company’s forward business December/January, page 8). This acquisition plan: ‘It allows us to turn expenses into also brought two additional tankers into the assets, and if there are problems [along the Aegean fleet, the Sara, an upgraded 7,389 supply chain], then we can identify them deadweight tonne (dwt) double-hull tanker, quickly and effectively; our controls are in and the Vera, a 1985-built single-hull tanker. place.’ Aegean has now added the double-hulled AMPNI currently sells and delivers tanker Aegean Princess to this service marine fuel to ocean-going and coastal ship centre and, according to Steve Leonard, operators, as well as traders and other end Bunkers@Sea is now fully integrated into users through its service centres in Greece, the company’s operations and is ‘performing Gibraltar, Singapore, Jamaica, the United very well, beyond our expectations’. Arab Emirates (UAE) and, more recently, Certainly, this acquisition of a strategic offshore UK and West Africa. The Greek niche player is being seen by industr y analysts market is served through AMPNI’s related and commentators as a shrewd move, and is company, Aegean Oil, which operates as a a good illustration of the business model physical supplier to all the country’s ports. In which Aegean seems to have developed Gibraltar, where Aegean sold some 843,073 after its initial public offering (IPO) at metric tonnes (mt) in the nine months the end of 2006. Its strategy is logical and ending 30 September 2007, the company straightforward: to increase its number of used to purchase the bulk of its fuel from service centres around the world, whilst Chevron’s Fuel and Marine Marketing increasing its market share in its already-

28 www.bunkerspot.com February / March 2008 bunkerspot strap

established centres. 22 new double-hull tankers with the Fujian The bunker market is largely the territory ‘We will look at under- Southeast Shipyard and the Qingdao of the independent suppliers who are all serviced markets or Hyundai Shipyard, with an option on an (and have to be) somewhat predatory when additional nine vessels. Furthermore, it has it comes to chasing after new business. markets that could placed an order for two ‘specialty’ ro-ro As Leonard points out, there are no real perform better if serviced tankers with a Romanian shipyard with an undiscovered niche markets to exploit in the differently; whether it is in option to purchase an additional four. The b u n k e r b u s i n e s s . I t i s ‘ a v e r y t r a n s p a r e n t ’ s e c t o r company’s order book is believed to now in terms of sourcing new opportunities, he the Americas, Europe or account for around 20% of global orders for says, and while Aegean may seek to position the Far East’ new double-hull bunker tankers, and this itself in additional service centres, it is also pre-emptive ‘strike’ will inevitably affect its dependent on achieving substantial organic competitors who have been less proactive in growth. ‘We will look at under-serviced held by Leveret International (controlled ordering new-builds. markets, or markets that could perform by Aegean founder Dimitris Melisanidis Spare building capacity at shipyards better if serviced differently; whether it is in and John P. Tavlarios) and AMPNInvest. is decreasing, and newbuild prices will the Americas, Europe or the Far East.’ Aegean (and, it must said, every industry inev itably be d r iven up over the com ing year s, So what is Aegean’s trump card in its bid analyst and player whose opinions were so, while some analysts may question the scale to grow its market share? Taking steps to canvassed for this article) is emphatic that of Aegean’s shopping spree, few question the act quickly on the opportunities thrown up the company is a very different business wisdom of placing early orders. Explaining by the phasing out of single-hulled vessels post-IPO. This, however, can prove to the background to its acquisition strategy, is, the company believes, the way forward be something of a double-edged sword in Steve Leonard notes: ‘Aegean’s management in achieving a competitive edge. If ever the considering the company’s future course. saw and seized the opportunity; there are introduction of a new maritime regulation The 2006 IPO now affords industry analysts not a lot of companies that can do this at presented a unique business opportunity, full disclosure of Aegean’s financial position the moment’. Certainly, undercapitalisation then the mandate to switch to double hulls and corporate ambitions. However, those is a problem for a number of marine fuel would seem to be it (at least from an ambitions, at least in terms of its new-build companies. Constantly escalating fuel prices early-2008 perspective). order book, are huge, and it is not easy to are leaching their reserves of working capital, Aegean’s decision to go for an IPO at predict whether a post-IPO Aegean will be and they will thus have to be cautious about the end of 2006 in order to pay down able to garner the level of business/market increasing their financial exposure by going existing debt and fund a huge order book share to sustain a fleet which, post 2010, will ahead with new vessel contracts. for double-hull vessels was a bold move. be roughly triple its current size. Prompt delivery of these new vessels The company raised $185.2 million through At this stage, the company would seem will be key to Aegean’s future plans. The the offering, and institutions now hold just to have stolen a march on some of its company has not undertaken contracts over 30% of its shares, with the remainder competitors by placing orders for a total of before with these shipyards, but says that

bunkerspot February / March 2008 www.bunkerspot.com 29 Company Profile: Aegean Marine Petroleum

the construction schedule is on track, and around $1.7 billion, well ahead of some of that Aegean has put in place technical ‘If ever the introduction of its competitors who achieve much greater teams in Piraeus and China to supervise a new maritime regulation sales revenues. Total revenue for the first the programmes. The first new-build from nine months of 2007 was $852,282,000, so it Fujian was delivered last July and this, the presented a unique should burst through the $1 billion mark for Milos, has been deployed to Singapore. business opportunity, then the full year quite comfortably. Obviously, Delivery of the Kithnos (which will operate the mandate to switch to oil price fluctuations can massively boost out of Fujairah) followed in November as or depress sales/costs figures for marine well the 4,600 dwt Serifos which will also double hulls would seem fuels businesses, but the company’s bottom operate out of Singapore. to be it (at least from an line looks strong, with net income rising Aegean has clearly set its sights on the bus- early-2008 perspective)’ comfortably year on year from $662,000 iness opportunities generated in Singapore in 2002 (if we may be allowed to look at a by the double-hull legislation. Leonard pre-IPO Aegean!) to $24,225,000 in 2006 estimates that the size of the Singapore countries with the inevitable knock-on and $21,483,000 for the first nine months fleet will contract by about 25% once effect that those companies who have a of 2007. single-hulled vessels cannot operate there, double-hull acquisition programme already In the view of one industry commentator so there should be pent-up or, at the very in place should gain a clear edge over their ‘Aegean has good liquidity [approximately least, ready demand for services offered by competitors. $30 million available at the end of September companies who are ahead in the double-hull Other suppliers may decide to add to their 2007], low gearing, and is doing just as well game. Although a relatively new presence in fleet by purchasing vessels in the secondary as can be done in this industr y’. The company Singapore, Aegean should be well positioned market, but although Aegean acquired four has secured lines of credit to finance its to grow its market share in this region. second-hand double-hulled tankers in 2007 vessel purchases, and acquisition costs will It is also worth noting here that while (including the vessels associated with its also be partially funded from cash flow. At the IMO’s deadline for single hulls is 2015, Bunkers@Sea purchase), this market sector the end of the third quarter of 2007, it had a some countries are bringing forward the ‘didn’t offer the state of the art vessels we $183.4 million senior secured credit facility, provisions of the ban, often in response were looking for,’ says Leonard. However, and then last November it put in place a to severe oil spills in national waters. For he counters: ‘We are an opportunistic $300 million senior secured revolving credit example, South Korea has brought forward company and will consider any situation facility underwritten by the Royal Bank of its deadline to 2010, while refiner GS presented to us. If we had a specific need for Scotland and HSH Nordbank which is to Caltex is to impose a voluntary ban as early a ship, and the right ship came along, such be used to replace part of the earlier credit as 2009. The Philippines is adopting an even an opportunity would not be ruled out; we facility. A condition of some the company’s more hard-line stance on single hulls by would act on it but it’s not on our agenda lines of credit is that single customers cannot prohibiting all such vessels carrying crude right now given our current order book’. account for more than 10% of overall annual oil and bunker fuel from visiting its ports Given the company’s financial performance revenues (in 2004, for instance, US Navy from April this year (see page 14). The following its IPO, its balance sheet looks fully contracts accounted for around 24% of feeling among some industry watchers is able to support its acquisition strategy. At the annual revenue). While the 10% ceiling is that this policy may be taken up by other end of 2007, it had a market capitalisation of standard banking practice, this does mean

30 www.bunkerspot.com February / March 2008 bunkerspot Company Profile: Aegean Marine Petroleum

that Aegean will have to maintain a broad was delivered in January, and the Amorgos customer base in future years. was due to arrive in Gibraltar during the The payment schedule for construction first week in February. The company is also milestones totals some $180,326,000 between anticipating delivery of two ro-ro vessels 2007-2009 for the double-hulled tankers and from Romania in the first half of 2008. The $15,708,000 for the specialty tankers. The first vessel is currently undergoing sea trials company does carry a significant tranche and should be delivered in February while of long-term debt, but the debt repayment delivery of the second vessel is scheduled for structure does allow for a considerable level April. These unusual shallow draft vessels are of repayment post-2012 (some $23,811,000 of double-hull, double-bottom construction, according to the company’s FY2006 report). and have been specifically designed for Once again, this shows that the company deployment around island regions, notably will have to realise its ambitions to grow Greece. Onboard road tank wagons (rtws) its market share in the relatively short term, will leave the ships to make fuel deliveries so that the debt repayment schedule after to gas stations, factories, power stations, or the completion of its vessel acquisition other industrial facilities. Aegean has options programme can be comfortably met. to purchase a further four ro-ro vessels, but Before its IPO, Aegean was cautious in its says that a decision to exercise these options approach to price risk in its fuel purchases. In is still under consideration. its offer document the company noted that Aegean’s attempts to boost market share it was not its policy to fix future prices for will also be realised by expanding the delivery of fuel in excess of a week, and that number of service centres world-wide. Its under consideration but we have made no it did not use derivative contracts, swaps or second company acquisition in 2007 – that decision at this point.’ futures to offset price fluctuations in marine of Portland Bunkers International – Product development is also an area for fuel. However, at that stage (in late 2006), the gives it another foothold in North West potential growth. Last October, Aegean company did not rule out using derivatives Europe. This marine terminal has four launched its own brand of marine lubricants. and other financial instruments to mitigate inland storage tanks with a total capacity of Alfa Marine Lubricants are currently price risk. Certainly, the company will have 40,000 cubic metres (m3), and Aegean plans manufactured in Aspropyrgos in Greece by to address this possibility as it increases the to offer lower sulphur marine fuel from here an Aegean-related company purchased from number of vessels it holds as floating storage, as it is located close to the southern access Texaco (the company is also producing and it will be interesting to see if and how of the North Sea Sulphur Emission Control blends on Texaco’s behalf at the facility). it changes its oil price risk strategy in the Area (SECA). The Portland facility will be In Singapore, the company is sourcing the short term. up and running in the first quarter of this product through a local manufacturer, and Aegean’s fourth new double-hulled vessel year and, according to Steve Leonard, a ship intends to market the product globally: has already been designated to operate out ‘Anywhere you mention, I’ll say “yes” to,’ of the terminal and is currently undergoing says Leonard. a modification programme. So, what sort of a player will a post- The company’s decision to establish a IPO Aegean be? The main driver for its foothold in Ghana is a clear indication future success must be its ability to dovetail that expansion into the African market its impressive vessel acquisition programme is high on its agenda. ‘It is a very large with solid new business growth. The 2006 market for many types of ships – tankers, offering meant that it had to declare its containers, upstream vessels, and exploration hand over its future expansion plans, and and production (E&P) vessels,’ says Leonard. its competitors will be ready to exploit any ‘We are already there with floating storage, weak links in its strategy, such as vessel the 68,000 dwt double-hulled Fos, and we construction delays. However, in the early are the only one that can offer this – we can days of 2008, it appears to be in sound make guarantees about fuel availability.’ financial health, and, if the need should arise, When asked whether Aegean would be most analysts agree that Aegean would have looking at opportunities thrown up by no trouble in securing new lines of credit. Malta’s decision, under pressure from the Balancing expensive acquisition costs with European Commission (EC), to open up the imperative for a substantially greater its petroleum products market to competition, market share is a tricky business, but here, at Leonard commented: ‘Malta is an interesting the beginning of 2008, Aegean’s foothold on location; like other similar locations, it is the financial tightrope has yet to waver.

32 www.bunkerspot.com February / March 2008 bunkerspot Spotlight on Turkey Country 0ROFILE 4URKEY

David Waterman reviews he bunkering areas of Turkey can bunker and running costs’. The new rates the key players and supply be divided into five regions: the are: $750 lump sum for MGO deliveries TTurkish Straits, the Marmara Sea, (up from $500); $1,500 lump sum for fuel centres of the Turkish the Aegean Sea, the Mediterranean and oil (up from $1,000); a $1,500 lump sum the Black Sea. However, the Turkish for fuel oil and MGO deliveries (up from bunker market Straits and the Marmara Sea are the $1,000). main bunkering centres, including the Many suppliers have complained about ports of Istanbul and Izmit Bay, and excessive bureaucracy within the Turkish together account for approximately bunkering industry, and all suppliers have 95% of the total market. had to obtain licences from the Energy The market is dominated by the port of Markets Regulatory Authority (EMRA) Istanbul due to its location in the Turkish since 2004. Suppliers have to send monthly Straits, through which 50,000 ships pass statistical reports to the EMRA, and annually, and about 30% of these take currently pay a turnover tax of about 50 on fuel in Istanbul. Ships have to wait cents per tonne. for clearance in order to pass through the The Turkish Bunker Association Strait, and this is one of the reasons they (TBA) brings together the key players in will often choose to take on fuel from the industry, and organises the International Istanbul’s terminals, rather than another Bunker Conference (IBC), last held at Turkish port or the main foreign competitor the Istanbul Ritz-Carlton in 2006. The port – Piraeus. There are seven physical next IBC is scheduled for 2009 so as not suppliers in Istanbul. Five supply both fuel to coincide with the Posidonia shipping oil and marine gasoil (MGO) and together conference to be held in Greece this year. account for more than 80% of the total Due to the new European Union (EU) Istanbul market of about 1.5 million metric regulations requiring ships to burn fuel of tonnes (mt) a year. The remaining suppliers less than 0.1% sulphur when in port, many only deliver MGO. Istanbul suppliers obtain Turkish suppliers have started to supply low the vast majority of their fuel from a sulphur MGO to ships destined for EU local refinery producing straight-run, low- ports. However, traders say that supply is not density, low sulphur, high-quality fuel oil. currently sufficient to meet demand. Blending is normally done ashore rather The main players in the market are than on the barge. Anadolu (formerly known as Baytur), Most players agree that the Turkish bunker Petrol Ofisi, Energy Petrol, CYE Petrol, market as whole has been expanding for the TBS, Lukoil and Oil Trade. last two years, and is continuing to do so. Anadolu is a key player in the Turkish As a result, one supplier pointed out, a more bunkering market. The company is a realistic figure for current annual fuel sales physical supplier in Istanbul and trades would be about 1.75 million mt. in all other Turkish ports. Anadolu can Izmit Bay is also a growing bunkering supply the main grades of fuel oil – 180 area, attributable to a thriving automobile and 380 centistokes (cst) – and MGO by importing industry and the ability for ships barge from the ports in the Turkish Straits to take on bunkers while working cargo. and the Marmara Sea, and can arrange The vast majority of Turkish suppliers deliveries of MGO elsewhere by road tank make deliveries by barge. Turkish regulation wagon (rtw). The company can currently requires a pilot and tugboat for all barges over supply 0.2% sulphur MGO, and is planning 1,000 gross tonnes (gt), and consequently to supply 0.1% sulphur fuel in the near most barges are below this limit. Another future. Anadolu currently has 10 barges, factor influencing the presence of smaller and is expecting an addition to its fleet, the barges is that Turkish regulations do not Bogazici 15, at the start of 2008. Its 29,000 allow for ‘milk run’ deliveries, whereby deadweight tonne (dwt) floating storage more than one ship is supplied before tanker MT Selin K, located in Istanbul, returning to the supply point. Barge rates allows for prompt supply around the clock. for bunker deliveries in Istanbul and Izmit Anadolu’s product is sourced from Russian Bay increased from January this year as a ports in the Black Sea. response, suppliers have said, to ‘increased Petrol Ofisi is another key player, and

34 www.bunkerspot.com February / March 2008 bunkerspot Spotlight on Turkey

currently supplies in Istanbul, Izmit Bay wider energy sector and is one of Turkey’s ‘Petrol Ofisi is planning in the Turkish Straits, Izmir in the Aegean largest corporations, a factor that gives to build a refinery in the (also known as Nemrut Bay), Antalya on it a competitive edge in the marine fuel the Mediterranean and Trabzon in the market. Iskenderun region, and Black Sea. Energy Petrol supplies at Istanbul and the has applied for a licence to In 2006, Petrol Ofisi opened a terminal main Marmara and Black Sea ports. The begin construction’ in Canakkale (on the Aegean) to provide an company operates seven barges, including alternative supply point to Piraeus for vessels the biggest in the Istanbul area – the 1,650 waiting to pass through the Dardanelles. dwt Atam. Energy Petrol supplies about However, the company has since informed 1,650 ships per year, keeping about 14% Bunkerspot that the terminal will be closing of the market. It sources its product from due to bad weather conditions that have not Turkish refineries which, the company says, allowed for safe barging. are ‘known for their high quality straight- In January, Petrol Ofisi opened a new run fuel’. The company can supply all terminal in Iskenderun on the Mediterranean. grades of fuel oil and MGO, and received The Iskenderun project was initiated to its first cargo of 0.1% Sulphur MGO in meet extra demand created as a result of mid-January. Energy Petrol’s founder, opening of the Baku-Tbilisi-Ceyhan (BTC) Mustafa Muhtaroglu, was the founding oil pipeline and the extra traffic it generates. chairman of the TBA, is a council member Petrol Ofisi has 380 cst fuel oil and MGO of the International Bunker Industry available from the new terminal, supplied by Association (IBIA), and an assembly two of the company’s 13 barges which have member of the Turkish Chamber of been moved down from Istanbul. Shipping – the most powerful semi-official Petrol Ofisi is also planning to build a body in Turkish shipping. refinery in the Iskenderun region, and has CYE Petrol has a similar market share applied for a licence to begin construction. to Energy Petrol. It can supply all grades Petrol Ofisi supplies the main grades of fuel oil from 30 cst to 380 cst and MGO of fuel in Istanbul, and has also started to from Istanbul and Izmit Bay. The company sell 0.1% sulphur MGO. Its new jetty at makes deliveries using three time-chartered the Haramidera terminal, which had not barges, and sources its product from ports previously been used for bunkering, was on the Black Sea. finished in November 2007. Because the TBS is a joint venture between Turkish terminal is only about seven kilometres oil company OPET and Danish supplier (km) from the supply point, deliveries can O. W. Bunker, and also has a similar market be made at very short notice. Petrol Ofisi share to Energy Petrol and CYE Petrol. The keeps physical stocks all around Turkey company supplies all the main grades of to ensure efficient delivery. For example, fuel oil and MGO in Istanbul, Izmit Bay, it maintains a supply point in Trabzon, Izmir, and Antalya. The supplier started to rather than fetching the fuel from Istanbul. sell 0.1% sulphur MGO at the beginning The company is a major player in the of 2008. TBS sources its product from Tupras, a previously state-run refinery that Port / Region Bunker suppliers Grades of fuel available Supply has recently gone through privatisation and infrastructure is now under the same group as TBS. The Istanbul / Turkish Anadolu, Petrol Ofisi, Energy Petrol, IFO 30 cst - 380 cst, MGO, Barge company’s General Manager, Sibel Buyuk, Straits CYE Petrol, TBS, Lukoil and Oil Trade limited 0.1% sulphur MGO is the former Chairperson of the TBA. Izmit Bay / Anadolu, Petrol Ofisi, Energy Petrol, IFO 30 cst - 380 cst, MGO, Barge Oil Trade only supplies MGO and operates Marmara CYE Petrol, TBS, Lukoil and Oil Trade limited 0.1% sulphur MGO in Istanbul and Izmit Bay. The company Izmir / Aegean Petrol Ofisi, TBS, As-Mira IFO 180 - 380 cst, MGO, Barge, rtw makes deliveries using five chartered barges. limited 0.1% sulphur MGO Product is sourced from Russia. Oil Trade Antalya, Petrol Ofisi, TBS, As-Mira IFO 180 - 380 cst, MGO, Barge, rtw currently sells about 64,000 mt of fuel oil Mediterranean limited 0.1% sulphur MGO a year. Iskenderun / Petrol Ofisi IFO 380 cst, MGO Barge Lukoil also supplies in Istanbul and Izmit Mediterranean Bay and up until 2007, when the company Trabzon / Black Sea Petrol Ofisi MGO Rtw started branching into fuel oil, also only Key: cst= centistoke; mgo=marine gasoil; mdo= marine diesel oil; mt = metric tonne; rtw = road tank wagon supplied MGO. The company has 10 barges

36 www.bunkerspot.com February / March 2008 bunkerspot Spotlight on Turkey

in the Turkish market, and sources its make deliveries by one of its two barges or Bridge Oil, World Fuel Services, and product from its own refineries in Russia. by road tank wagon (rtw), and sources its Bunkers International. Most traders Lukoil told Bunkerspot that MGO supplies product directly from the Tupras refinery in arrange deliveries in all Turkish ports. are significantly affected by the seasons, and Aliaga, on the Aegean. Bridge Oil is one of the leading traders prices become less competitive in winter The Tupras refinery prepares fuel oil in Turkey, selling approximately 400,000 when Russian ports become less accessible. products for each individual vessel, blending mt of fuel annually. The company is also Lukoil will deliver fuel all year round and heating each order to the required Istanbul’s oldest trader, and this year will – even on national holidays if orders are specification. AS-Mira says that this makes be celebrating its 20th anniversary in the placed in advance. The company currently its product the best quality in the region. Turkish market. commands about a 20% share of Turkey’s Its two barges, M/T AS Yakit-1 and M/T World Fuel Services operates in Turkey MGO market, and says one of its main goals Aslan-3, can load up to 185 mt of fuel oil through Tramp Oil, which joined the for the future will be to increase its share of and 150 mt MGO; and 250 mt fuel oil and group three and a half years ago. the fuel oil market. 100 mt MGO, respectively. AS-Mira took Smaller traders include companies such AS-Mira Petrol Ltd is both a local over bunkering operations from its parent as A&B Petrol, ACT Petrol Ltd, Balkan supplier and trader. The company makes company, AS-Yakit, which now supplies to and Black Sea Shipping Company, deliveries at Canakkale on the Aegean, the domestic market. In total, the company Force Twins Shipping Ltd, Istanbul Antalya on the Mediterranean, and at all has 29 years of bunkering experience. Bunkering & Shipping Ltd, Oran ports and marinas in between these locations. There are a multitude of traders in the Bunker Ltd, Sima Petrol Ltd, and The company can supply the main grades of Turkish market, but some of the main Triton Marine Fuels Ltd. Brokers include fuel oil and MGO, and is now supplying players are the representative offices of Kaynar Industry and Foreign Trade 0.1% sulphur MGO as well. AS-Mira can international trade houses, including Co. Ltd.

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Stephan Wrage of n 15 December, the world’s The tethered flying SkySails can operate at SkySails argues that the first commercial cargo vessel altitudes between 100 m and 300 m, where Oequipped with additional stronger and more stable winds prevail. By christening of the propulsion by a SkySails-System was means of dynamic flight manoeuvres, e.g. ceremonially christened by Eva Luise the figure of eight, SkySails generate two Beluga SkySails marked Köhler, wife of the German Federal to three times more power per square metre a key milestone in the use President, at the Landungsbrücken in (m2) sail area than conventional sails. It is Hamburg. thus possible to gain significant savings by of sustainable propulsion With all components of the towing kite using comparatively small sail areas. technologies for the propulsion system installed on deck, the The launch and recovery system manages 133 metre (m) Multi Purpose Heavy Lift the automatic deployment and lowering shipping industry Carrier MS Beluga SkySails, belonging to of the towing kite and is installed on the the Bremen-based Beluga Group, was forecastle. During the launch, a telescopic now ready to set sail for the very first time. mast lifts the towing kite, which is This marked an important milestone in the reefed like an accordion, from its storage use of sustainable propulsion technologies compartment. When it reaches a sufficient at sea. altitude, the towing kite then unfurls to It is a simple fact: wind is cheaper its full size and can be launched. A winch than oil and the most economic source of releases the towing rope until operating energy on the high seas. However, shipping altitude has been reached. The recovery companies have not been taking advantage process is performed in reverse order. The of this attractive savings potential because, entire launch and recovery procedure is until now, no sail system has been able to carried out automatically and typically meet the requirements of today’s maritime takes between 10 and 20 minutes. shipping industry. The ship’s crew can operate the SkySails- Now for the first time, SkySails is System from the bridge. Launch and offering a wind propulsion system based recovery as well as emergency actions on large towing kites which meets all these can be initiated at the push of a button. requirements. The SkySails’ automatic control system Depending on the prevailing wind performs the tasks of steering the towing conditions, a ship’s average annual fuel kite and adjusting its flight path. costs can be reduced by 10% to 35% by All information on the operation status of using the SkySails-System. Under optimal the system is displayed in real-time on the wind conditions, fuel consumption can monitor of the SkySails control panel and is temporarily be cut by up to 50%. This thus easily accessible for the crew. allows enormous amounts of expensive oil Their double-wall profile gives to be saved, conserves petroleum resources the SkySails towing kites aerodynamic as they become ever scarcer in the future and properties similar to the wing of an aircraft. simultaneously reduces climate-damaging Thus, the SkySails-System can operate not Stephan Wrage is the chairman of the SkySails executive board and is in charge of sales, public emissions. just downwind, but at courses of up to 50° relations, investment relations and business to the wind as well. development. Reliable, high-performance technology The textile towing kite is easy to stow SkySails is developing, producing and selling an The SkySails-System consists of three simple when folded and requires very little space internationally-patented wind propulsion system main components: a towing kite with rope; onboard ship. A folded 160 m2 SkySails, based on large towing kites. SkySails believes that a launch and recovery system; and a control for example, is only the size of a telephone its technology will enable ship operations to ‘become system for automatic operation. booth. In contrast to conventional sail more profitable, safer, more sustainable and more Instead of a traditional sail fitted to a propulsions, the SkySails-System has no independent of declining oil reserves’. mast, SkySails uses large towing kites for superstructures which may obstruct loading the propulsion of the ship. Their shape is and unloading at harbours or navigating Contact: comparable to that of a paraglider. The under bridges. Furthermore, the heeling Stephan Wrage technical possibilities resulting from the caused by the SkySails-System is minimal SkySails GmbH & Co. KG spatial separation of the ship and the ‘sail’ and virtually negligible in terms of ship Tel: +49 40 702990 or towing kite give SkySails an entirely new safety and operation. Email: [email protected] performance spectrum: high performance, Due to the compact and universal design, Web: www.skysails.com high practicability, high safety. virtually all seagoing cargo ships can be

38 www.bunkerspot.com February / March 2008 bunkerspot Environmental Issues

outfitted, or retrofitted, with the SkySails to test promising new technologies and propulsion. approaches – has been one of these valuable ‘The pilot customer phase partners throughout the development From vision to reality starting with the maiden process and was the first company to sign a In 2001, SkySails started with the voyage of the MS Beluga sales contract for the system. development of the world’s first practicable SkySails thus marks the As a pilot customer, Beluga Shipping will towing kite propulsion system for employ the system during regular shipping commercial shipping. Then after five years last step before the startup operations and gain thorough and detailed of intense developmental work, the basic of series production of the practical experience in using it. These research and engineering was completed SkySails-System for cargo experiences and lessons learned by the pilot near the end of 2005. All essential system customers will then flow into the process components successfully underwent trials ships in 2008’ of optimising the SkySails propulsion for off the coast of Wismar on the Baltic series production. The pilot customer phase, Sea aboard the 15 m testing platform Jan starting with the maiden voyage of the MS Luiken. exchange with these potential customers Beluga SkySails, thus marks the last step In early 2006, the final development throughout the research and development before the start-up of series production phase prior to the market launch of the (R&D) process helped in identifying of the SkySails-System for cargo ships in SkySails-System began on board the 55 m the particular conditions and demands 2008. buoy-laying vessel MS Beaufort. By the end of the maritime industry concerning an Given that the SkySails-System of 2006, SkySails had scaled the towing alternative propulsion technology. These demonstrated its suitability for regular kite’s area on this ship all the way up to insights made it possible for SkySails to shipping operations during the pilot test 160 m2. This marked the first time that the develop a custom-tailored technology phase, Beluga Shipping wants to equip SkySails-System aboard the Beaufort had which meets all requirements of modern more of its currently 47 cargo vessels with reached full-scale size. shipping. the towing kite propulsion. The company SkySails was able to establish partnerships Beluga Shipping – renowned in the already plans on installing the system on two w it h i n nov a t ive s h ippi n g com p a n ie s a t a ve r y industry as a very innovative company, being larger vessels currently under construction. early stage. A very close cooperation and willing to leave the beaten path in order Interest among shipping companies

bunkerspot February / March 2008 www.bunkerspot.com 39 Environmental Issues

‘The systematic and worldwide use of SkySails technology would make it possible to save over 146

million tonnes of CO2 a year, an amount equivalent to about 15% of Germany’s

CO2 emissions’

Climate protection Due to its universal and compact design, virtually all sea-going cargo vessels can be retro- or outfitted with the SkySails propulsion. The SkySails-System can be installed on newly-built ships as well as on existing ships without extensive modifications. The vessels best suited for using the system are cargo ships with an average cruising speed of under 18 knots, as well as super yachts and fish trawlers of over 24 m in length. This opens up an attractive market for the SkySails-System: Some 60,000 (e.g. bulk carrier, tanker, multipurpose vessels, etc.) of the approximately 100,000 ships worldwide listed in Lloyd’s Register and about 1,100 of the 1,900 newly built vessels joining the world’s merchant fleet each year are predestined to be outfitted with SkySails propulsion. SkySails has set itself ambitious production goals for the next few years, planning to equip 1,500 ships by the year 2015, and thus it has the potential to make a major contribution to curbing climate change. The operating cargo vessels is steadily increasing. presently has 48 permanent employees at systematic and world-wide use of SkySails In addition to the Beluga Group from Bremen, its locations in Hamburg and Wismar and technology would make it possible to save

numerous other shipping companies plan to plans to employ around 70 members of staff, over 146 million mt of CO2 a year, an amount

equip one or more of their vessels with mainly engineers, by the end of 2008. equivalent to about 15% of Germany’s CO2 SkySails propulsion. This group includes After completion of the pilot phase and emissions. – among others – the shipping companies start-up of series production, R&D work It is SkySails’ objective as a company to Wessels and Jüngerhans. will focus on advancing the technology and be an example for how working with nature At this stage, SkySails is evolving from increasing its performance. The towing – and not against it – makes business success an R&D-based technology venture into a kites for cargo vessels currently offered by possible, for its customers and SkySails alike. manufacturing business company. SkySails SkySails have an effective load of between By harnessing the most economic and has set itself ambitious production goals eight and 32 metric tonnes (mt). The environmentally sound source of energy for the next few years and is now laying scheduled product programme comprises available on the high seas, the SkySails- the required foundations. Currently, the towing kite propulsion systems with an System thus provides a very attractive manufacturing capacity and logistics are effective load of up to 250 mt. The system alternative for shipping companies addressing being established. This process also entails will thus be further scaled up to these sizes both economic and environmental continual corporate growth: SkySails within the next few years. considerations.

40 www.bunkerspot.com February / March 2008 bunkerspot Environmental Issues #RYINGWOLF

Lars Robert Pedersen of ow that the Baltic and North One might wonder where the next SECA A.P.Moller-Maersk looks Sea / English Channel Sulphur will be designated, but may also wonder NEmission Control Areas if the SECA concept is already dead. The at the operational and (SECAs) are in force, and land-side requirements for the designation of a SECA caps on sulphur emissions have tackled are very stringent and tough to meet, and regulatory issues resulting the initial problem of acid rain and there is a tendency to adopt SECA-like from the requirement to deforestation in northern Europe, the requirements in local legislation. However, concept of more SECAs might already there are many areas that suffer serious air use low sulphur distillate be dead, with smaller, local or regional quality issues but which do not suffer from fuels regulations used instead in coastal areas. direct sulphur-related effects, and therefore Sulphur was once the ‘beast’ in air emi- their problems are not necessarily associated ssions, with acid rain causing deforestation with sulphur emissions. in Europe and Scandinavia. However, it The Baltic and North Sea/English Channel now appears that particulate matter (PM) is SECAs will stay in place while the concept becoming the main environmental issue. It of coastal zones, close to populated areas, or must be remembered, though, that sulphur mini-SECAs, may well be adopted in the emissions are also a PM issue. It is difficult to revised version of Annex VI. reduce PM in diesel emissions with sulphur in A differentiated approach to sulphur the fuel, and diesel particulate matter (DPM) emissions will require either using low sulphur is now seen as a serious health issue in ports fuel or by scrubbing in reduction zones. and in populated areas close to dense shipping Is fuel switching the right way to reduce activities. sulphur emissions? A.P.Moller-Maersk Nitrous oxides (NOx) are also contributing believes that a cost/benefit analysis is the to local air quality issues although reductions right way to determine which is the right in NOx levels tend to lead to reduced engine solution. Shipowners should have the freedom efficiency. The trade-off between NOx to choose amongst the various emissions- reduction and increase in carbon dioxide reduction options to reach their goals.

(CO2) must thus be considered. CO2 is now a The disposal of waste water from scrubbers global issue and should not be addressed from remains an open issue. As the expectations a local perspective. Solutions should be sought for sulphur reduction in ports is now very globally, via the International Maritime high and the criteria for waste water handling Organization (IMO). remains uncertain, A.P.Moller-Maersk The current process taking place at the believes that fuel switching is the only viable IMO to revise MARPOL Annex VI has solution in the short term. However, we several possible outcomes. The Chairman of should never rule out technology advances in the Working Group for air emissions at Bulk abatement techniques. Liquids Group (BLG) 11 said that he could The usage of distillate fuels with maximum see two very different ways forward. These 0.1% sulphur will be required in European were either a global uniform distillate fuel Union (EU) ports and in Californian waters requirement with a sulphur limit of 1%, or from 2010, then perhaps also in designated a differentiated requirement with stringent coastal areas, especially near ports, from 2011 sulphur limits close to populated areas and – this remains a question mark. more lenient requirements on the high seas. What then is the big deal about switching The Secretary General of the IMO, fuels? In ‘the old days’ diesel engines ran on Efthimios E. Mitropoulos, has instructed a diesel oil. Later on, residual fuels evolved as group of experts to review the effects of the bunker fuels, but for safety reasons, they were Lars Robert Pedersen is Director of Regulatory Affairs various proposals on the table. We contend, only used at sea. One might argue that not for A.P.Moller-Maersk, however, that one global fuel standard will switching fuels was a safety concern. not satisfy local regulations already existing As technology evolved, shipowners learned Contact: in different parts of the world. A.P.Moller- how to operate their engines on residual fuels Lars Robert Pedersen Maersk is therefore supportive of the US all the time. A generation has now lapsed and A.P.Moller-Maersk and Baltic and International Maritime with that has gone the knowledge of good Tel: + 45 3363 4482 Council (BIMCO) conceptual approach to practice that had been built up. Today we hear Email: [email protected] sulphur reductions in line with the statements many statements about the safety concerns Web: www.maersk.com from the World Shipping Council. associated with switching fuels. However, the

42 www.bunkerspot.com February / March 2008 bunkerspot Environmental Issues

industry should not ‘cry wolf’ on issues such operations. As far as we are concerned, this is ● the fuel oil suppliers shall set blending as this because it is something which we know a test to prove that fuel switching is an option targets using ISO 4259; the sulphur limit how to tackle and overcome. that is available to help reduce air emissions. is a critical limit and the supplier should From an operational viewpoint, the It is also an alternative to the practice of ‘cold guarantee compliance temperature gradient during the change-over ironing’, which does not necessarily work for ● and we have to remember that exceeding from residual fuel to distillates is critical. No everyone. We question the cost-effectiveness the sulphur limits as proscribed in heating whatsoever may be applied to the for ocean-going ships compared to on-board MARPOL Annex VI and EU Directive distillate fuel to ensure lubricity. Standard solutions. 2005/33/EC is a breach of environmental procedures for switching fuels are contained Fuel switching is a mobile solution which laws. In some countries this is now a in all engine builders’ operations manuals. travels with the ship and can be deployed criminal offence. In California, all A.P.Moller-Maersk anywhere the ship goes. As a major shipping company, A.P.Moller- container vessels are now switching to 0.2% Also the fuel itself poses challenges when Maersk does not support one global fuel sulphur distillate on both main and auxiliary it comes to compliance with sulphur limits. standard as the answer to air emission engines, 24 nautical miles (nm) from port. There are a number of important issues that reductions. We do not consider fuel switching This initiative started in March 2006. The now need to be adhered to: to be a safety issue that cannot be managed, company estimates that this alone cuts around ● Bunker Delivery Notes (BDNs) must be and we believe in mobile solutions which 400 metric tonnes (mt) a year of emissions Annex VI compliant; every supplier must are independent of shore-side infrastructure. of NOx, SOx and PM. The process is fairly sign the MARPOL sample The sulphur limit is critical to operational easy to implement, not least because the ships ● Port State Control must take ISO 4259 compliance and fuel suppliers should guarantee already carry distillate fuels. So far, no serious into account when judging if an owner is the limit of sulphur in the fuel they supply by issues have been observed in terms of engine in compliance or not utilising the advice in ISO 4259 as intended. Environmental Issues 3-!24MOVES

Mark Servidio, egardless of where one inter-facility transfers. VP, Logistics and stands on the subject of Sharp’s key environmental project, Rclimate change, we are all however, is its participation in the Environmental Supply impacted by rising energy prices SmartWay Program, a US Environmental and our dependence on foreign oil. Protection Agency (EPA) initiative Chain Planning for Sharp Since carbon-based energy fuels our which the company signed up to in 1994. economy and carbon dioxide (CO ) is The programme covers freight movement Electronics USA, and 2 the by-product, any effort to reduce by truck, rail and sea, and was set up Buddy Polovick of the US fuel use will also reduce greenhouse to establish incentives for fuel efficiency Environment Protection gas emissions. Further reductions in improvement and greenhouse gas emission fuel use can also reduce nitrous oxide reductions. By 2012, the initiative aims Agency, extol the virtues (NOx) and particulate matter (PM) to reduce, between 33-66 million metric

emissions. Saving fuel, therefore, is a tonnes (mt) of CO2 emissions and up to for freight shippers and win-win position both for the economy 200,000 mt of NOx emissions each year. carriers of signing up and for the environment. The freight It is also hoped that the scheme will result sector is a significant contributor to in annual fuel savings of up to 150 million to the US SmartWay greenhouse gases, and it is imperative barrels of oil. Transport Program that industry’s logistics and supply Under the terms of the voluntary chain sectors become involved in programme, freight carriers can apply to environmental awareness. As logistics become a SmartWay Transport Partner, and supply chain professionals, we can and shippers then pledge to use SmartWay be a significant part of the solution carriers. In signing up to the programme, and also help to make our businesses carriers must measure their current more profitable. environmental performance using the Sharp Corporation (Japan) and SmartWay Transport Fleet Logistics Energy Sharp Electronics USA are working and Environmental Tracking (FLEET) with members of the environmental Performance Model for carriers and then supply chain community to confront these commit to improving their performance areas of environmental concern. With its within three years. headquarters in Osaka, Japan, Sharp is In return, shippers must then assess the working towards being an environmentally current proportion of goods dispatched green company and has introduced what with SmartWay Transport Partner Carriers it calls a ‘Super Green Strategy’. All using the FLEET Performance Model for Sharp manufacturing sites have gained Shippers. This model allows a company Mark Servidio is Vice President, Logistics and Environmental Supply Chain Planning with Sharp ISO14001 Environmental Management to quantify the percentage of freight they Electronics Corporation. Sharp is a member of the US System certification and the corporation ship or receive with fleets that are members EPA SmartWay Program. has established intra-company guidelines of the SmartWay Transport Partnership, for the production of environmentally- and it also has the capability to help

Contact: conscious product designs. shippers estimate the CO2, NOx, and Mark Servidio The company has embraced the philosophy PM emissions generated from their entire Tel: +1 201 529 9452 of Environmental Supply Chain Planning shipping operations. E-mail: [email protected] which looks at the logistics and supply chain For shippers to become SmartWay as it relates to the environment, and not Transport partners, they must commit to Buddy Polovick is the Chief Shipper Coordinator for just in terms of cost. It is looking at ways ship at least 50% of their goods using the SmartWay Transport Partnership and is based at of reducing the movement of products by SmartWay carriers, and also assess and the National Vehicle and Fuel Emissions Laboratory, selling directly from factories; it is trying to commit to improving facility transport Ann Arbor, Michigan. He has worked for the US use modes of transport which will result in emissions within three years. Environmental Protection Agency for 12 years within the lowest attainable carbon footprint; and For Sharp USA, its response to joining the Office of Transportation and Air Quality. it asks its customers to consider combining the SmartWay Program was to establish orders or using weekly shipments where an action plan with goals which included Contact: possible. Other corporate initiatives include having strict pick-up times on Less-Than- Buddy Polovick the use of correct packaging to prevent Truckload (LTL) shipments, implementing E-mail: Polovick.Buddy@epamail. product damage and subsequent return, and a no-idle policy on trucks when waiting to epa.gov the implementation of a ‘planning from the be loaded, and receiving Customs-Trade Web: www.epa.gov/smartway right place’ concept which aims to reduce Partnership Against Terrorism (C-TPAT)

44 www.bunkerspot.com February / March 2008 bunkerspot Environmental Issues

carriers which rose to 98% in 2006/7. The well as considering other innovations such ‘Some 52 freight-shippers adoption of a non-idle policy and increased as cold-ironing, speed reduction and hull and 17 shipper-carriers usage of intermodal means of transport also coatings. have now signed up to the resulted in a reduction between 2004-2007 As a company, Sharp is receiving more of CO2 emissions (918.2 mt), PM (0.8 mt), and more enquiries from consumers asking SmartWay scheme, and we NOx (18.5 mt), and a saving of 82,005 what we are doing to address environmental must all be committed to gallons of diesel fuel. Sharp also won issues. Some 52 freight shippers and 15 the 2006 and 2007 SmartWay Excellence shipper-carriers have now signed up finding long term solutions Award, the only shipper to have won it to the SmartWay scheme, and we must and introducing more twice. all be committed to finding long term sustainable operations’ The next step is for more ocean carriers solutions and introducing more sustainable to sign up to SmartWay. This will require operations. We would like to see a SmartWay a commitment to using low sulphur transport programme introduced across the certification. bunker fuels and looking for other fuel European Union (EU), but it is important For Sharp USA, the results of SmartWay improvements, as a well as a commitment that companies aim to exceed the current membership have been positive. In 2004/5, to engine improvements such as the use requirements which have been mandated 28 % of the 85 ca r r ier s it used were Sm a r tWay of slide valves, fuel injection, and exhaust and that they realise that their competitors members, and this had risen to 90% by gas recirculation (EGR). A move to using are also aware of these issues so that they 2006/7. Yet again, in 2004/5 33% of a total scrubbers, catalysts, bonnets and other after- must take a lead in tackling environmental of 127,841 mt was shipped with SmartWay treatments should also be on the agenda, as concerns in order to stay ahead.

Sin Soon Hock Sdn. Bhd. is a fully-integrated marine Logistics service company providing value-driven services that go far beyond mere transportation. Founded in 1910, Sin Soon Hock Sdn. Bhd. has risen to the top of its field by developing innovative services and solutions that push the state of the art. From a strong foothold on local shores, we are advancing into international markets to emerge as a major global player. To fulfill this vision, we are focused on consolidating our competencies fostering innovations, and offering services & solutions that seamlessly combine our expertise and experience in marine logistics. Our diverse fleet includes the Anchor Handling Tug (AKT), dumb barge, oil barge, water barge, pontoon, passenger boats and oil tankers while our comprehensive range of core services includes; • Moving of dry and liquid bulks in inter-modal or multimodal mode • Supply of fuels • Bunkering • Ship chandlering • Ship chartering • Dry docking • Repair & maintenance for a wide array of vessels • Various tug and barge services • Offshore transportation associated services • Marine engineering works Progress steered by experience

Sin Soon Hock Sdn Bhd (198240-P) 2-7-23 Harbour Trade Centre. Gat Lebuh Macallum, 10300 Pennang. Malaysia.

T: +604-2626028/2626029 F: +604- 262 2915/264 3025 E : [email protected] Alternative Fuels 'AS TO "UNKERS

David Waterman looks at atural gas provides an abundant with huge coal resources such as China and the potential of Gas-to- source of energy, with an the US are paving the way towards large- Nestimated 6,000 trillion cubic scale Coal-to-Liquids (CTL) production in Liquids as an alternative feet of reserves in the world. With order to provide greater energy security, and increasing pressure on oil reserves, for this reason CTL production is expected fuel for the shipping rising crude prices, desires for energy to be much larger than GTL. industry security and concerns over greenhouse Although the end product is identical gas emissions, natural gas would make regardless of the feedstock, the cleaner the an attractive alternative to petroleum source of fuel, the cleaner the process will be. in many transport sectors. Composed Biomass would provide one of the cleanest primarily of methane, it produces sources of synthetic diesel due to its carbon significantly lower levels of nitrogen neutrality. In terms of fossil fuels, however, oxides (NOx), sulphur oxides (SOx), it is much easier on the environment to use and particular matter (PM), as well a source like natural gas rather than a source

as reducing carbon dioxide (CO2) such as coal. emissions. GTL has the potential to be cost-effective As far as liquefied natural gas (LNG) is because it can utilise remote supplies of concerned, applications to the marine sector natural gas that would otherwise require have been limited, primarily because the long-distance pipelines or conversion to gas has to be kept at a very low temperature LNG in order to reach markets. One third (-160ºC) which demands heavy containment of the world’s gas reserves are considered tanks and insulation. This, in turn, requires to be stranded – if this were converted into regular refuelling. Consequently, in its liquids it would be greater in size than Saudi natural state, methane gas has not been an Arabia’s oil reserves. attractive alternative fuel to most large-scale Although there is no shortage of potential shipping. GTL fuel, the cost building of a commercial- As stated in previous Bunkerspot articles scale GTL plant is vast. For example, ‘GTL has the potential to about alternative fuels, any new fuel would ExxonMobil abandoned its 154,000 barrels have to solve the supply-and-demand (or a day (b/d) Palm project in Qatar because be cost-effective because chicken-and-egg) problem in order to be the estimated costs rocketed from an initial it can utilise remote taken up by fleet owners (see Bunkerspot, figure of $7 billion to more than $15 supplies of natural gas that December/January, page 40). Any alternative billion. fuel would not only have to be cost effective, At present, the main players in the GTL would otherwise require but would have to work as direct replacement field are Shell and South Africa’s Sasol (the long-distance pipelines or for the petroleum products that fuel the latter being supported by Sasol-Chevron). conversion to LNG in order compression ignition (CI) engines used in Both Sasol and Shell are developing GTL the vast majority of ships. Furthermore, in plants in Qatar with a 140,000 b/d, and a to reach markets’ order to facilitate the gradual introduction of 34,000 b/d expected production respectively. a new fuel, it would have to blend well with There are also companies such as Syntroleum existing marine fuel. that are looking into integrated oil/GTL Gas-to-Liquids (GTL) fuel goes at least offshore floating production vessels capable some way to meeting these demands. The of utilising stranded gas that would normally process, discovered by German professors be flared-off in order to access the trapped Franz Fischer and Hans Tropsch in the 1920s, oil below. uses ‘syngas’ (short for synthetic gas) which Shell built the world’s first medium-scale can be produced from hydrocarbons such as GTL plant in 1993 at Bintulu, Malaysia natural gas. This syngas is then converted which has a capacity of 14,700 b/d. Blends into longer chains of hydrocarbons such as of GTL fuel from this plant are already kerosene or diesel. In the latter case, the end available to some automotive markets. Shell product is a crystal-clear gasoil of exceptional launched its V-Power Diesel in 2002, and quality that can be used in conventional CI it is now sold at more than 4,900 sites in engines with no adjustments needed. Syngas Thailand and Europe. – and therefore synthetic diesel – can be Since GTL diesel can act as a direct produced from many other different sources, replacement for petroleum diesel, it solves such as biomass or coal. Indeed, countries the chicken-and-egg issue by fitting in with

46 www.bunkerspot.com February / March 2008 bunkerspot Alternative Fuels

the existing supply infrastructure and it does fuel to be used in areas that demand more Shell has been conducting tests of GTL not require additional storage facilities like environmentally-friendly fuel than usual. fuel onboard a ferry in the province of LNG does. Furthermore, because of the GTL is non-toxic and readily biodegradable, North Holland in the Netherlands. The greater stability of GTL fuel in comparison and Sasol-Chevron told Bunkerspot that tests, conducted in conjunction with New with conventional diesel, it can last in the damage caused by spilling the fuel at Energy Docks, represent the first maritime storage for at least two and a half years with sea would be very limited. Furthermore, trial of GTL fuel, and were carried out on no significant degradation. the reduction in emissions would make it the vessel’s auxiliary engine using GTL Compared to petroleum diesel, the ideal for areas that demand cleaner air. For diesel from Shell’s Bintulu plant. New emissions from GTL diesel are much lower, example, effective from 1 January, ships Energy Docks told Bunkerspot that, aside with 6% less NOx, 26% less PM, 91% less operating in European Union (EU) territory from reductions in emissions, the test results carbon monoxide (CO), 63% less unburned are now required to use fuel with less than showed lower operational cost, less engine

hydrocarbons, and 1.5% less CO2. Taking 0.1% sulphur content (see page 10). The pollution, and three decibels less noise. The into account the whole of the production International Maritime Organization next step is to test GTL on the ferry’s processes, GTL diesel has the same carbon (IMO) is also considering one option to main engine, and the long term aim is to footprint as its petroleum counterpart, and reduce sulphur emissions which would use biomass-to-liquids (BTL) fuel which the environmental benefits are focused on introduce similar rules to be applied to will be produced by Choren in Germany the other emission reductions. Because the coastal waters world-wide. GTL fuel, being later this year. International companies like fuel is virtually free of sulphur – less than 5 virtually free of sulphur, would provide one Shell, Daimler and Volkswagen are key parts per million (ppm) – SOx emissions are way of meeting these requirements. shareholders of Choren. effectively zero. This would have obvious Currently, the main option for achieving Clearly there are many benefits to using advantages for the shipping industry, which these emission levels is ultra-low sulphur GTL diesel as an alternative fuel for the increasingly has to meet limitations in NOx MGO (0.1%), which is currently trading at shipping industry; including its ultra-low and SOx emissions. around $800 a metric tonne (mt). Both Shell sulphur content, biodegradability, and According to Sasol-Chevron: ‘Most CI and Sasol-Chevron have declined to provide blending compatibility. But the availability engines are not able to operate at maximum any price indication of GTL fuel, and it can of this super-fuel, at least for the foreseeable efficiency due to emission limitations. be assumed that its present production costs future, will remain limited. As an alternative Because of the emissions benefits associated mean that it could not compete with MGO to fuel oil, biodiesel would be much more with combustion of GTL diesel, it is 0.1% in the near future. However, in the viable in the short-term, being in much possible to operate under a more efficient longer term, as more stranded gas reserves greater supply and sharing some of the control strategy with the use of this fuel.’ are utilised, GTL may be able to compete benefits of GTL fuel (see previous article in Consequently, because of the reduction in with MGO 0.1% in price and availability. the December/January issue of Bunkerspot). NOx emissions from the use of GTL, it is If not, GTL diesel may still serve a If GTL did ever become widely available as likely that a ship engine using the fuel could purpose as a blending component in the a replacement for bunker fuel, it seems likely be adjusted for better performance, while marine sector. According to Sasol-Chevron: that ships’ CI engines could be adjusted to meeting the MARPOL Annex VI limits at ‘The properties of GTL diesel make it make best use of the fuel’s characteristics. But the same time. an ideal blending component to upgrade as with any new fuel, these settings would Adjusting the timing of an engine would lower-quality middle-distillate streams have to be approved by the International also take full advantage of a GTL’s higher to on-road diesel quality. This could be Council on Combustion Engines cetane number – which is more than 74, particularly valuable in Europe where (CIMAC) before ship operators would start compared to around 40 for MGO. Although refinery configurations make upgrading adjusting their engines. There would also a high cetane number is no bad thing, it these streams increasingly difficult and need to be International Organisation does mean that it is far more valuable as expensive. On a volume basis alone, GTL for Standardisation (ISO) specifications fuel for higher-performance vehicles. When will allow refiners to increase their diesel before large-scale trading in GTL would Bunkerspot asked one marine fuel expert if output’. Consequently, GTL diesel may take place in the marine market. the high cetane number would suit a marine become valuable as a blending component Although GTL could certainly be used fuel application, they replied: ‘Where do you for MGO as a more cost-effective way of as a direct replacement for MGO, GTL is want to go? The Moon!’ It seems that GTL obtaining the low sulphur distillate required a far superior product than any petroleum may be simply too good to be sold on the for use in areas such as the EU. diesel. Consequently, GTL diesel is likely to usual bunker markets. All products in the Sasol-Chevron told Bunkerspot that go to other, more profitable sectors before bunkering industry are sold close to their GTL fuel could theoretically be used as a bunker barges start supplying pure GTL. specifications, and selling GTL at a similar cutterstock for fuel oil, as it could replace In the short-term however, there may well price to standard MDO would be giving MGO in most applications. But it may be be potential for using the synthetic fuel as away quality free of charge. illogical to use such a high-quality distillate a blending component to obtain the 0.1% What may be a much more appropriate to blend with residual fuel, and the MGO sulphur MGO that will inevitably be in high use for GTL, in the marine context, is as a application seems far more viable. demand for years to come.

bunkerspot February / March 2008 www.bunkerspot.com 47 Events

Organised by Vostock Capital. opportunities to meet the experts and to do Contact: Oksana Fedoseyeva business. %VENTS$IARY Vostock Capital UK Contact: Luke Hallam Evans Tel: +44 20 7394 3090 Tel: +44 1295 814455 FEBRUARY Fax: +44 20 7231 1600 Fax: +44 1295 814466 UNITED KINGDOM: Managing and Avoiding Email: [email protected] Email: [email protected] Bunker Claims Web: www.vostockcapital.com Web: www.petrospot.com/events/maritime 7-8 February, London Organised by Lloyd’s List Events at the UNITED STATES: Shipping 2008 JUNE Lloyd’s Maritime Academy, London. 17-19 March, Stamford, Connecticut GREECE: Posidonia Contact: Maritime Customer Services Presented by the Connecticut Maritime 2-6 June, Athens Tel: +44 20 7017 5511 Association, this major annual shipping Email: [email protected] Fax: +44 20 7017 4745 event, held at the West Stamford Hotel, is Web: www.posidonia-events.com Email: [email protected] entitled Four Virtues: People, Safety, the Web: lloydsmaritimeacademy.com/lm1980 Environment and Profits. SEPTEMBER Contact: Lorraine Parsons, Event Director UNITED KINGDOM: The Oxford Bunker UNITED KINGDOM: The IBIA Dinner 2008 Tel: +1 203 406 0109 Course 18 February, London Fax: +1 203 406 010 8-12 September, Oxford The 14th annual International Bunker Industry Email: [email protected] A five-day intensive residential course Dinner takes place at the Hilton Hotel on Park Web: www.shipping2008.com covering technical, operational, commercial, Lane. financial and legal aspects of bunkering. Contact: Anne Chambers APRIL Contact: Luke Hallam Evans Tel: +44 2380 226 555 NETHERLANDS: Bunker Experience Tel: +44 1295 814455 Fax: +44 2380 221 777 14-17 April, Vlaardingen, Rotterdam Fax: +44 1295 814466 Email: [email protected] Organised by Vergo Consultancy at the Delta Email: [email protected] Web: www.ibia.net Hotel, Vlaardingen, this hands-on training Web: www.petrospot.com/events/oxford course is limited to 18 delegates. MARCH Contact: Goris Vermeulen OCTOBER GREECE: The Piraeus Bunker Course Tel: +32 484 168780 SINGAPORE: SIBCON 2008 5-6 March, Piraeus Fax: +31 847 474573 15-17 October. Venue, programme and Taking place at the Piraeus Marine Club, Email: [email protected] contact details to be finalised. this information-packed training course Web: www.bunkerexperience.com focuses on fuel standards, sampling and NOVEMBER treatment onboard, quality and quantity, MAY SOUTH AFRICA: The IBIA Annual Convention credit analysis, commercial, legal and UNITED KINGDOM: The Oxford Bunker 2008 operational issues. The course provides Course 24-27 November, Cape Town a practical and ‘hands-on’ approach that 12-16 May, Oxford Now in its fifth year, the IBIA Annual Convention encourages delegate participation and the This highly-popular five-day intensive takes place at the Westin Grand Cape Town sharing of individual experiences. Delegates residential course covers technical, Arabella Quays Hotel. Comprising one- and will also witness a live bunkering operation. operational, commercial, financial and legal two-day training courses, an exhibition, and The course is organised by Petrospot Ltd aspects of bunkering. Detailed case studies, an issue-led conference designed to spark and is led by Chris Fisher, Managing Director demonstrations, lectures, practical exercises discussion and debate, this is the only forum of Bunker Claims International. and discussion groups, plus comprehensive where your Association invites you to have Contact: Luke Hallam Evans course literature, provide a thorough your say. Organised by Petrospot on behalf Tel: +44 1295 814455 grounding in the industry. This course is also of IBIA. Fax: +44 1295 814466 celebrated for its exceptional networking Contact: Luke Hallam Evans Email: [email protected] experiences. Tel: +44 1295 814455 Web: www.petrospot.com/events/piraeus Contact: Luke Hallam Evans Fax: +44 1295 814466 Tel: +44 1295 814455 Email: [email protected] LATVIA: Biofuel – A New Market Niche Fax: +44 1295 814466 Web: www.petrospot.com/events/ 13-14 March, Riga Email: [email protected] Organised by Vostock Capital, this event Web: www.petrospot.com/events/oxford takes place at the Reval Ridzene Hotel. Contact: Oksana Fedoseyeva UNITED STATES: Maritime Week Americas Vostock Capital UK 2008 Tel: +44 20 7394 3090 19-23 May, South Beach, Miami, Florida Fax: +44 20 7231 1600 The inaugural Maritime Week Americas Email: [email protected] will feature a range of seminars, courses, Web: www.vostockcapital.com and conferences, split into specialised To list details of bunker related streams covering bunkering operations, events contact: LATVIA: Bunker Fuel Delivery Disputes environmental, legal, commercial issues and Tel: +44 1295 814455 Resolution maritime and port security. A substantial Fax: +44 1295 814466 13-14 March, Riga exhibition, port visits, and a spectacular Email: [email protected] A workshop examining bunker disputes. networking programme offer unique

48 www.bunkerspot.com February / March 2008 bunkerspot Networking

3054 8935; Fax +45 3345 5411; Email: jij@ Asmira Petrol (Member). /NTHEMOVEx dan-bunkering.dk. Mideast and Africa Europe Michael H. V. Nielsen has joined A/S Global International Bunkering (Middle East) DMCC, OceanConnect has opened an office in Hull, Risk Management Ltd, a subsidiary of A/S part of Denmark’s A/S United Shipping Dan Bunkering Ltd, as a Risk Manager. manned by Steve Wilson and Chris Todd. & Trading Co., has appointed Carsten K. Tel: +45 8838 0005; Email: mni@global- Contact: Ocean Connect UK Ltd, Kingston Ladekjær as Managing Director, replacing House, Priory Park, Saxon Way, Hessle, riskmanagement.com. Robert Svarer Olsen Devedas Felix, who has resigned. Tel: +971 Hull HU13 OJL, England. Tel: +44 1482 628 has joined the company as an Oil Risk 4 309 7933; Fax: +971 4 332 7460; Email: 160; Fax: +44 1482 629 209, Email: hull@ Manager. Tel: +45 8838 0011; Email: rso@ [email protected]. oceanconnect.com. Wilson: Mob: +44 7795 global-riskmanagement.com.

325 459; Email: swilson@oceanconnect. Mlamli Figlan has joined O.W. Bunker South com. Todd: Mob: +44 7795 324 787; Email: Thomas Worsoe has joined O.W. Risk Africa Pty Ltd in Cape Town as a bunker [email protected]. Management in Copenhagen. Tel: +45 9812 7277; Direct: +45 3945 6052; Mob: +45 5116 trader. Tel: +27 21 425 6342; Mob: +27 836 KPI-Bridge Oil has bought London-based 6967; Email: [email protected]. 339 374; Fax: +27 21 425 9080; Email: Mlfi@ broker Davies and Newman Wake Ltd. Marco Kolff has relocated from O.W. Bunker owbunker.com. Contact: KPI-Bridge Oil, 3rd Floor, 36 (Netherlands) BV to O.W. Bunker Switzerland Broadway, London SW1H 0BH, England. S.A. Tel: +41 22 839 4435; Mob: +41 79 289 Asia Pacific Tel: +44 20 7799 4420; Fax: +44 20 7799 0037; Email: [email protected]. Jenny Hwang and Winter Shao have 4421. Email: [email protected]. joined A/S DAN-BUNKERING’s Shanghai Rakesch Muthreja has joined Wrist World Representative Office as marketing Intermediate Fuel Oil Ltd has moved to Wide Trading GmbH in Hamburg as a bunker executives. Contact: Tel: +86 21 6135 2700; Ellesmere Coach House, Church Road, trader. Tel: +49 40 3255 900; Direct: +49 40 Fax: +86 21 6135 2701. Jenny Hwang: Wortham IP22 1PT, England. Contact: 3255 9063; Mob: +49 1729 849 637; Fax: Direct: +86 21 6135 2704; Mob: +86 1502 Charles Twitchen. Tel: +44 1379 890 440; +49 40 330 471; Email: rakesch.muthreja@ 1007 612; Email: [email protected]. Fax: +44 709 220 8615; Mob: +44 7766 683 wristbunker.de. cn. Winter Shao: Direct: +86 21 6135 2707; 101; Email: [email protected]. Mob: +86 1502 1007 611; Email: WSH@dan- Patricia Gardet-Cadet has been appointed bunkering.com.cn. Anders Bønnelykke and Jeanette Jensen the European Sales and Marketing Manager of Chemoil Europe BV, a division of Chemoil have joined A/S DAN-BUNKERING Ltd’s Americas trading team in Middelfart, Denmark. Energy Ltd, in Rotterdam, the Netherlands. Keith Richardson, Managing Director Tel: +45 6441 5401; Fax: +45 6441 5301. Tel: +31 10 292 9933; Email: patricia.gardet. of Chemoil Latin America in Panama, Bønnelykke: Direct: +45 6421 5472; Mob: [email protected]. +45 6037 3936; Email: abo@dan-bunkering. has relocated to Chemoil’s Americas dk. Jensen: Direct: +45 6421 54312; Mob: Cem Ozoral of Istanbul-based Anadolu AS headquarters in San Francisco, working as +45 6037 3959; Email: jje@dan-bunkering. has been elected the new President of the a trader. Tel: +1 415 268 2740; Email: Keith. dk. Turkish Bunker Association. The new Board [email protected]. Richardson is of Directors includes Yesim Muhtaroglu of replaced in Panama by Andres Galavis, Jim Jensen has joined A/S DAN-BUNKERING Energy Petrol (Vice President), Sibel Buyuk previously of Petroleos de Venezuela SA. Ltd’s trading team in Copenhagen. Tel: +45 of TBS (Secretary), Mustafa Yılmaz of Dto Tel: + 507 265 5081; Mob: +507 6679 3374; 3345 5410; Direct: +45 3345 5431; Mob: +45 Petrol (Treasurer) and Mustafa Aslan of Email: [email protected]. To list details of bunker related moves contact: Tel: +44 1295 814455, Fax: +44 1295 814466, Email: [email protected]

Maritime Week Americas 2008 is a major new event designed to draw together the key players in the marine fuels and maritime and port security sectors from within the Americas and beyond.

Don’t miss the comprehensive four-day programme of high-level workshops, sharply- focused seminars and unique training courses, together with a full conference programme covering bunkering operations, the environment, MIAMI, FLORIDA, USA commercial issues, legal issues, and port and 19-23 MAY 2008 maritime security. Outstanding Programme Exceptional Networking!

View full details & register online at: www.petrospot.com/events/maritime For further info either Call: +44 1295 814455 or Email: [email protected] strap /CEANWATCH

John Williams outlines n estimated 1.3 million tonnes of oil enter the sea worldwide ‘The deployment of the BMT’s environmentally- Aeach year through the combined BMT surveillance system friendly approach to oil impact of natural seepage, extraction, transport and consumption. While can enable polluters to be spill detection the largest contributor is natural tracked down using the seepage, accounting for about 46%, information provided by the world is currently focusing on the SAR imaging’ increasing amounts of maritime traffic and oil exploration which are the most obvious causes of oil pollution through Simple Messaging Service (SMS), through discharges and spills from email and a dedicated secure web service. ships, tankers and pipelines. While The deployment of the BMT surveillance accidents will inevitably occur from system can enable polluters to be tracked time to time, the focus of this article down using the information provided by is on combating oil pollution caused SAR imaging. The cost-effective provision by possibly malicious actions. of such information can also provide a There is a growing movement to work knowledge base to support those who towards a global philosophy whereby the seek to discharge their corporate social polluter pays to clean up any damage that responsibilities and those who wish to may be caused to the environment. This ensure compliance with the concept of ‘the has garnered the support of the major polluter pays’ corporations who are concerned about issues Another benefit of the system is that of reputation as well as the triple bottom a profile report of the target area can line and corporate social responsibility. be generated and forwarded to the client In this context, when BMT was asked to corporation thus allowing it to manage develop an ocean surveillance system for a the information it has about the polluted client working in Indonesian waters, one area and, consequently, better manage its of the key requirements was to implement reputation and mitigate liability to protect a system which would pro-actively address its company brand. issues of liability and reputation. Utilising Routine satellite oil pollution surveillance Synthetic Aperture Radar (SAR) imaging, also offers environmental security and serves which is highly cost-effective and already both public and private interests. If a report in widespread use, the ocean surveillance was forwarded to the relevant government, service offers routine surveillance and then the transgressors could be watched analysis of the area in which the client is and they could be ordered to pay for their operating and is able to capture proof of the actions. This would be a model of fair polluters and determine the causes of any application as it would raise awareness of oil spills in Indonesia’s West Java Sea. the issue and encourage people to clean up Following an effective six-step their act voluntarily. methodology, BMT’s Ocean Surveillance Over a period of 24 months, the system system starts by planning the acquisition of has proved to be so successful and able to imagery through the pre-programming of deliver such high-resolution information, RADARSAT -1 (24 days cycle, all-weather that BMT’s client has actually cancelled an imaging and day and night acquisition). existing contract for helicopter surveillance It then downlinks the scenes and pre- of their subsea pipelines. Apart from processes the image data at RADARSAT significant cost savings by using the satellite -1 networked ground stations, after which surveillance services, fuel consumption is Near-Real Time (NRT) data processing reduced alongside carbon emissions, thereby of data will recreate the scene before the cutting down on air pollution and saving information is analysed and interpreted. energy. After conducting the interpretation and BMT has also developed a ground- forensic analysis, the service database will be breaking technology oil spill model capable updated and maintained to include archives. of predicting the movement, spreading, Finally, profile reports will be provided weathering and shoreline impact of spilt

53 www.bunkerspot.com February / March 2008 bunkerspot strap

oil under the influence of current flows, response. Its development has been guided dispersion meteorology and waves. The Oil Spill by feedback from its extensive user base in ● sub-sea dispersed oiling visualisation Information System (OSIS) has been marine terminals, offshore oil installations, ● dispersant use time windows developed by BMT and NCEC combining oil spill response vessels and emergency prediction complementary expertise in spill behaviour, response centres and has been used to aid ● integrated database of international oil oceanography and marine systems the clean up of oil spills across the globe as types development. Now in its latest version well as aiding forward crisis planning. (4.0) the system is used worldwide by Through the use of high-end technology, oil companies, national governments and The model is unique as it factors in a governments and the maritime industry response organisations for use in emergency range of issues including: are slowly getting to grips with issue of oil response, planning and training. ● trajectory, spreading, weathering and pollution – both accidental and intentional. Knowledge of the movement, behaviour beach impact models As these technologies develop those who and shoreline impact of an oil spill is ● stochastic modelling (wind rose and fail to maintain the highest of standards fundamental to the planning of a successful time series modes) in the growing shipping traffic and oil response. The model builds on 30 years ● true coastline and object beaching exploration arenas will find themselves of research into oil spill behaviour in ● spill move tool slowly pushed out of the market – and the laboratory and at sea, coupled with ● automatic computation of tidal and paying a high price for the failure to meet over 15 years of modelling experience. residual flow fields international standards. In emergency situations, ease of use and ● differential particle size oil spreading speed are paramount to enable a rapid ● colour contouring of oil thickness &

‘Routine satellite oil pollution surveillance also offers environmental security and serves both public and private interests’