2nd CMT Bunker Fuel Webinar - Triple Whammy for the Maritime Sector in 2020
Blog Article - July 29, 2020
The second CMT Bunker Fuel Webinar held on 9 July focused on Singapore’s marine fuel market and the pandemic environment. I was happy to take part alongside known industry experts including Yasuhito Imaizumi, Deputy GM from Summit Energy & Resources Pte Ltd; Justin Tan, Category Manager, Marine Fuels and Hedging from The China Navigation Company; John Phillips, Global Head Bunker Credit Manager at GP Global Group, and our session moderator, Adrian Tolson, Director at BLUE Insight.
What really stood out from the panel’s discussion is: what a year it has been so far! 2020 has been a whirlwind, as our industry has grappled with three key issues coinciding to create a ‘triple whammy’:
- Our industry going through significant transition to a post-IMO 2020 landscape, with regulations having come into force from 1 January 2020. This has driven efforts to cleaner marine fuels, including LNG.
- The COVID-19 pandemic has created a backdrop of HSE, commercial, and operational challenges in the international shipment of goods. This includes the continued emphasis on the welfare and well-being of seafarers who have been instrumental in keeping our shipping lanes open. We fully recognise the critical role many people make both offshore and onshore at times of crisis.
- Dramatic oil price volatility since the beginning of 2020.
Besides the sharp drop in crude oil prices in Q1, one of the key fluctuations in oil prices this year has been the highly volatile 0.5% fuel - MGO spread. As much of the 0.5% market has priced off e.g. MOPS 10ppm, this has heightened bunker price volatility for customers and suppliers alike. As liquidity in the physical and derivative markets for 0.5% increases, there may well be rationale for pricing 0.5% fuels on 0.5% fuel indices.
The drive towards environmental sustainability appears strengthened post-COVID, and in the past months our industry has come together in a number of new coalitions to drive forward environmental objectives. TOTAL is proud to be an active contributor to this momentum. In CMT’s previous webinar we discussed the case for LNG and its significant environmental advantages over traditional petroleum products, where LNG typically produces lower emissions of carbon dioxide (CO2) and virtually no nitrogen oxides (NOx), particulate matter (PM), or sulphur oxides (SOx). Importantly, that LNG is ready and feasible as a marine fuel today, is not at odds with efforts to pursue tomorrow’s fuel alternatives for the decades to come. LNG is indeed a viable solution for numerous segments and ship sizes, and while we are engaging with clients for strategic multi-year supply deals, we are also likely to see the development of a spot market for LNG bunkering.
In addition to LNG, we are actively working on our biofuels proposition to customers. Biofuels is another solution ready today, which provides a compelling environmental and economic case for certain geographies.
The next CMT Bunker Fuel Webinar is themed “Alternative Marine Fuels – Where is the industry heading?” and I am sure it will be worth tuning in for, in this rapidly developing space. You can discover more at https://www.cmtevents.com/videoaccess.aspx?ev=2WEB200310&.