INDUSTRIAL NEWS-WEEK 02

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 EIA: PRICE EFFECTS FROM SULPHUR CAP TO DIMINISH OVER TIME

The US EIA issued its 2019 Short-Term Energy Outlook (STEO) forecasting that the change in fuel specification, as a result from IMO’s 2020 sulphur cap, is expected to put upward pressure on diesel margins and modest upward pressure on crude oil prices in late 2019 and early 2020. EIA’s analysis indicates that the price effects that result from implementing this new standard will be most acute in 2020 and will diminish over time.

Residual oil—the long-chain hydrocarbons remaining after lighter and shorter hydrocarbons such as gasoline and diesel have been separated from crude oil—currently comprises the largest component of marine fuels used by large ocean-going vessels, also known as bunker fuel. Marine vessels account for about 4% of global oil demand.

Removing sulfur from residual oils or upgrading them to more valuable lighter products such as diesel and gasoline can be an expensive and capital-intensive process.

As such, EIA notes, refineries have two options with regard to residual oils:

  •  Invest in more downstream units to upgrade residual oils into more valuable products or
  •  Process lighter and sweeter crude oils in order to minimize the production of residual oils and the sulfur content therein.

In the January STEO forecast, Brent crude oil spot prices increase from an average of $61 per barrel (b) in 2019 to $65/b in 2020 with about $2.50/b of this increase being attributable to higher demand for light-sweet crude oils priced off of Brent.

As refiners maximize production of diesel fuel, distillate fuel refinery yields are forecast to increase from an average of 29.5% in 2018 to 29.9 % in 2019 and 31.5% in 2020, while motor gasoline yields fall from an average of 46.9% in 2018 to averages of 46.5% in 2019 and 45.6% in 2020. Residual fuel yields decrease from an average of 2.4% in 2018 to an average of 2.2% in 2020.

Refinery runs are expected to increase from an average of 17.2 million barrels per day (b/d) in 2018 to a record level of 17.9 million b/d on average in 2020, so small changes in refinery yields can have large implications for the volumes of petroleum products produced.

MLC AMENDMENTS 2016 ON CREW WELFARE ENTER INTO FORCE

The second set of amendments to the Maritime Labour Convention (MLC) for improving crew safety and welfare have entered into force, as of 8 January 2019. The amendments, agreed in 2016, are comprised of additions to the guidelines of Regulation 4.3. They cover health and safety protection and accident prevention.

According to clarification given by Nautilus International, the three changes relate to the following points:

  • account is to be taken of the latest version of the guidance on eliminating shipboard harassment and bullying (which is jointly published by ICS and ITF).
  • in addition to the various health and safety matters which the MLC requires should be taken into account, there is added ‘harassment and bullying’.
  • to the list of matters which should be considered for investigation in a health and safety context, there is added ‘problems arising from harassment and bullying’.

Bullying and harassment, including sexual harassment, is an abuse of human rights and living on a ship offers limited alternative to avoid it.

These changes should help to improve safety onboard, as well as enhancing seafarers’ welfare, a subject which has had much attention recently in the form of seminars and discussions. Although the changes are to the non-mandatory Code B of the MLC, flag states must give due consideration to implementing them, Nautilus advised.

A further amendment has been made to mandatory Standard A5.1.3, whereby flag states may extend the validity of a Maritime Labour Certificate (which is otherwise limited to a maximum period of validity of five years) by up to a further five months. This will apply where a ship has successfully completed an MLC renewal inspection, but a new certificate cannot immediately be issued and made available onboard.

VIETNAM RELEASES GUIDANCE FOR OIL SPILL RESPONSE

The Vietnamese Ministry of Natural Resources and Environment has published a circular to regulate marine oil spill cleanup and recovery efforts. Specifically, a preliminary investigation on the level of pollution will have to be made within the first 10 days after the report of an oil spill. The circular will apply from March 12.

If the investigation concludes that the level of oil in the water is higher than national standards, a more detailed assessment on environmental damage will have to be completed 20 days after the initial results, local media reported.

Moreover, individuals and organisations must address the oil spill if the area of the pollution is 25% more than the overall area under assessment.

In other cases, analysis of the seawater environment must be performed once a week, as well as reviews of the development of environmental pollution every 15 days. If the results are higher than the allowed ones, the responsible will need to establish a recovery plan.

The recovery operation will be supervised by authorised agencies. Namely, supervision will give emphasis on the recovery of the marine ecosystem and marine creature in the polluted areas.

Finally, according to statistics, about 200 million tonnes of oil are transported every year through the sea in Vietnam, while around 10 oil spills are being recorded per year.

ANCHORING IN WESTERN SINGAPORE PORT LIMITS PROHIBITED

The Maritime and Port Authority of Singapore (MPA) had published a circular informing ship masters and owners of the revisions to the port limits that entered into force on 6 December 2018, under the Maritime and Port Authority of Singapore Notification 2018.

MPA reminds ship masters, owners and agents of vessels operating in Singapore port waters that anchoring in all areas outside the designated anchorages is prohibited.

Applying from 26 Dec 2018, stricter penalties will apply, under the Maritime and Port Authority of Singapore (Port) Regulations, to offenders whose vessels are anchored outside the designated anchorages.

Offenders may, upon conviction, be liable for fines of up to $20,000 and $2,000 for every day or part of a day that the offence continues after conviction.

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