Los Angeles' role in marine fuel market may fade

The Port of Los Angeles could become less important as a fuel supplier for ships in 2020 when low-sulphur fuel rules kick in.

Most suppliers that operate at the port, including Peninsula, Aegean and Glencore, have historically relied on relatively inexpensive Mexican high-sulphur residual fuel oil barrels to sell in Los Angeles for bunkering. But the fuel will be too high in sulphur to feasibly blend down to the required 0.5pc sulphur limit as required by the International Maritime Organization (IMO).

The ports of Los Angeles and Long Beach sold about 57,300 b/d of marine fuel in 2018, of which about 80pc, or 45,840 b/d, was residual bunker fuel.

According to the US Energy Information Administration (EIA), there were 92,083 b/d of residual fuel oil with over 1pc sulphur content and 20,500 b/d of resid with sulphur content ranging at 0.31-1.00pc produced in PAD District 5, which encompasses the US west coast and Alaska and Hawaii, in 2018.

Cruise ships that have installed scrubbers to meet the IMO rules could still account for some demand for high-sulphur fuel oil at Los Angeles. But there is not enough low-sulphur fuel oil production in the area for the California ports to meet the demands of shipowners. And what limited supply of marine gasoil (MGO) there is in the area, will also be sought after by international buyers. In 2018, PAD District 5 imported 11,250 b/d of diesel and exported 100,250 b/d, according to EIA.

A number of marine fuel suppliers this year have listed which international ports they plan to make 0.5pc sulphur fuel oil available in time for the 2020 regulation. The only supplier on the US west coast that has announced availabilities so far is BP, at its refinery in Seattle, Washington. No supplier has yet to assure IMO-compliant fuel oil in Los Angeles.