Euronav buys more fuel oil for IMO storage

Paragraph 4 corrected, see 'European 0.5pc fuel oil in demand in Asia-Pacific' published on 21 June 2019

Belgium-based shipowner Euronav has nearly filled up its ultra large crude carrier (ULCC) in the Mediterranean with low-sulphur fuel oilas part of its strategy to blend and store marine fuels compliant with the International Maritime Organisation's (IMO) 2020 sulphur cap.

Euronav purchased at least seven 30,000t cargoes from different suppliers since March to store ontothe tanker Oceania, according to vessel tracking firm Vortexa.

The firm bought cargoes from refiners such as Italy's Iplom and Saras, Nigeria's Sahara and Israel's ORL.

Euronav bid at a $35/t premium to low-sulphur west Mediterranean cargoes last week. The deal could not be confirmed with the firm.

Euronav will use these marine fuels for its own fleet's consumption in 2020, the company said. But market participants said it will need to blend some of the products as some of the cargoes purchased are above the 0.5pc sulphur limit. The tanker has several segregated tanks to store the product.

Euronav's fleet of two ULCCs, 43 very large Crude Carriers (VLCC), 25 Suezmax tankers and two Floating Storage and Offloading (FSO) units consume around 1mn t of marine fuel per year.

Demand for 0.5pc fuel oil started to emerge in Europe recently, as companies started storing the product in preparation for next year.

Prices of 0.5pc sulphur fuels are set to pick up towards next year with demand. The Argus calculated assessment of 0.5pc Rotterdam barges reached $512/t on 14 June.

The shipping sector currently uses high-sulphur fuel oil with a maximum sulphur content of 3.5pc. But under the new IMO regulation, ships must limit sulphur emissions in exhaust fumes to 0.5pc. Shipowners will either have to burn new 0.5pc marine fuels, use marine gasoil (MGO) or run LNG to comply with the cap. They can also fit ships with exhaust scrubbers to continue to burn high-sulphur fuel oil.