Speakers at Petrospot’s Maritime Week Africa conference said that the International Maritime Organization’s (IMO) 0.50% global sulphur cap is bringing a ‘radical change’ to the bunker markets in Egypt and East Africa.
Opening the session, Rear Admiral Mohamed Abdel-Aziz, Consultant to the Chairman-Ports Affairs, Suez Canal Economic Zone, gave an overview of developments on the Suez Canal and told delegates: ‘IMO 2020 has radically changed the bunker market and, in particular, it has changed the attractiveness of the Suez Canal Zone due to the switch from 3.50% high sulphur fuel oil (HSFO) to 0.50% very low sulphur fuel oil (VLSFO) causing dislocation in the bunker supply chain.’
Abdel-Aziz said that Egypt’s bunker market could capitalise on the demand for VSLFO with ‘IMO 2020-compliant fuels mainly sourced in “EuroMed”, or from Houston Gulf system’.
Egypt, and the ports of the Suez Canal, formerly accounted for a significant amount of bunker volumes – until supply problems and political issues led to a major drop in bunkering activity. Now, bunkering in the Suez Canal ports could be due for a revival. Abdel-Aziz detailed how the investments that have been made in the ports in recent years have led to significant increases in throughput capacity, which will mean more potential bunker demand. He also pointed out that transiting through the Canal necessitates a waiting time during which ships take on services such as bunkering.
Djibouti is another location in the region which is looking to restore its reputation as a major bunkering centre and – as reported earlier today by Bunkerspot - Red Sea Bunkering’s General Managing Abdi Ismail Kahin told Maritime Week Africa delegates that a new floating storage facility and a VSLFO-producing floating oil refinery could be the key to realising those ambitions.
Mauritius has never been a major bunkering hub but – as Gert Nell, Trading Manager, Delta Energy Fuel Supply & Trading, outlined in his presentation – it has seen some impressive growth in recent years. According to Nell, bunkering volumes rose from 270,000 metric tonnes (mt) in 2013 to 405,000 mt in 2017 and the Mauritius Government is reportedly now aiming to boost the market to around two million mt a year. According to Nell, this transformation has come about because: ‘The Mauritian Government set themselves apart from other countries quite early on in realising the true untapped potential of the island and the financial and commercial impact the shipping sector could play in the local and national economy.’
Key to this ‘untapped potential’ is the island’s location, as Nell pointed out: ‘An estimated 35-40,000 vessels pass Mauritian waters annually in one of the world’s main ocean routes from Far East to the Americas.’
Nell told Maritime Week Africa delegates that, for the bunker fuels delivered in Mauritius, ‘the main sourcing regions include Fujairah, Durban and the Indian Sub-Continent but other limited supplies come from further afield, for example Europe or Singapore’.
Summing up his company’s interest in Mauritius, Nell said: ‘Mauritius represents an ideally-placed market to invest in long term for building sustainable bunker business and is a key part of our strategy moving forward.’
Also speaking in the Maritime Week Africa session this morning, Dermot Campbell, CEO, Channoil Consulting, expected to see a growing demand for fuel in the East African region. ‘Given the projected growth in GDP, population, increased urbanisation and the resultant projected increase in the number of motor vehicles,’ said Campbell, ‘it is likely that the growth in transport fuels in particular will continue in the foreseeable future.’
Campbell added that the fuel supply infrastructure will have to be upgraded to keep up with the demand. ‘The transport growth will continue to drive demand for diesel and gasoline supply,’ he said, but ‘increasing bottlenecks on existing supply locations are expected’.
However, he believed that the increased demand will probably not lead to the construction of new refineries as ‘East Africa has easy access to the Middle East and Indian export refineries and has no need to develop refining capacity in the foreseeable future’.