Is land-based storage the future for Fujairah's bunker market?
The Port of Fujairah has announced plans to construct an on-shore bunkering terminal, and has hinted that the growth in on-shore storage will render the use of floating storage on tankers offshore obsolete. Suppliers seem less convinced that this will happen very fast, and also quote clear advantages in using floating storage compared to a land-based terminal.
The port of Fujairah announced this week that it plans to commission a new on-shore storage terminal for bunkers by early 2005. The port's general manager, Captain Moosa Murad, told Gulf News yesterday that on-shore storage facilities for bunker fuels is fast replacing the wide-spread use of offshore floating storage. He also hinted that new environmental regulations that are being adopted around the world will automatically cause bunker fuel storage onboard floating storage vessels to cease.
The new terminal, which according to Capt. Murad has seen a lot of interest from potential investors, will be 820 metres long. It should be able to accommodate two vessels up to 180,000 dwt or a Suezmax tanker, Gulf news reported. Capt. Murad said that nearly 80 percent of around 6,000 vessels calling at the port every year take bunkers, adding up to around 11.5 million tonnes of bunker fuel handled annually.
All the major players in the Fujairah bunker market rely heavily on floating storage today, generally using large single-hulled tankers. Many of these also double up as transportation vessels for fuel oil cargoes. They are not only necessary, but also convenient, as they are situated in the same area where most of the bunkering take place, namely Fujairah's off-shore anchorages.
Major players like FAL Energy, ENOC and Avin all use floating storage, and Hin Leong, which trades mostly in the cargo market but also dabbles in the Fujairah bunker market every so often, has huge floating storage capacity. ENOC, one of the few suppliers that is also in the process of constructing its own on-shore bunker storage facility, recently announced that it also plans to add a further 60,000 tonnes of additional product storage capacity in the form of a transportation and storage vessel before the end of this year.
Land-based storage facilities for fuel oil today are limited, and is mostly used by cargo traders rather than bunker suppliers. Tank storage is available at Vopak and at the Fujairah refinery, but most tanks are dedicated to 'clean' products rather than 'dirty' products such as fuel oil.
The environmental concerns that Capt. Murad talked about are most likely the introduction world-wide of legislation echoing that of the European Union (EU), which has moved ahead of the International Maritime Organisation in introducing strict new regulations on single-hull tankers. In addition to speeding up the phasing out of single-hull tankers, the EU has also banned all single-hull tankers above 5,000 dwt from carrying heavy oils with immediate effect as of October 21st 2003.
The position of the single-hull storage tanker Wilmington in Gibraltar is still unclear. It was asked to leave or stop storing fuel oil by the authorities, but its operator Vemaoil has protested the decision on the basis that the vessel is not used for transportation and is stationary inside port limits. A court hearing is expected in December. The outcome will be interesting for suppliers in Fujairah too, as it may indicate future legislation on the use of single-hulled storage vessel in this part of the world as well.
We asked James Hill, London-based General Manager for the Fujairah supplier Avin, what he thought about the port's intention to replace offshore floating storage on vessels with a land-based solution. "I see where they are coming from, but I don't see the practicality of it," he told Bunkerworld.
He explained that it would first of all increase the turnaround time for barges, as it would probably take a good hour each way for a barge to leave the anchorage and come back from the in-port terminal. Add to that the loading time and the huge potential for barge and loading congestion, and the entire logistical side of supplying bunkers could become very cumbersome. The great advantage of the floating storage is that the product is stored at the location where the suppliers actually operate, making turnaround time very quick. it also works out less expensive than renting land-based tank space.
One can also imagine the scenario where the new on-shore loading terminal is fully occupied by a Suezmax unlading new cargoes of fuel oil. The operation could easily take a day, and in the meantime suppliers' barges would not be able to load product. Even the environmental advantage of land-based storage is questionable. Mr. Hill mentioned that the constant traffic of bunker barges shuttling between the port - which has a narrow entrance area - and the supply area at anchorage, may present a much bigger risk for accidents to occur compared to the use of floating storage at anchorage.
The planned new Fujairah on-shore bunkering terminal may also be looking at making deliveries directly to vessels calling at the port by pipe-line. That does make logistical sense, and it would be even more so of the bunkering terminal cold connect a pipeline to supply vessels working cargo at the nearby cargo terminal.
What would happen if the use of single-hull storage tankers become banned at the Fujairah anchorage? At the moment, suppliers are likely to continue to use single-hulled tankers as floating storage for cost reasons as well as for logistical reasons.
We asked Mr. Hill if a ban on the use of single-hulls would tip the cost balance in favour of land-based storage in the future. While it is too early to tell, Mr. Hill speculated that by the time such legislation comes into force, there will be probably be a larger number of cheaper double-hulled tanker tonnage available in the market, so floating storage may still be the preferred option. With a large number of new double hulls on the order books, and some of the first double-hulls now coming of age, the cost for some older double-hulls should start to come down.
The port of Fujairah announced this week that it plans to commission a new on-shore storage terminal for bunkers by early 2005. The port's general manager, Captain Moosa Murad, told Gulf News yesterday that on-shore storage facilities for bunker fuels is fast replacing the wide-spread use of offshore floating storage. He also hinted that new environmental regulations that are being adopted around the world will automatically cause bunker fuel storage onboard floating storage vessels to cease.
The new terminal, which according to Capt. Murad has seen a lot of interest from potential investors, will be 820 metres long. It should be able to accommodate two vessels up to 180,000 dwt or a Suezmax tanker, Gulf news reported. Capt. Murad said that nearly 80 percent of around 6,000 vessels calling at the port every year take bunkers, adding up to around 11.5 million tonnes of bunker fuel handled annually.
All the major players in the Fujairah bunker market rely heavily on floating storage today, generally using large single-hulled tankers. Many of these also double up as transportation vessels for fuel oil cargoes. They are not only necessary, but also convenient, as they are situated in the same area where most of the bunkering take place, namely Fujairah's off-shore anchorages.
Major players like FAL Energy, ENOC and Avin all use floating storage, and Hin Leong, which trades mostly in the cargo market but also dabbles in the Fujairah bunker market every so often, has huge floating storage capacity. ENOC, one of the few suppliers that is also in the process of constructing its own on-shore bunker storage facility, recently announced that it also plans to add a further 60,000 tonnes of additional product storage capacity in the form of a transportation and storage vessel before the end of this year.
Land-based storage facilities for fuel oil today are limited, and is mostly used by cargo traders rather than bunker suppliers. Tank storage is available at Vopak and at the Fujairah refinery, but most tanks are dedicated to 'clean' products rather than 'dirty' products such as fuel oil.
The environmental concerns that Capt. Murad talked about are most likely the introduction world-wide of legislation echoing that of the European Union (EU), which has moved ahead of the International Maritime Organisation in introducing strict new regulations on single-hull tankers. In addition to speeding up the phasing out of single-hull tankers, the EU has also banned all single-hull tankers above 5,000 dwt from carrying heavy oils with immediate effect as of October 21st 2003.
The position of the single-hull storage tanker Wilmington in Gibraltar is still unclear. It was asked to leave or stop storing fuel oil by the authorities, but its operator Vemaoil has protested the decision on the basis that the vessel is not used for transportation and is stationary inside port limits. A court hearing is expected in December. The outcome will be interesting for suppliers in Fujairah too, as it may indicate future legislation on the use of single-hulled storage vessel in this part of the world as well.
We asked James Hill, London-based General Manager for the Fujairah supplier Avin, what he thought about the port's intention to replace offshore floating storage on vessels with a land-based solution. "I see where they are coming from, but I don't see the practicality of it," he told Bunkerworld.
He explained that it would first of all increase the turnaround time for barges, as it would probably take a good hour each way for a barge to leave the anchorage and come back from the in-port terminal. Add to that the loading time and the huge potential for barge and loading congestion, and the entire logistical side of supplying bunkers could become very cumbersome. The great advantage of the floating storage is that the product is stored at the location where the suppliers actually operate, making turnaround time very quick. it also works out less expensive than renting land-based tank space.
One can also imagine the scenario where the new on-shore loading terminal is fully occupied by a Suezmax unlading new cargoes of fuel oil. The operation could easily take a day, and in the meantime suppliers' barges would not be able to load product. Even the environmental advantage of land-based storage is questionable. Mr. Hill mentioned that the constant traffic of bunker barges shuttling between the port - which has a narrow entrance area - and the supply area at anchorage, may present a much bigger risk for accidents to occur compared to the use of floating storage at anchorage.
The planned new Fujairah on-shore bunkering terminal may also be looking at making deliveries directly to vessels calling at the port by pipe-line. That does make logistical sense, and it would be even more so of the bunkering terminal cold connect a pipeline to supply vessels working cargo at the nearby cargo terminal.
What would happen if the use of single-hull storage tankers become banned at the Fujairah anchorage? At the moment, suppliers are likely to continue to use single-hulled tankers as floating storage for cost reasons as well as for logistical reasons.
We asked Mr. Hill if a ban on the use of single-hulls would tip the cost balance in favour of land-based storage in the future. While it is too early to tell, Mr. Hill speculated that by the time such legislation comes into force, there will be probably be a larger number of cheaper double-hulled tanker tonnage available in the market, so floating storage may still be the preferred option. With a large number of new double hulls on the order books, and some of the first double-hulls now coming of age, the cost for some older double-hulls should start to come down.
Unni Einemo | Fri Nov 14 17:39 GMT 2003