IMO 2020 – DURBAN HARBOUR

Home Insights IMO 2020 – DURBAN HARBOUR
The 1st of January 2020 brings with it many implications for the shipping industry, some of which will directly concern South Africa. With the IMO 2020 regulation looming large there is inevitably a search for solutions. Shipping companies, suppliers and bunkering companies all have questions that need to be answered.

The Port of Durban is responsible for much of the distribution of the South Africa’s oil. If the new Very Low Sulphur Fuel Oil (VLSFO) was to be produced in this port, it would have seriously beneficial consequences for the port itself and the country. This notion has been latched onto by some major bunker suppliers. Durban Harbour is currently subject to a reported $1billion investment. This project, funded by the fuel suppliers, is aimed at making Durban a producer of VLSFO. The effort is focused on a single refinery. The refinery, SAPREF, is the country’s largest crude oil refinery, responsible for 35% of South Africa’s refining capacity. So, we have the nation’s largest refinery situated in the continents largest port. (SAPREF is jointly owned by Shell Refining SA and BP Southern Africa)

If this project proves to be successful, then significant amounts of money would be saved by virtue of the fact that suppliers would not have to import and then store large amounts of fuel. By producing the substance Durban would itself become a supplier to a very in demand market. Not only would the rest of South Africa be taken care of but, depending on the production capacity, exportation would be an option, especially into Africa. However, the operation of upgrading the SAPREF refinery is a major one and there is not much news on its progress at present. Despite this, the relevant suppliers are still adamant that whatever the outcome they will be ready for the 1st of January next year and that there will be a supply of fuel oil for ships.

The Durban Harbour is equipped with tank farms built to hold the oil in large storage tanks. However, these are not large enough to handle the amounts that would be needed to properly supply ships with the fuel they need. With this issue it would seem that the successful upgrading of the Durban refinery to make VLSFO is the only option. Another problematic area is the ownership of the few existing tank farms. Having been built and sustained solely by the suppliers who run them they are of course privately owned. However, in the name of Black Economic Empowerment (BEE), the Transnet National Ports Authority (TNPA) is wanting to change this. The TNPA has no direct say over this private sector’s affairs however, they are the landlords of the land on which these tank farms operate and so control the granting of leases. It could very well be that having 51% black partnership will become the only way to renew the leases on these farms going forward.

With all the supply and storage issues aside, we come to the fuel itself. The barge operators are faced with an entirely different problem. The traditional HSFO is highly viscose and so it required heavy machinery and special pumps to be able to pump the substance. The new VLSFO has, at this point, an unknown viscosity. If it is lower and not close enough to the older HSFO then barges may have to undergo major upgrades to their onboard pumps in order to handle the new fuel oil. Changes of this magnitude would have heavy financial implications for the barge operators. Linsen Nambie and Amsol are the two barge operators in Durban. Both operators say that the speculated viscosity problem is not as big as we thought, they are prepared and ready. At present they are not exactly sure what the clients will want nor how they will go about it. It is possible that a client will use a different operator for a different fuel type. It is also probable that clients could demand that one barge operator supplies all the available types. If this is the case Linsen Nambie say they will then have to go through a process of modification with their barges. This modification will allow the barges to efficiently operate with HSFO, VLSFO and gas oil. in addition to the convenience this would afford their clients, Linsen Nambie assure us that such modifying is no massive operation but rather something they may simply need to do; in which case they are well prepared to do so. Amsol too are prepared. They say that they will be managing the challenge by having specific barges ready and equipped for the different fuel types. If a client needs VLSFO for example, then they will dispatch the relevant barge and likewise when HSFO is needed.

The South African government on the other hand, has challenges of its own, one being lawful compliance with IMO 2020. The South African Maritime Safety Authority (SAMSA) is the body charged with the implementation of current national and international regulations regarding the maritime industry which include both commercial and recreational vessels that fall under its jurisdiction. They say that although the there is currently no legislation regarding the IMO 2020 Sulphur cap they are fully on board and in the process of moving to accommodate it. According to SAMSA the Department of Transport (DOT) are busy drawing up the appropriate and necessary papers in order for IMO 2020 to be properly enforced in South African waters. To legislate this would be to ensure that all vessels travelling in South African waters are burning fuel with a sulphur content of less than 0.5%. Alternatively, if the vessel is burning HSFO they should be equipped with a scrubber. As it stands SAMSA will tolerate any type of approved scrubber. An interesting point will be to see if this stance continues as approved scrubbers include both open and closed loop scrubber types. Closed loop is more environmentally friendly as it holds onto the sulphur and other bad toxins it extracts from the fuel burning process by storing them on board in a tank. However, an open loop scrubber deals with this same waste by directing it into the ocean. This could influence the many marine reserves dotted along our coastline. Although, it could be that most ships passing through our waters will not be using scrubbers but rather complying through the use of VLSFO or other distillates.