Fuel Quality — Update INTERTANKO Bunker Sub-committee London

Fuel Quality - Update INTERTANKO Bunker Sub-committee, London Håkon B. Thoresen, DNV Petroleum Services, Norway 31 Jan 2011

Fuel Quality - update Legislation Experience Enforcement Fuel Quality - Update 31 Jan 2011

Revised MARPOL Annex VI – Entered into force 1 July 2010 Adopted 9 October 2008 - IMO MEPC 58 -– Entered into force 1 July 2010 Sulphur limit for fuel oil Sulphur content Enforcement Global 4. 50% 3. 50% 0. 50% [Prior to 1 January 2012] [1 January 2020]* ECA (SECA) 1. 50% 1. 00% 0. 10% [Prior to 1 July 2010] [1 January 2015] *Subject to a review of fuel availability in 2018, with the option to delay the 0. 5% sulphur global cap by five years Abatement technology (eg Scrubbers) is an "equivalent measure". This means that an Administration may allow abatement technologies, but the Administration (and not the ship) have to acknowledge that: ØThey have equivalent efficiency in terms of SOx, PM and NOx emissions. ØThat they operate within the requirements of the IMO guidelines ØThat they do not harm the environment. Fuel Quality - Update 31 Jan 2011 © Det Norske Veritas AS. All rights reserved. 3

North American ECA (US + Canada) - 1 August 2012 Ø Annex VI entered into force for the U. S. on January 8, 2009 Ø ECA application from US and Canada submitted in March 2009. Ø North American Emission Control Area adopted at IMO MEPC 60 in London, 26 March 2010. Ø Expected to enter into force 1 August 2011 (pending US & Canadian domestic legislation) with 1 year grace period as per MARPOL Annex VI Regulation 14. 7 (1 August 2012) and it will require all ships within 200 nautical miles to use low sulphur fuel according to Marpol Annex VI ECA limits. 200 nautical miles Fuel Quality - Update 31 Jan 2011 © Det Norske Veritas AS. All rights reserved. 4

Californian regulations - CARB Fuel requirements apply to ocean-going vessel main (propulsion) diesel engines, auxiliary diesel engines, and auxiliary boilers when operating within the 24 nautical mile regulatory zone off the California Coastline. Effective date July 1, 2009 January 1, 2012 Fuel* Phase I Fuel requirement Marine gas oil (DMA) at or below 1. 5% sulfur; or Marine diesel oil (DMB) at or below 0. 5% sulfur Phase II Fuel requirement Marine gas oil (DMA) or marine diesel oil (DMB) at or below 0. 1% sulfur *DMA and DMB are marine grades of fuel as defined in Table I of International Standard ISO 8217: 2005 Fuel Quality - Update 31 Jan 2011 © Det Norske Veritas AS. All rights reserved. 5

MEPC 61 - US ECA proposal for Puerto Rico and U. S. Virgin Islands

IMO - Fuel quality on agenda § A particular driver behind the development of ISO 8217: 2010 marine fuel specification has been the request by IMO MEPC 57 in April 2008 (to ISO) for recommendations on specific parameters related to air quality (environment), ship safety, engine performance and crew health as well as specific values for each ; and § to have a new ISO 8217 Specification for marine fuels ready by the entry into force of the Revised MARPOL Annex VI on 1 July 2010. § ISO 8217: 2010 English edition was published on 15 June 2010 § IMO MEPC 61 (27 Sep – 1 Oct 2010) instructed the BLG Sub-Committee to review the revised specification of marine fuels ISO 8217: 2010 taking into account the proposals made in documents MEPC 61/4/7 (Norway and INTERTANKO) and MEPC 61/4/9 (OCIMF) as well as comments raised at MEPC 61 with 2011 as the target completion date (BLG 15). Fuel Quality - Update 31 Jan 2011 © Det Norske Veritas AS. All rights reserved. 7

Average sulphur content North Sea ECA ARA -Distillates (trend) Fuel Quality - Update 31

Average sulphur content Baltic Sea ECA - HFO (trend) Fuel Quality - Update 31

Average sulphur content georegion LSHFO/HSHFO (July-Oct 2010) Fuel Quality - Update 31 Jan 2011

HEAVY FUEL OIL QUALITY - RECENT DEVELOPMENT CONTINUES Blending to meet required sulphur limits results in: § Increased average density § Increased average catfines level (Al+Si) § Increase in sludging problems § Reduced ignition and combustion quality. § Increased problems with chemical contamination of fuel. Fuel Quality - Update 31 Jan 2011 © Det Norske Veritas AS. All rights reserved. 12

Average Al+Si - LSHFO/HSFO georegion(July-Oct 2010) Fuel Quality - Update 31 Jan 2011 ©

Fuel Quality - Update 31 Jan 2011 © Det Norske Veritas AS. All rights

Development off-spec FP and marginal on-spec FP fuels - ARA Fuel Quality - Update

On board experience with the EU 0. 1% S requirement § Experience for AUX engines and boilers only (at berth): § Change over (Switch over”) take longer times than expected Fuel Quality - Update 31 Jan 2011 © Det Norske Veritas AS. All rights reserved. 18

Fuel switching cause major pump detoriation ”Tanker Operator” 24 Sep 2010 : A warning has been given by a leading pump manufacturer about high wear in pumps on vessels switching fuels (Allweiler) : - ”The majority of pump problems occur on vessels in global operation. ” - “When two different fuels are mixed there is a risk of incompatibility, which may cause clogging of fuel filters and separator, sticking of fuel injection pumps and considerable pump deterioration, ” - “When switching from HFO to diesel, oil temperatures must drop from 150 deg to 40 deg C. This process is extremely difficult to manage, due to the resulting low viscosity of diesel caused by too high temperatures or the very high viscosity HFO levels caused by too low temperatures. ” Fuel Quality - Update 31 Jan 2011 © Det Norske Veritas AS. All rights reserved. 19

NEW APPENDIX VI - Fuel Verification in force 1 July 2010 Procedure for MARPOL Annex VI Fuel Samples § The representative fuel oil sample, which is required by paragraph 6(a) of regulation 18 (the “MARPOL sample”) shall be used to verify the sulphur content of the fuel oil supplied to a ship. § The laboratories responsible for the verification process set forth in this appendix shall befully accredited in accordance with ISO 17025 or an equivalent standard for the purpose of conducting the test method(s). § Two sub-samples should be tested in succession, in accordance with the specified test method referred to in Appendix V. For the purposes of this verification process, the results of the test analysis shall be referred to as “A” and “B”. § If the test results of “A” and “B” are valid, an average of these two results should be calculated thus giving the result referred to as “X”. § If the result of “X” is equal to or falls below the standards required by Annex VI the fuel oil shall be deemed to meet the requirements § If the result of “X” is greater than the standards required by Annex VI, Verification Process Stage 2 should be conducted § If the result of “X” is greater than the specification limit by 0. 59 R (where R is the reproducibility of the test method), the fuel oil shall be considered non-compliant and no further testing is necessary. Fuel Quality - Update § The results obtained from the verification process are final. 31 Jan 2011 © Det Norske Veritas AS. All rights reserved. 21

Recent PSC detentions: ECA max 1, 00% Sulphur …. fuel samples were taken from circulating fuel line of main engine at the booster pump, showing a sulphur content of 1, 68% Most probably this vessel was following an “old” changeover procedure, that did not account for the max 1, 00% sulphur contents requirements, applicable in ECA from 1 July 2010. This was considered evidence that the environmental protection policy of the company is not fully implemented and the vessel was requested to update the change-over procedure before departure Fuel Quality - Update 31 Jan 2011 © Det Norske Veritas AS. All rights reserved. 22

Recent PSC detentions: ECA max 1, 00% Sulphur This vessel had 1, 17% sulphur content in the fuel that was measured in the daytank. The vessel’s bunker delivery note (BDN) stated 0, 95% Fuel Quality - Update 31 Jan 2011 © Det Norske Veritas AS. All rights reserved. 23