ECA Operator Slashes 2015 Bunker Bill by €20 Million

Tallink says it lowered its bunker costs for 2015 by 5%

Despite having to switch to more expensive fuel to comply with the January 1, 2015 introduction of a tighter 0.10 percent sulfur cap for bunkers burned within Emissions Control Areas (ECAs), AS Tallink Grupp (Tallink) Wednesday announced that the huge plunge in oil prices that happened at the end of 2014 meant it actually managed to reduce its bunker costs for the year by 5 percent.

Like many ECA operators, the switch to ECA compliant 0.10 percent sulfur MGO had previously been expected to come at a hefty premium compared to the 1.0 percent max sulfur product used to comply with the ECA regs in effect for 2014.

"The previously highlighted risk of increasing fuel cost did not materialise," said Tallink, adding that it actually made savings of €20 million ($22.65 million) during the 2015 financial year, compared to the previous year.

The operator also managed to reduce consumption too, which for 2015 fell 13 percent year-on-year thanks to "optimisations in vessel operations and changes in the fleet."

The savings were clearly good news for the firm's bottom line; while revenue increased by 2.6 percent to an "all-time high" of €945.2 million ($1.07 billion), compared to €921.5 million ($1.043 billion) for the previous year, the company's net profit more than doubled year-on-year to €59.1 million ($66.91 million).

While operators are enjoying the fact that the dollar premium for MGO has dropped significantly thanks to plunging crude costs, earlier this year an analysis by Ship & Bunker showed that in percentage terms, MGO had become significantly more expensive relative to HFO prices.