Eliseo Curcio, Vice President & CFO, Refinery Automation Institute, LLC. IMage Credit: RAI
With IMO 2020 around the corner, it is posing big questions about significant issues, and clear answers are proving difficult to find. Everybody is starting to produce very low sulfur fuel oil, destroying the Hamletic fear regarding the low sulfur fuel availability. The VLSFO after a warm up phase is starting to increase its value jumping from $450/ton to $550/ton in less than a month. RAI predicted all this rapid ascent, showing stoic confidence that the VLSFO price will reach $650/ton in 2020 during the "madness" phase where everybody will realize that IMO is real.
The real question all the maritime folks are asking is What is VLSFO? Everybody will agree (even those people at IBIA) that the maximum amount of sulfur is set to be 0.5% wt, but what about the viscosity?
The ISO 8217 doesn't mention anything about the viscosity for the new VLSFO. For example IFO380 (residual fuel oil with viscosity up to 380 Cst) has a maximum viscosity spec of 380 centistoke, this means there is going to be a high probability of buying a VLSFO with 5 centistoke and a VLSFO with 300 Centistoke. Can we call VLSFO with 5 centistoke bunker??? Can we price the VLSFO 5 centistoke as the same as the one with 300 Centistoke?
In past (or present) the lower the viscosity the higher the price of the fuel oil, because it required more expensive components, like MGO (marine gas oil) to dilute the high viscosity bunker. Now with a variety of low viscosity and sulfur cheap blend components, diluting a high viscosity bunker is cheaper and easier.
The VLSFO not having a defined range of viscosity influences other things such as:
The fuel heating temperature with the potential for thermal shocks, and leakage around cylinder/ piston clearances and lube oil contamination.
With lower viscosity the bunker doesn't need to be heated up at high temperature.
Lubricity is reduced with lower sulfur content and will require adding lubricity additives.
Shipowners will spend more money to buy more expensive lubricating oil and can potentially incur more frequent oil changes.
As mentioned previously a clear difference can be observed between 5-20-cSt "bunker" and "real bunker" of around 340 cSt to 380 cSt made with readily available components on the US Gulf Coast. Not only is 340- cSt bunker cheaper than 20-cSt bunker by around $75/ metric tonne, it also eliminates myriad issues, such as thermal shocks; stability and compatibility; the need for special lubrication oil; costly, frequent changes of oil due to seepage; and contamination.