INTERVIEW: Hartree Marine Sets Out Long-Term Bunker Industry Ambitions

Hartree launched its New York operation earlier this year. File Image / Pixabay

After announcing its launch last year, Hartree Marine has been establishing its sustainable presence in the marine fuels market.

In an interview with Ship & Bunker, Ethan Ram and Karl Schmidt, who head up the marine fuels business, which is operated by a wholly owned subsidiary of Hartree Partners, LP (Hartree), talked about the company's philosophy and direction.

"We are taking a measured approach to growth and first and foremost our focus is on establishing a customer service-oriented business that is in it for the long term," said Ram.

Hartree describes itself as "a global energy and commodities firm with an international reputation for integrity," a philosophy that Ram says is integral to Hartree Marine. 

"Hartree has a stellar reputation. Integrity is a cornerstone of the company and it is key to our marine fuels business," said Ram.

Hartree Marine has already established both physical and trading/brokerage operations where it procures bunkers worldwide for its customers.

Running the physical side of Hartree's bunker business are Sal Drago and Gregg Schwartz, the firm's co-heads of North America fuel oil. Both are highly experienced and boast a combined 50+ years in the industry. Prior to joining Hartree the pair spent several years working together at Aegean, at the time the world's largest independent physical bunker supplier.

Schwartz's 25 years of experience also includes roles at Texaco, Chevron, and Chemoil. 

Prior to Aegean, Drago spent a number of years at Chevron and Hess Corporation. Hess previously held a 50% stake in Hess Energy Trading (HETCO, which was subsequently renamed Hartree Partners). In 2015 Hess sold its share of HETCO to funds managed by Oaktree Capital Management.

Operations

Hartree currently has physical operations in the US Gulf, where it supplies bunkers offshore by tanker, and in New York harbor.

On the trading and brokerage side, Hartree has been growing a team of equally experienced bunker traders in London, Singapore, Dubai, and California.

Paul Millar, well known in the industry having spent over a decade as head of global credit at Bomin, joined Hartree Marine last year as its full-time credit manager.

More recently, Hartree has signaled its continuing interest in fuel oil by hiring a team of cargo traders previously with LITASCO and Maersk Oil Trading.

Expansion

Even prior to establishing its marine fuels unit last year, Hartree had signalled its intent to play a significant role in the marine fuels space.

Perhaps most notable was Hartree's unsuccessful 2018 bid, with Oaktree, to buy Aegean.

"The goal is to offer physical supply in markets where we can add value or make a difference. Where customers come to us and say they need a solution in a port, or it's a port where we see opportunity." Schmidt said.

Ram and Schmidt both noted that the extraordinary oil market volatility witnessed in recent years has been, and will continue to be, a key driver for opportunities.

Indeed, Ship & Bunker data shows VLSFO prices at key bunkering hubs practically doubling between June 2021 and June 2022, rising from an average of $545/mt in June 2021 to 1087/mt in June 2022, and having now fallen back to around $750/mt during October 2022 so far.

This follows a tricky period during 2020 and 2021 that saw the introduction of IMO2020 and then a COVID-induced oil price collapse, events that saw VLSFO prices slide from an average of $651/mt in January 2020 to just $251/mt in April 2020, before rising to over $500/mt by March 2021.

While this dynamic has caused difficulties for many stakeholders in the marine fuels supply chain, it is presumably not only less of a concern for Hartree, but actively plays well to their abilities. With a capitalization exceeding $3.5 billion, Hartree Partners' Marine Fuel unit presumably has access to plenty of financial muscle.

But Ram is keen to highlight that Hartree Marine is about more than just physical supply, or indeed trading.

"It's about providing a service. We see our role as solutions providers.  We are a reputable, financially strong firm with the ability to offer customers a single source for marine fuels around the globe, physical supply in selected ports, and expert solutions for managing risk and carbon." he explained.
Decarbonisation

Amongst that expanded offering, Hartree believes it can play a role in the decarbonisation of shipping as well as the provision of conventional bunker fuels.

Vertree Partners (a Hartree subsidiary) assisted shipping company Tankers International to set up a carbon compensation service. Ram stated that Hartree Marine is able to provide carbon compensation solutions, via Vertree, to their marine counterparties.

In addition, Hartree Marine believes it can offer solutions in the alternative fuels market.

"Hartree has a growing presence in LNG and biofuels across the world, which may provide a head start when it comes to supplying these as fuels to shipping," Ram said.

"We're very interested in working with customers to develop pilot projects in bio and alternative fuels utilizing our in-house expertise and supply.

"And through our network of physical assets and access to alternative fuels, we believe that that will be an important part of the solutions we offer customers."