FEATURE: Industry Reminded on Need for Effective Bunkering Regs Before MFMs Can be Introduced

Bunkering operation in Singapore. Image Credit: MPA

Recent industry discussions have highlighted once again that Mass Flow Meters (MFMs) for bunkering can only be introduced in ports where there is robust regulatory backing from authorities, while it also remains to be seen whether all ports would benefit from such a scheme.

"In principal, MFMs can be highly effective, however they need to be implemented effectively. This includes regulation by the Port Authorities and a clear process for resolving any disputes," an official at Vitol recently told S&P Global Commodity Insights.

Singapore is currently the only port in the world where the use of MFMs for bunker deliveries is mandatory.

One of the main reasons the use of MFMs in Singapore has been highly successful is that even prior to their introduction, Singapore's Maritime and Port Authority (MPA) had a clear licensing and regulatory framework in place for all market participants.

This included the fact that all bunker suppliers in the port require a licence to deliver bunkers.

Not only did MPA then add effective standards for MFM bunkering such as TR48 to that regulatory landscape, but prehaps most critically, it has demonstrated time and again that those not playing by the rules will be expelled from the market.

Savings

MFMs offer highly accurate measurement of the amount of fuel delivered to a ship. In Singapore there is officially a +/- 0.5% margin of error, although in practice it is believed the actual margin is tighter than this.

To be at their most effective, MFMs need to be calibrated to ensure both accuracy and a level playing field. If there is no regulatory system in place ensuring all market participants have their MFMs equally calibrated, the usefulness of market-wide MFMs is diminished.

The use of accurate MFMs along with suitable regulations can help guard against many types of bunkering malpractices such as aeration - so-called Cappuccino Bunkers - and 'buy backs'.

All said, in 2020 industry vetren Adrian Tolson calculated that in less than four years after they were introduced in 2017, the mandating of MFMs for bunkering in Singapore had likely saved marine fuel buyers some US$1.7 billion.

The International Bunker Industry Association (IBIA) has for some years been trying to persuade authorities at the world's largest bunkering ports to create bunker licence systems similar to Singapore's, and has made lobbying for the introduction of supplier licensing and MFMs one of its main goals over the coming years.

Key players such as Minerva Bunkering are among those who support the introduction of MFMs at more ports, although CEO Tyler Baron recently told Platts he believes ports such as Fujairah "will only adopt MFM regulations if and when they see that they are losing market share to more transparent alternative bunkering locations."

As Ship & Bunker was first to report in October last year, so far only Rotterdam and neighbouring Antwerp-Bruges have said they will follow Singapore with mandatory MFMs.

Benefit?

If IBIA's focus is any indication there is ceratinly belief that many global ports would benefit from mandatory use of MFMs, but perhaps not all.

North America, for instance, remains one of the few areas where industry backing for such a scheme has been consistanty low.

And this is not for a lack of interest from suppliers. MFMs have been periodically introduced by a number of market participants for over a decade, but enthusiasm for their use from buyers has always appeared to be low.

"I think if we look at North America, it's not a place where there are any issues with quantity disputes, so I think it would be overkill to put it on," Rasmus Jacobsen, Americas managing director at Monjasa, said last November at the most recent IBIA Annual Convention in Houston.

Frank Ray, bunker sales specialist at Houston-based GCC Supply & Trading, echoed the sentiment and suggested MFMs would not be a popular addition to the market.

"We already have a mass flow meter on one of our barges; we don't use it, because we don't have quantity discrepancies," he said.

"There's just a reality that it does reduce the flow rate.

"if you cut your flow rate, well, time is money."

Last week during a virtual Town Hall-style meeting with IBIA's Regional Board for the Americas that aimed to identify regional challenges and opportunities, participants did not express any need for MFMs or licencing.