Vessel operators don’t want to pay the premium for cleaner fuel. many are ill-prepared for new rules coming in soon. Claude Paris/AP
Vessel operators don’t want to pay the premium for cleaner fuel. many are ill-prepared for new rules coming in soon. Claude Paris/AP

Middle East bunkers provide safe port in IMO 2020 storm



Shipping fuel markets are facing a historic shakeup.

A new global sulphur cap at the start of 2020 will force most vessel owners to switch from burning fuel oil to more expensive, cleaner alternatives. But as the deadline approaches, few are ready for the shift

The decision by the International Maritime Organisation (IMO) in October 2016 to bring down the global sulphur cap from 3.5 per cent to 0.5 per cent omitted instructions, or an outline of responsibilities, leaving a stand-off between shippers and refiners to act. Intermediaries have been caught out by three-years of inaction.

Refiners can no longer offload their lower-grade products and instead will have to supply the ship industry with middle distillates. But vessel operators don’t want to pay the premium for cleaner fuel. The standoff could see unwanted fuel oil build up in storage until its cheap enough to be a substitute for coal or natural gas in power generation. A large proportion of these power plants are in Asia, the Middle East and Russia.

On the flipside, IMO 2020 will also create a 3 million barrel-per-day boom for lower sulphur fuel-oil and distillates, ramping up prices across a large part of the barrel as refiners clamber to meet new demand.

"The market has not appreciated yet the degree and scope of these changes," said S&P Global Platts Analytics’ Rick Joswick.  The forward curve for middle distillates currently shows little change between 2019 and 2020, he adds.

Alternatives are limited. Ship owners could install so called ‘scrubbers’ to clean up emissions to avoid a rise in bunker costs and carry on using fuel oil. However, the upfront cost of fitting the pollution cleaning technology to ship engines has largely put off buyers so far.

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Although oil producers will benefit from higher demand from refineries, crude quality will play an important role in the IMO 2020 transition. Refiners are likely to switch to sweeter lighter crudes adding a premium to quality. But some refineries could struggle if they are unable to convert residual fuel oil into top dollar distillates even with the extra crude coming their way.

There is also the risk of shippers failing to comply with the environmental curbs. “It was a poorly designed policy… Yes there is going to be an implementation date in 2020 but what is the enforcement date? We don’t have enough information to know,” Jeff Currie, head of commodity research at Goldman Sachs told an S&P Global Platts Crude Oil Summit recently.

:A trading source at the event told Platts “there will be some slippage for sure”. Traders also questioned the sense of multiple marine fuels hitting the market, which aren’t compatible with each other. Platts Analytics’ latest research predicts non-compliance will have a limited impact on global bunker demand as the reputational risk of getting caught will be too high for most owners and operators to attempt.

Meanwhile, the Middle East could capitalise on the confusion. The Port of Fujairah on the east coast of the UAE is the world’s second largest bunkering hub after Singapore and sits in a strategic location amongst top OPEC producers, Asia and Europe. Equipped with one of the world’s most advanced fuel blending operations it is already geared up to meet potentially growing demand for low-sulphur products. If Fujairah, which currently stores over 18 million barrels of oil products, can master the complexity of the new regulations quickly then it will serve to enhance its reputation and capture market share.

S&P Global Platts holds exclusive rights to publish Fujairah oil inventory data and has deployed a Blockchain solution for its collation.

But Fujairah and the UAE aren’t alone in seeing an opportunity in IMO 2020. In Oman, consultants have been hired to manage the development of a new bunkering terminal at Duqm. The sultanate hopes the facility located south of Masirah Island on its Indian Ocean coastline will provide a new gateway for trade vessels heading out of the Gulf of Aden.

The region has also entered into another phase of expanding its modern and sophisticated refinery infrastructure, seizing the initiative from European competitors. Improvements to the Ruwais refinery in the UAE now bring its capacity up to 900,000 barrel-per-day and Kuwait’s 615,000 barrel-per-day Al Zour plant is expected to start up shortly. Both plants are on the list of the world’s top ten largest refineries. As 2020 nears, Middle Eastern refineries will be able to tweak their crude palette to support rising demand for distillates. This not only supports Fujairah’s business model, but sharpens the port’s competitive edge against other facilities in terms of supply.

Most are hoping for a harmonised system but getting to that point will mean navigating some choppy waters. The Middle East could provide a safe port in the IMO 2020 storm.

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
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COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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Engine: 1.5-litre 4-cylinder petrol

Power: 154bhp

Torque: 250Nm

Transmission: 7-speed automatic with 8-speed sports option 

Price: From Dh79,600

On sale: Now

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COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
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Call of Duty: Black Ops 6

Developer: Treyarch, Raven Software
Publisher:  Activision
Console: PlayStation 4 & 5, Windows, Xbox One & Series X/S
Rating: 3.5/5

'Laal Kaptaan'

Director: Navdeep Singh

Stars: Saif Ali Khan, Manav Vij, Deepak Dobriyal, Zoya Hussain

Rating: 2/5

THE SPECS

Range Rover Sport Autobiography Dynamic

Engine: 5.0-litre supercharged V8

Transmission: six-speed manual

Power: 518bhp

Torque: 625Nm

Speed: 0-100kmh 5.3 seconds

Price: Dh633,435

On sale: now

Tips for used car buyers
  • Choose cars with GCC specifications
  • Get a service history for cars less than five years old
  • Don’t go cheap on the inspection
  • Check for oil leaks
  • Do a Google search on the standard problems for your car model
  • Do your due diligence. Get a transfer of ownership done at an official RTA centre
  • Check the vehicle’s condition. You don’t want to buy a car that’s a good deal but ends up costing you Dh10,000 in repairs every month
  • Validate warranty and service contracts with the relevant agency and and make sure they are valid when ownership is transferred
  • If you are planning to sell the car soon, buy one with a good resale value. The two most popular cars in the UAE are black or white in colour and other colours are harder to sell

Tarek Kabrit, chief executive of Seez, and Imad Hammad, chief executive and co-founder of CarSwitch.com

How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

Types of fraud

Phishing: Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.

Smishing: The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.

Vishing: The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.

SIM swap: Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.

Identity theft: Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.

Prize scams: Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.

* Nada El Sawy

Squad for first two ODIs

Kohli (c), Rohit, Dhawan, Rayudu, Pandey, Dhoni (wk), Pant, Jadeja, Chahal, Kuldeep, Khaleel, Shami, Thakur, Rahul.

West Asia Premiership

Dubai Hurricanes 58-10 Dubai Knights Eagles

Dubai Tigers 5-39 Bahrain

Jebel Ali Dragons 16-56 Abu Dhabi Harlequins

Joker: Folie a Deux

Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson

Director: Todd Phillips 

Rating: 2/5

Company%20Profile
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The Pope's itinerary

Sunday, February 3, 2019 - Rome to Abu Dhabi
1pm: departure by plane from Rome / Fiumicino to Abu Dhabi
10pm: arrival at Abu Dhabi Presidential Airport


Monday, February 4
12pm: welcome ceremony at the main entrance of the Presidential Palace
12.20pm: visit Abu Dhabi Crown Prince at Presidential Palace
5pm: private meeting with Muslim Council of Elders at Sheikh Zayed Grand Mosque
6.10pm: Inter-religious in the Founder's Memorial


Tuesday, February 5 - Abu Dhabi to Rome
9.15am: private visit to undisclosed cathedral
10.30am: public mass at Zayed Sports City – with a homily by Pope Francis
12.40pm: farewell at Abu Dhabi Presidential Airport
1pm: departure by plane to Rome
5pm: arrival at the Rome / Ciampino International Airport

APPLE IPAD MINI (A17 PRO)

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In the box: iPad mini, USB-C cable, 20W USB-C power adapter

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The specs
Engine: 77.4kW all-wheel-drive dual motor
Power: 320bhp
Torque: 605Nm
Transmission: Single-speed automatic
Price: From Dh219,000
On sale: Now
match info

Athletic Bilbao 1 (Muniain 37')

Atletico Madrid 1 (Costa 39')

Man of the match  Iker Muniain (Athletic Bilbao)

The specs

Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now


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