Shippers on Indian eastern coast running out of VLSFO: report

Shipping operations along India’s eastern coast were reported to be under threat due to the non-availability of low-sulphur fuel oil (VLSFO), reports Hindu Business Line. It would be the first instance of the IMO 2020 rules seriously impacting the flow of goods by sea

A shipping company senior executive told Business Line that “there is virtually no supply of low-sulphur fuel oil and all coastal ships, including the feeder container vessels plying between Indian ports on the east coast, will come to a standstill from this week as soon as they exhaust whatever little stock they have”.

The looming crisis reportedly was discussed at a January 9th meeting called by the Government with ship owners, PSU oil refiners and the Director-General of Shipping.

Bunker suppliers have said that the east coast of India required about 30,000 tonnes of VLSFO each month to meet the requirements of ships plying on local routes.

The situation on the west coast of India was relatively better, due to the availability of the fuel in Kandla and Kochi for most coastal ships.

The shortage was attributed by one bunker supplier that oil refiners had started production of low- sulphur fuel oil late. “They should have been ready with the product in adequate quantities by December 1 to meet the demand. The first lot of the product was sold by Indian Oil Corporation and Hindustan Petroleum Corporation in the open market and then when the DG Shipping pushed them to supply to coastal ships, they made some priority rules that gave first preference to ships they have chartered to transport their own crude and petroleum products, followed by coastal vessels/Indian flag ships and then to other vessels. This prioritisation should have been done prior to start of sales.”

The shipping company executive said that refiners on the east coast were only catering to own-use vessels. “So, there is not much they can allot to coastal ships on the east coast. Whatever they produced is finished and virtually there is no supply and they want us to operate vessels. I don’t know how,” he said.

At the January 9th meeting the Indian Government was reported to have advised ship operators to use diesel oil until the situation improved. But ship-owners said that this was not workable for financial reasons.

“That is not a sustainable solution because diesel oil costs Rs. 87,000 a tonne today. At least we know we will not be using diesel oil and as soon as we exhaust our low-sulphur fuel oil stock, we have no option but to stop operating ships,” the shipping company executive said.

India said many times last year it might not be in a position to comply with the new global sulphur cap regulations.