Bunker fuel constitutes a fundamental element and one of the largest expenses in ships operation, yet shipowners in West Africa, Nigeria to be precise, face serious challenges sourcing IMO 2020 complaint fuels for their operations.
Bunkering is the supplying of fuel for use by ships, and in January 2020, the International Maritime Organisation (IMO) regulation directing vessels to use only bunkers with no more than 0.5 per cent sulphur content came into effect.
This compelled shipowners to install scrubbers in their exhaust systems while others have made arrangements for adequate supply of IMO compliant bunkers at various ports and hub locations.
However, for Nigerian shipowners, the transition to 0.5 per cent sulphur bunker fuel has been fraught with several challenges that have made it difficult to meet the compliance target.
One of such challenges facing Nigerian shipowners is the fact that despite a preponderance of sweet crude oil blends in the region, there is almost no refinery in West Africa that has the capacity to produce the IMO compliant quality of bunker.
Chief Executive Officer, Sea Transport Services Limited, Aminu Umar said that as a result, most of the bunkers required for use in Nigeria and around the region have to be imported from Europe and other refineries in the world. This has a huge impact on accessibility because the products are not as at when they are needed.
He was speaking during a panel discussion on the Shipment of Petroleum Products: Issues in Bunker Quality and Maritime Security, at the 14th Oil Trading and Logistics (OTL) Africa Downstream conference in October.
Umar further noted that another major factor seriously affecting shipping operations and availability of bunkers in Nigeria stems from a lack of regulation and non-licensing of bunker supply companies in Nigeria.
He said “In Nigeria today, I don’t think there is any licensed bunker supplier and because there is no license given to operator to carry out bunkering operations, supply is chequered and far in-between.”
The operator of Nigeria only indigenous ocean going fleet of vessels also pointed out another issue with regulatory approvals for bunker supply. “When you have somebody who is ready to supply you bunkers with a waiver, due to the fact that he has not been issued a license, the regulatory approval process in Nigeria is very cumbersome and causes a lot of delays and losses for shipowners in this country”, Umar complained.
These factors and more have combined to result in exorbitant prices of bunker fuel most especially in Lagos, with far-reaching financial and operational implications for shipowners.
Nigerian shipowners have also noticed a restriction of bunker supply to a certain region of the country. Umar explained: “Nigeria has four port states in the country, that is Delta, Lagos, Crossriver and River States, but the only place you can get bunkers in Nigeria today is Lagos. This anomaly has simply been traced to security consideration, which restricts the suppliers from providing bunkers at any other port in Nigeria except Lagos Offshore where the security apparatus of the state is in control of the waters.”
The effect on shipowners is telling as the search for quality bunkers actually impact their vessels and operations negatively because in order to avoid being victims of poor quality bunkers, many operators have to take huge bunkers from Lagos or Lome to perform any kind of voyage within Nigerian waters or the region.
Aminu stressed that except the Nigerian National Petroleum Corporation (NNPC) Marine Division that have their own supply arrangement, other shipowners operating in Nigeria are inadvertently compelled to go to other countries to take bunkers to meet the IMO regulation and it is something that should change as soon as possible. According to him, there has to be proper licensing of bunker suppliers in Nigeria and the approval processes by the designated regulatory agencies should actually be streamlined to make it easy on both the shipowners and bunker suppliers in the country.