Abu Dhabi, UAEWednesday 1 April 2020

Adnoc to trial biofuel for ships as it caps sulphur emissions

Adnoc preparing its fleet for stricter regulations capping emissions set to come into force in 2030 and 2050

Adnoc Logistics and Services is preparing for a future where vessels may be required to cap their sulphur content even lower, to around 0.1 per cent, according to its chief  executive Captain Abdulkareem Al Masabi. Chris Whiteoak / The National
Adnoc Logistics and Services is preparing for a future where vessels may be required to cap their sulphur content even lower, to around 0.1 per cent, according to its chief  executive Captain Abdulkareem Al Masabi. Chris Whiteoak / The National

The Abu Dhabi National Oil Company will trial biofuel as a bunkering fuel for ships as it looks at alternative low-emission fuels to comply with global regulations to cap sulphur content released into the world's oceans, according to the chief executive of the firm's logistics and services subsidiary.

Low-emission fuels in shipping have become increasingly important for ship operators following the introduction of new rules capping sulphur emissions earlier this year, which has caused a spike in demand for certain categories of fuels.

"We're studying with one of our subsidiary companies the usage of biofuel and how that can reduce fuel consumption to be meet some of the targets for [the] Adnoc group of companies," Captain Abdulkareem Al Masabi, chief executive of Adnoc Logistics and Services, told The National in an interview.

"We are on [a] trial basis and I think within this year we can get the results of using how much blended biofuel can help us in achieving these targets," he added.

The biofuels trial comes as the International Maritime Organisation mandated all vessels to reduce emissions of sulphur oxides from all ships from January 1. Allowable sulphur emissions have been cut to 0.5 per cent of fuel oil, from 3.5 per cent previously used.

Adnoc enforced the regulations across its entire fleet by November 2019, with the company now exploring other alternatives such as liquefied natural gas, liquefied petroleum gas as well as blended biofuel to carry its vessels.

Biofuel sourced from Adnoc Distribution, the group's fuel distribution arm will be used to ferry offshore support vessels in Abu Dhabi on a trial basis, said Capt Al Masabi.

"These are medium-sized vessels that go from Mussafah all the way to offshore rigs. It's very convenient for us because they don't go long distance[s] and they always come back to the source," he added.

Mussafah, which is located in Abu Dhabi is an industrial district, with port facilities available for major energy and manufacturing companies in the emirate.

The results of the biofuel trial will be known within a year, with the company currently studying how much biofuel could be blended.

Adnoc's Logistics and Services subsidiary is also looking at the feasibility of using LNG as a bunkering fuel with some of its bigger clients.

The company signed an agreement with Japan's Inpex last year to look at opportunities for LNG bunkering in the UAE as well as in Southeast Asia.

"By that time if we see that it's feasible, that there's enough demand, we may go to another phase in our relationship with Inpex," said Capt Al Masabi.

The UAE is the only Arab country that is a council member of the IMO and Adnoc Logistics and Services is preparing for a future where the agency may require vessels to cap their sulphur content even lower, to around 0.1 per cent.

"In all our new designs for new vessels, we'll make sure that we're prepared for even the 2030, 2050 regulations. This is one of our top priorities," said Capt Al Masabi.

He declined to comment on the timeline for the company to finalise its joint venture with China's Wanhua Chemical, which was earlier set for the end of 2019, saying an announcement was forthcoming.

The logistics and services arm is not targetting bringing in a foreign stakeholder or aiming to go public for now, said Capt Al Masabi.

"We're not looking at the moment for any direct investments or taking it out to the markets. Our focus right now is on how to maximise the value and the valuation of this company. Perhaps maybe later in the future, but there's no plan as of today," he added.

Updated: February 1, 2020 05:16 PM

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