Mr Andrew Laven, Chief Operating Officer, Sahara Energy Resources DMCC, Dubai, says an increase in demand for Very Low Sulphur Fuel Oil (VLSFO) will lead to strengthening of prices, as economies begin to recover and trade restrictions ease, following the COVID-19 pandemic.
In a statement issued in Lagos on Wednesday, Mr Bethel Obioma, Head, Corporate Communications, Sahara Group, said that Laven made the prediction in an article for a leading trade publication, Energy Voice.
In the article, Laven explored key industry developments in the six months since the introduction of the International Maritime Organisation (IMO) 2020 Policy.
He reaffirmed Sahara Group’s commitment to cleaner fuels, welcoming industry-wide efforts to reduce maritime sulphur emissions and commending the energy sector’s transition to VLSFO without incurring anticipated delays.
“Sahara Group continues to demonstrate leadership in the energy sector globally, providing full backing for progressive policy-making in support of wider sustainability initiatives, ” Laven said.
Previewing Sahara Group’s plans for the United Arab Emirates and other markets, he reiterated the energy conglomerate’s preparedness for transitions to cleaner fuels.
Laven said, “For the foreseeable future, this will be the marine fuel of choice and we want to play our part, in ensuring availability and supporting the supply chain, that is necessary to keep trade moving.”
On economic recovery post-COVID-19, he said the shipping business would inevitably see increased demand.
“International shipping is responsible for around 90 per cent of world trade. This will drive demand for VLSFO and prices should strengthen.
“The build-up of stocks in advance of 2020 meant shortages did not occur and the reduction in demand through COVID-19 meant the supply chain hasn’t been fully tested,” he said.
He allayed the fear that the energy sector would not adjust smoothly or productively to the IMO 2020 Policy.
Laven said: “While the talk was negative, the industry proved very capable of rebalancing and the shift to VLSFO started during the third quarter of 2019.
“The spike in High Sulphur Fuel Oil (HSFO) was driven by restricted availability, as storage shifted to VLSFO.
“The price of VLSFO rose at times to higher than the next alternative, MGO.
“As the supply chain became more robust and stocks of VLSFO built up, the differential to HSFO dropped. On occasions, HSFO actually became more difficult to purchase than VLSFO.” (NAN)