Going into 2020 – a distant, simpler age I’m sure we all look back on with great nostalgia – there were question-marks over IMO 2020-compliant fuel availability across the Caribbean. Local refining and storage are of mixed capacity and capability, and most fuel testing is based in a handful of labs. However, the changeover went off largely without a hitch.
Looking back on the first six months of VLSFO supply in the main bunker hub of Jamaica, national oil company Petrojam said this summer that the switch had been a success.
Petrojam’s general manager Winston Watson said: “We have been in preparation mode (for this switchover) for close to two years and so the transition was relatively smooth, with very few glitches. We had a plan in place to be able to produce the material from the refinery and in fact started the production and sale of this product in mid-December well before the deadline.”
Watson added that despite the challenges anticipated by power company Jamaica Public Service’s conversion to LNG and changes in the quality requirements for the bunker market, Petrojam had recalibrated its business model to ensure continued supply reliability and commercial viability, with strict controls ensuring fuel was on-spec. “So far, we have received commendations from all of our bunker customers on the high quality of the product,” he said.“It’s been more than six months into our supplying this new grade of fuel and we are quite pleased with the level of sales we have been realizing; and despite Covid–19, we do anticipate that these will increase as time progresses.”
Of course, we’re now in 2020 and while readily available IMO 2020 compliant fuel is normal, many other things currently aren’t thanks to Covid–19. And in terms of shipping economics, one of the Caribbean’s main sources of shipping traffic, if not always fuel sales, is currently on hold with the shutdown of the US cruise industry since March. This situation is clearly set to continue for some time to come.
Carnival, which used a swathe of its fleet in late April to repatriate crew stuck abroad by no-fly restrictions, had originally planned to resume sailings from August 1
That would be a week after the planned end of a US Centers for Disease Control no-sail order due to expire on July 24, as the early impact of the virus in its first US centres ebbed and the federal government pushed ahead with calls to “reopen” the economy. But as that reopening quickly led to a disastrous resurgence, particularly in cruise-heavy states like Florida, Carnival decided in June to push back that resumption through September 30 – a decision reinforced in July when the CDC extended its no-sail order to the end of September over concerns about cruise vessels’ skeleton crews following virus safety protocols. Delays to completion of the LNG-powered Mardi Gras and to the drydocking in Spain of the Carnival Radiance mean changes and cancellations even then, with reduced and juggled itineraries running all the way into May 2021 at least.
“We continue to assess the impact of the Covid–19 pandemic on global commerce, public health and our cruise operations. In addition to our current pause in service, there have been many other unintended consequences, including shipyard, dry dock and ship delivery delays, and related changes to our deployment plans for our fleet,” said Christine Duffy, president of Carnival Cruise Line.
“While we had hoped to make up construction time on Mardi Gras over
the summer, it’s clear we will need extra time to complete this magnificent ship. We share our guests’ disappointment and appreciate their patience as we work through this unprecedented time in our business and the lives of so many people. We remain committed to working with government, public health and industry officials to support the response to the pandemic and to return to operations when the time is right.”
Royal Caribbean has made similar decisions, while Princess Cruises has cancelled all non-Australian sailings, including its Caribbean itinerary, until mid-December. All told, the chances of a steady stream of cruise vessels showing up at Caribbean nations any time soon seem remote.
And there’s certainly no reason to think that most island states – which have generally managed the pandemic with minimal infections – would want tourists arriving from the US until the disease is under control, despite their heavy reliance on tourism.
The Bahamas had originally reopened to American visitors at the start of July, albeit with the provision that arrivals had to test negative for Covid–19. But less than three weeks later, with cases in Florida ballooning out of control, the island nation announced it would once again be barred to commercial flights and passenger shipping from the US. The Bahamian government, at the same time, put Grand Bahama itself on two weeks of total lockdown, restricting even internal intra-island traffic, following a return of virus cases after two months without any at all, most based on residents returning from abroad.
Following a spike in cases, the US Virgin Islands put a restriction in place on workers at the Limetree Bay refinery, banning new contractors and restricting those currently staying in the facility’s living quarters to the site until further notice.
Trinidad and Tobago has remained largely closed, like most Caribbean islands. It is possible, however, that the country’s mothballed former Petrotrin refinery in Pointe-a-Pierre, which up until the company’s bankruptcy a couple of years ago was the centre of the country’s bunkering business (albeit one dogged by sometimes unreliable infrastructure), could be in line for a return to operations. There is a caveat: at the time of writing, the country was in the middle of elections, and promises made during an election campaign don’t always come to fruition.
In July, incumbent prime minister Keith Rowley announced that the government would be signing a US$700 million deal “in the coming days to take over the defunct facility with the Oilfield Workers Trade Union, whose subsidiary had won the bidding purchase for the refinery and its fuel trading arm (the company having been split into
four parts after bankruptcy). “It is the intention of the government of Trinidad and Tobago, in the coming days, to sign off with the OWTU on the beginning of the way back for the Petrotrin refinery, known today as Guaracara, as soon as the OWTU is ready to commit itself to what I said here in this statement today, and provide its commitment by its signature,” he said at the launch of a land distribution programme to enable ex-Petrotrin workers to build homes.
“And, when that would have been done, the people of Trinidad and Tobago would have solved yet another one of its major problems. This government did not have the luxury of postponing this outcome. The outcome has not been without pain. It has not been
His chief rival in the election, opposition leader Kamla Persad-Bissessar, has also promised to reopen the refinery and redevelop Port Lisas. She has been damning of the government’s handling of Petrotrin, describing breaking it up after bankruptcy as a “recipe for disaster” and saying that the government’s “disastrous mismanagement of the energy sector has therefore deliberately destroyed the economic livelihoods of thousands of families”.
The government’s OWTU announcement – and the timing of it so close to voting – has certainly drawn criticism. It remains to be seen in which form, and when, the one-time hub of Trinidad’s domestic fuel production industry will rise again.The main bunker operator on the island remains Ventrin, owned by Suriname’s national oil company Staatsolie – though Bunker One expanded to Trinidad in May, moving a tanker there as part of an overall Caribbean expansion. Last fiscal year, Staatsolie (which doesn’t break down its figures to say how much is supplied by Ventrin) sold approximately 487,000 tonnes of HFO produced at its Suriname refinery, switching to VLSFO in November. “With the initial average spread of more than US$ 25/bbl, this proved to be most essential for Staatsolie in Q4 2019. With the introduction of our own VLSFO we were able to capture and expand on the international bunker market which had a positive effect on our sales margins,” the company said in a statement.
It added: “[VLSFO supply is] providing us not only high margins, but also generating international recognition, customer loyalty, larger market share and an increase in bunker fuel sales from November 2019 forward.”
It remains to be seen how 2020 pans out for Staatsolie and other bunker providers in the region. It looks likely that it will be quieter than usual.
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