Maersk advances PBF Logistics clean bunker fuel supply deal by two months
PBF Logistics’ agreement to supply shipper A.P. Moller-Maersk with low sulfur bunker fuel will start in October, a company executive said.
“The Maersk processing agreement is set to commence in October, which is two months earlier than originally anticipated,” said Matthew Lucey, President of PBF Logistics on the second quarter results call. “The early start can be one of the initial signals from market participants that preparations for IMO 2020 are indeed underway.”
Under the agreement, PBF Logistics will supply Maersk with the equivalent of 1.25 million metric tonnes or 9.4 million barrels of fuel, which is about 10% of A.P Moller-Maersk’s annual fuel demand.
PBF Logistics and Maersk in February 2019 inked a deal which would allow Maersk Oil Trading to supply IMO-compliant 0.5% sulfur fuel to its customers on the US Atlantic Coast.
The crude will be processed at the former Crown Point International site — a terminal facility located in New Jersey on the Delaware River south of Philadelphia. PBF Logistics bought CPI’s East Coast Storage Assets located near Paulsboro, New Jersey, in July 2018. It includes a storage facility, a marine facility, a rail facility, a truck terminal, equipment, contracts and more located near PBF’s Paulsboro, New Jersey, refinery.
PBF Logistics will repurpose the idled asphalt portion of the facility to process about 25,000 b/d of crude for Maersk.
Earlier, PBF Energy chairman Tom Nimbley said on the parent company’s call that PBF will sell components rather than finished fuels to the market, obviating the need for patents or any possible patent infringement problems with other refiners.
The International Maritime Organization’s mandate that bunker fuel sulfur is reduced to 0.5% from the current 3.5% sulfur will be in effect on January 1, 2020.
The mandate will increase demand for clean fuels and reduce the need for high sulfur fuels. Refiners and shippers have been on the lookout for signs that the market is moving to accommodate that change which is coming slower than some originally anticipated.