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Maersk Closes U.S. Low Sulfur Fuel Deal

FreightWaves

Maersk, the largest container ship and supply vessel operator in the world, is continuing its preparations to meet new low sulfur fuel regulations following a deal with New Jersey-based PBF Logistics LP to supply the fuel to Maersk Oil Trading, a subsidiary of AP Moeller-Maersk.

The sulphur regulation (IMO 2020), which requires operators to use fuel with a sulfur content of 0.5 percent or less (or use scrubbers to mitigate sulfur emissions), takes effect on January 1, 2020.

Maersk has opted out of fitting scrubbers to most of its fleet, meaning that it needs to secure low sulfur fuel supplies globally for its vessels to comply with the new regulation.

As a result, Maersk has embarked on a series of strategic agreements with fuel storage and supply companies that will ensure its fleet is able to operate legally after the January 2020 implementation of IMO 2020.

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The latest deal with PBF Logistics LP will ensure supplies of 1.25 million tons of low sulfur fuel from the PBF Logistics' facilities on the Delaware River, south of Philadelphia.

Niels Henrik Lindegaard, Head of Maersk Oil Trading, said, "The vast majority of our fleet will comply with the regulation through use of compliant low sulfur fuels. With the capability to produce and store compliant low sulfur fuel on the U.S. East Coast, we take control of the fuel supply in a key maritime hub for us. We will continue our drive to ensure compliance in all geographies come 2020."

PBF Logistics is headquartered in Parsippany, New Jersey. It is comprised of PBF Energy Inc., which owns or leases, operates and is developing and acquiring crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets. In October 2018 the company acquired CPI Operations LLC from Crown Point International, acquiring its East Coast oil storage facilities.

The deal with PBF Logistics follows a similar deal that Maersk concluded in Europe in July 2018 with Dutch oil storage company Vopak. That agreement is to supply up to 2.3 million tons of low sulfur fuel from Vopak's facilities in the Port of Rotterdam.

"We trust that this initiative will put to rest some of the concerns the industry has on fuel availability as well as secure our continued competitiveness in the market," said Lindegaard at the time of the Vopak deal. Nevertheless, those concerns are still being debated.

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