Interview Going it alone David Hughes talks to Eirik Andreassen, chief executive, Veritas Petroleum Services B ack in 1981, an offshoot of Norwegian classification society Det Norske Veritas (DNV) introduced the first commercial bunker fuel testing programme for ships. Three decades on, DNV Petroleum Services (DNVPS) has become a global provider of fuel quality testing and bunker quantity services with a network of customer service offices across the world. But last year, following the merger of DNV with German classification society Germanischer Lloyd, DNVPS was sold off to IK Investment Partners and, this July, the testing agency was rebranded as Veritas Petroleum Services (VPS). So World Bunkering caught up with VPS’s chief executive Eirik Andreassen recently to find out more about life after DNV for this major player in the bunker testing scene. Firstly, though, I asked what he saw as the biggest challenge facing the bunker industry at present. “Right now there are many challenges, and most of them driven by upcoming environmental regulations,” Andreassen replied. “One of the challenges facing the industry is, of course, how to ensure availability and sufficient stocks of compliant fuels based on customers’ needs and operating profiles. The demand for fuel compli- 30 ant to the 0.10% sulphur limit will most probably increase from quarter four this year, and the fight for compliant fuels and blend stocks will drive the price upwards. This implies that the bunker suppliers/traders and brokers will have additional challenges to optimise the blends to provide a compliant fuel that is fit for purpose, and they may need to look beyond traditional sources. “We will also see new fuel types coming into the market. Some we already know and have seen, and others will be developed continuously. “For our customers, price and availability of emission control area-compliant fuel will probably be first on their minds, but we also see an increasing concern over the quality of compliant fuel. “Another challenge that will affect the whole industry is enforcement of the environmental legislation. This is, of course, something that is also of great concern to shipowners, the authorities and the general public. I am concerned that we will see huge regional variations in enforcement, but administrations are gearing up to address this challenge. The shipping industry has long seen that inconsistent enforcement Eirik Andreassen, CEO, Veritas Petroleum Services (VPS) World Bunkering Autumn 2014 World Bunkering Autumn 2014 the reduction in demand for HFO will make this product more attractive for ships in combination with scrubbers. We also believe there will be slightly less coupling between the prices of the various fuel grades.” So, will there be more or less need for testing companies in the future, and why? “We believe the need will continue to be there,” said Andreassen. “The types of fuel will change and, from 2020, the fuel mix will make for an even greater degree of complexity compared to what we see today. While most distillates are compliant with sulphur regulations, and cat fines pose a problem only to a limited degree, there will be more operational issues related to compatibility, lubricity, viscosity and cold flow properties.” Turning to one of the major parts of VPS’s current work, I enquired: “Will mass flow meters mean there will be no need for surveyors to attend when bunkering takes place?” “No,” came the definite answer. “A surveyor is still needed for the verification of the flow meter reading and control of sampling. As a prudent measure, the buyer should always have a surveyor onboard to take the opening manual measurement of the bunker tanker for the verification of the flow meter reading. “Currently, VPS is experiencing an increase in both bunker quantity surveys and investigative surveys, because of the need to accurately account for the bunkers replenished and the bunkers already onboard.” “Do you think biofuels will take on in the shipping industry, and what challenges would that pose?” I asked. “Good question,” Andreassen responded. “I don't think biofuels will take off significantly in the marine industry. You will see the occasional products that contain some biofuels though. A lot probably also has to do with the price differential between bio and traditional marine gas oil. I would assume that bio can be sold at a better price elsewhere, for example to the automotive industry. Let us say my assumption is correct – why would anyone sell bio at a lower price to the marine market?” He summed up the challenges related to bio fuels as “cold flow properties, oxidation stability and microbial growth”. From this point, the discussion focused on VPS. Asked what he saw as the opportunities and challenges for the company as it is launched as a separate business, Andreassen first listed the opportunities. “We will be much more agile and flexible when it comes to developing new services and growing the business organically and inorganically. “We will continue to leverage our rich historical information, data analytics supported by deep technical expertise and experience to provide insights that will help our clients make the right decisions to improve their operational and financial performance.” “And the challenges?” I asked. Andreassen conceded: “The support from a big organisation like DNV was much more comprehensive. But, while independence means a greater challenge for our new organisation, it also gives us the opportunity to become a leaner, more nimble and efficient service provider.” Interview may be a threat to a level playing field, and is gearing up to put pressure on legislators to introduce a consistent approach to enforcement.” On the subject of the impending environmental regulations, I asked: “Do you think the widespread use of scrubbers will mean heavy fuel oil (HFO) will continue to be the main marine fuel for the foreseeable future?” According to Andreassen: “It will be part of the solution. When you look at it, there will still be a considerable amount of residuals available. These residuals have to go somewhere. The main consumers today are ships, oilfired power plants and other refineries that use these as feedstock, but the pricing varies a lot, and while ships and power plants are moving to cleaner fuels, meaning a reduction in demand for HFO, our belief is that this product will still be in abundance, and will be an important energy source for ships. “The question is also when will this start to make an impact. It is very difficult to say what will happen in 2020, but, from 2025, we believe that 31