B Going it alone Inter view

Going it alone
David Hughes talks to Eirik Andreassen, chief executive, Veritas Petroleum Services
ack in 1981, an offshoot of
society Det Norske Veritas
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-
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
“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
“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.”
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