The IMO 2020 mandate is expected to introduce a yet-to-be blended low-sulfur bunker fuel to the shipping market from Jan. 1, 2020.
Although no one is blending the new 0.5% sulfur bunker, compared with the current 3.5% sulfur bunker, it did not stop major oil companies from formalizing their own branded blending patents or licensing for the low-sulfur bunker fuel.
Based on licensing documents obtained by OPIS, Shell and ExxonMobil have already filed U.S. patent or proprietary licensing for their own low-sulfur bunker blends, which dictates the fuel mix and specifications. The patents were registered by Shell Oil Company in Houston in June 2015 and ExxonMobil Research and Engineering Company in Annandale, N.J., in August 2018.
This would mean in theory some oil companies could enforce their new bunker blend patents against competitors if they choose to do so in courts. Industry sources said that Shell and ExxonMobil are more likely to "go after the bigger bunker companies" than the smaller ones if they were to pursue patent infringements.
Also, these patents cover a relatively broad and common blending mix, they said. They compared this bunker patents to the Unocal gasoline patent lawsuit against six major oil companies in 1997.
In Shell's patent registration, the company said that low-sulfur marine fuel compositions are provided. Embodiments comprise greater than 50 to 90 wt percent of a residual hydrocarbon component, with the remaining 10 and up to 50 wt percent selected from a non-hydroprocessed hydrocarbon component, a hydroprocessed hydrocarbon component, and a combination thereof. Embodiments of the marine fuel composition can have a sulfur content of about 0.1% wt percent or less.
Sources said that these patents apply to both 0.1% and 0.5% sulfur bunker blending. The focus on these patents is on the composition of components used to make a low-sulfur fuel oil, and not necessarily on the sulfur content, they said.
The current market expectation is for a blend of 83% of ultra-low-sulfur diesel and 17% of high-sulfur fuel oil to make a 0.5% sulfur bunker fuel.
The response from some bunker players on the patents has been mixed.
Some played down the potential impact of trying to copyright a fuel blend or mix as the global bunker market relies on a fungible non-licensed product.
"Patenting a bunker fuel blending mix is like trying to put a patent on air," a bunker player said.
Sources said that the early indications from major oil companies are that low-sulfur bunker fuel of 0.5% sulfur or less would not be fungible, meaning a buyer or ship owner could not comingle branded products without voiding the original seller's warranty.
This is expected to create logistics issues for ship owners, meaning that they would need to buy the same branded product at the next port of call if needed.
The low-sulfur bunker is not being blended yet. Therefore, pricing, blending process, economics and stability of this new blended product remain in question and very much a talking point for now.
--Edgar Ang, eang@opisnet.com
Copyright, Oil Price Information Service
