SHIPPINGInsight 2019

IMO2020 Compliant Fuels Thoughts/OverviewKevin CoteMarine Technical Sales Manager16 October 2019

LEGAL DISCLAIMER - INNOSPEC’S PRESENTATIONS

§ This presentation is the property of Innospec and its subsidiaries (the “Company”) and is

strictly confidential. It contains information intended only for the person to whom it is

transmitted. With receipt of this information, recipient acknowledges and agrees that: (i)

this document is not intended to be distributed, and if distributed inadvertently, will be

returned to the Company as soon as possible; (ii) the recipient will not copy, fax,

reproduce, divulge, or distribute this confidential information, in whole or in part, without

the express written consent of the Company; (iii) all of the information herein will be

treated as confidential material with no less care than that afforded to its own confidential

material. This presentation is for informational purposes only.

INNOSPEC INC. – COMPANY PROFILE

§ Innospec Inc. –NASDAQ(IOSP)

§ Corporate HQin Englewood,CO

§ Regional offices in USA, UK, continental Europe, Africa & Asia

§ Manufacturing sites in USA, UK, France, Italy, Spain&Germany; globalnetwork of offices and testingfacilities

§ Revenue of $1.5 billion(2018)

TERMINAL & STORAGE

PIPELINE & STORAGE

PRODUCTION

REFINERY

DRILLING

AVIATION FUEL

HEAVY DUTY & FLEETMARINE PASSENGER VEHICLESPOWER

FRACTURING & STIMULATION WELL TO WHEELS

• Innospec is represented on the ISO working group responsible for the development of the Classification & Specification of Marine Fuels – ISO8217

• International Council of Combustion Engines (CIMAC) working group 7 (Fuels)

• Singapore Shipping Association Fuel committee member

• Lloyds Register & Shell Marine have independently verified the claims associated with certain Innospec products under rigorous conditions, providing assurance that the products perform

INNOSPEC - MARINE IINDUSTRY INVOLVEMENT

2020 HYBRID FUEL – VLSFO

Major change: Introduction of Very Low Sulphur Fuel Oil (VLSFO)

50-70% of 2020 Marine fuels will be hybrid fuels (VLSFO)

VLSFO can be processed directly, but major quantity only available by blend

no specific VLSFO grade available

• many (!) different types

• VLSFO quality will vary from port to port and batch to batch

• Variation in VLSFO viscosity

BREAKDOWN OF COMPLIANT FUEL

1. MGO-Distillate marine fuel below 0.5% sulphur fuel (DMA, DMB, DMX &

DMZ)

2. VLSFO- Blended below 0.5% sulphur fuel from various fuel suppliers

Viscosity ranging from 20-160cst. Average viscosity at 145cst

3. HFO- desulphurized below 0.5% sulphur fuel. Viscosity ranging from 180-

500CST

4. Direct Crude-sweet crude with 0.5% sulphur

FUELS MATRIX

IMO2020 COMPLIANT FUELS - POTENTIAL

2020 HYBRID FUEL – VLSFO ISSUES

Fuel Stability

Ageing of distillate components

Sludge formation related to paraffins and asphaltenes

Fuel blend stability

Fuel Compatibility

Compatibility issues between various IMO fuels (Comingling)

Fouling in fuel systems

Poor combustion

Fouling in engine and exhaust gas system

SHIP OWNERS' PREPAREDNESS§ Fuel systems on board ships – segregation of HS and LSFO systems

§Engine Room fuel sampling points

§On board documentation/approval for changes to fuel systems

§HAZID and mitigating measures

§On board Operational Manual including:

- change over @ compliance date/bunker tanks cleaning/renew switch over times

§Procedure for fuel oil purchase and testing

§Procedure how to document and report fuel non-availability

§Crew training

SUMMARY - CHALLENGES

§The challenges of operating with VLSFO 0.5% compliant fuel

- Stability & Compatibility

- Ignition quality (Poor CCAI – Calculated Carbon Aromaticity Index)

§The challenges of operating with distillate fuels

- Lubricity with a max limit of 520 microns

- Waxing of fuel when operating in cold regions

- Microbial contamination

- Viscosity – To maintain at 2 cSt and above

§ P-value measures how easy or difficult it is for the asphaltenes to remain soluble in the fuel oil

§ S-value measures the intrinsic stability of asphaltenes in HFO

§ HFT measures the insoluble organic and inorganic material in the fuel oil

§ Spot test assesses the degree to which asphaltenes are already precipitated

§ Porla is similar to both P and S value, uses different sensor and is capable of measuring

stability in low asphaltene fuels >0.05%

§ ASTM D7061-06 examines how asphaltenes remain dispersed in the fuel oil or settle out of

the solution and is complement to above methods. Turbiscan is able to give additional

information about storage stability.

STABILITY TEST METHODS – OVERVIEW

TURBISCAN TEST – ASPHALTENE STABILITY (VLSFOs)

For best asphaltene stability results treat rate: 1:10,000 – 1:15,000

Very Low Sulphur Fuel Oil (VLSFO) Fuel Test Matrix§ 6 Fuel samples tested

§Each individual Fuel sample un-additized tested

§Each Fuel tested in a 50:50, 90:10 and 10:90 blend with each other, all un-additized

§Each Fuel and fuel combination additized

§Summary§More than 35% of fuels failed in stability testing

§More than 50% of the fuel combinations failed in stability testing

§All additized fuels showed excellent stabilities

TURBISCAN TEST – ASPHALTENE STABILITY (VLSFOs)

For best asphaltene stability results treat rate: 1:10,000 – 1:15,000

Un-additized 50% Additized 50%2191570 2191571 2191572 2191576 2191593 2191594 2191570 2191571 2191572 2191576 2191593 2191594

50%

2191570 0,49

50%

21915702191571 0,26 2,27 2191571 /2191572 15,63 2,42 11,82 2191572 0,47 /2191576 8,12 5,90 8,81 2,92 2191576 1,68 0,22 0,502191593 0,67 1,12 9,53 1,08 10,80 2191593 / / 0,40 /2191594 5,08 7,97 12,23 14,02 8,70 0,31 2191594 0,29 0,27 0,20 0,23 0,72

Un-additized 90% Additized 90%2191570 2191571 2191572 2191576 2191593 2191594 2191570 2191571 2191572 2191576 2191593 2191594

10%

2191570 0,49

10%

21915702191571 0,20 2,27 2191571 /2191572 4,34 0,42 11,82 2191572 0,34 /2191576 0,12 0,34 9,48 2,92 2191576 / / 0,712191593 0,24 0,27 11,37 0,22 10,80 2191593 / / 0,45 /2191594 0,38 0,43 12,88 0,51 15,71 0,31 2191594 / / 0,92 / 0,92

Un-additized 10% Additized 10%2191570 2191571 2191572 2191576 2191593 2191594 2191570 2191571 2191572 2191576 2191593 2191594

90%

2191570 0,49

90%

21915702191571 0,32 2,27 2191571 /2191572 10,83 12,13 11,82 2191572 0,14 0,122191576 0,13 0,19 0,43 2,92 2191576 / / /2191593 9,66 9,81 9,16 8,78 10,80 2191593 1,53 1,04 1,45 1,182191594 5,25 3,02 4,15 5,60 4,96 0,31 2191594 0,45 0,56 0,4 0,32 0,63

RECENT VLSFO ISSUE/CONCERN• New VLSFO fuel, supplied from a European refinery, went unstable within four (4) hours of first use - Fuel barged (1 day voyage, heated storage, temp not known, how clean was the barge?)- Fuel bunkered into tanks which had been hand washed then hand dried, i.e. completely clean and dry- Purifiers and sludge lines were blocked within 4 hours of starting to use- Service tank temp was 65C- Engine components (fuel injectors, exhaust valves) were destroyed by the fuel’s instability/failure to burn - Fuel was “on spec” per ISO8217 according to retained sample testing

QUESTIONS?Thank You