As the shipping industry is the biggest culprit of sulphur emissions, the International Marine Organisation (IMO) will be launching Regulation 2020, set to cut sulphur emission, a by-product of the fuels used, by 80 per cent. This will have a marked impact as the marine industry accounts for half of the global fuel oil demand. Last year, the marine industry consumed 3.8 billion fuel/oil barrels per day.
As governments and businesses across the globe continue working to reduce emissions, the 2020 regulation will be latest efforts to ensure the shipping sector is in line with other industries that are consciously striving to reduce greenhouse gas emissions. The regulation will see sulphur limits for bunker fuels cut from 3.5 percent to 0.5 percent.
According to a study by consultancy Wood Mackenzie, who will be speaking at the upcoming Tank Storage Asia conference, the shipping industry’s annual bunker costs could rise by up to $60 billion in 2020 with full compliance with the IMO’s sulphur cap.
Nick Powell, StocExpo & Tank Storage Portfolio Divisional Director comments: “2020 is not far away and will be on our doorstep before we know it. It is important to act now to ensure that the right frameworks, operations and business models are in place to guarantee compliance as the vessels that fail to do so will face severe fines or could be prevented from sailing.
“The industry as a whole shouldn’t overlook the wider impact that the regulation will have, Singapore may need to repurpose some storage tanks to prepare for a shift from fuel oil to gas oil bunkering.”
Mr Powell continues: “The IMO 2020 regulation is going to have a marked impact on the tank storage industry, with many believing that there will be an increase in demand for storage as the industry shifts to compliant fuel options.
“The IMO 2020 regulation will take centre stage at the upcoming Tank Storage Asia conference, as we grapple with what compliance of IMO 2020 will look like for the industry.”
The Paris MOU, Tokyo MOU, Indian Ocean MOU and Black Sea MOU port state control (PSC) regimes have agreed to focus on the prevention of ship air pollution during their forthcoming concentrated inspection campaigns (CICs).
The CICs will be carried out between 1 September 2018 and 30 November 2018, according to marine insurance and risk management company gard, and the Port State Control Officers (PSCOs) will pay particular attention to visiting ships’ compliance with MARPOL Annex VI during regular PSC inspections. The CIC checklist/questionnaire to be used by attending PSCOs will reportedly be published in August 2018.
However, gard said: “as some PSC regimes have recently announced that they will take enforcement of the new 2020 global 0.5% sulphur cap seriously from “day one”, the CIC may be considered a good opportunity to create awareness on the forthcoming requirements.
“Ship operators should therefore not be surprised if verification of the sulphur content of the onboard fuel is requested as part of the CIC. This could include a review of documents, such as bunker delivery notes, oil record books, fuel logs and fuel changeover procedures, as well as the taking and analysis of fuel samples at short notice.
“The ‘Sulphur Inspection Guidance’ published by the European Maritime Safety Agency (EMSA) contains useful information on what to expect from an attending PSCO.”
Not just SOx
gard pointed out that in addition to sulphur oxides (SOx), MARPOL Annex VI limits emissions of nitrous oxides (NOx) and prohibits the deliberate emission of ozone depleting substances (ODS). It also regulates shipboard incineration of waste material, and the emissions of volatile organic compounds (VOC) from tankers.
The risk management company said it is assumed that the questionnaire will focus on the maintenance and working condition of relevant equipment, such as the incinerator, but will mainly contain operational questions aimed at verifying the crews’ familiarity with the ship-specific equipment and procedures.
Post your comment and join in the debate.
Refiners and oil majors are looking to strike exclusive agreements to market their new bread of IMO 2020 compliant 0.50% sulphur bunker fuels.
The new fuels are expected to become available around the time that the new global 0.50% sulfur cap on marine fuel comes into force on January 1, 2020.
Bomin is among the suppliers who say it is working on “a number” of such deals.
“There’s more of these agreements coming up, and as a supplier this is one of the most important tasks for us right now,” Bomin’s recently appointed Managing Director, Jan Christensen, told Platts.
Given the difficulty in producing such fuels, quantities are expected to be limited and availability will not extend to all markets.
As there will be no update to ISO 8217 before 2020, there will also be no official ISO specifications for IMO 2020 bunkers ready in time for the new cap.
Instead, an ISO Publicly Available Specification (PAS) for the fuels, PAS 23263, is currently under development.
CEPSA are among a small number of suppliers that have already given estimates on pricing for the new products, which is believes could sell around $120/Mt over HSFO.
“In a nutshell, Tallett, a chemical engineer by training, says the problem is insufficient equipment across the refining industry that would remove sulfur. There hasn’t been enough investment since the 2020 deadline was set to address the issue — either by refiners or shipping companies who can get kit fitted on their vessels to eliminate the pollutant, allowing them to burn otherwise non-compliant fuel.”
Martin Tallett, the consultant who warned two years ago that oil markets would be strained if tough standards for shipping fuel were imposed from 2020, says he’s even more concerned now.
What worries him is a demand surge so great that by 2020 the world will need 2.3 million barrels more oil a day than was being predicted when he did his previous research.
Read more: https://www.bloomberg.com/news/articles/2018-06-01/researcher-who-saw-stressed-2020-oil-market-is-more-worried-now
The availability of compliant marine fuel once the 0.5% sulfur cap is in place should not be a problem, according to a United States Coast Guard (USCG) official.
In comments made at the recent Posidonia shipping event and posted on the USCG website, Rear Admiral John Nadeau, assistant commandant for prevention policy, said failure to get the right fuel could be down to ‘poor voyage planning’ as much as anything else.
Read the full article here