Bunker industry must ensure supply of high sulphur fuel oil bunkers continues beyond 2020: IMO

IMO sulphur cap

At a recent event for the refining and petrochemical industry held in Athens, the IMO stressed that the bunker industry must keep providing the supply of high sulphur fuel oil bunkers even after the new regulations of the 0.5% global sulphur cap on marine fuel comes into force in 2020. According to IMO’s Edmund Hughes, discussions should focus on how to ensure consistent implementation of the sulphur limit as there will be no delay to a 2020 start date for the new rules. This issue will be addressed in the next session of IMO’s sub-committee on Pollution Prevention and Response in February 2018 and during an intersessional working group to be held later in 2018. “Compliance, enforcement and monitoring will be the remit and responsibility of both flag States and port States,” IMO said in a statement following Hughes’ presentation.

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South Korea’s SK innovation invests in development of new desulphurisation unit

Oil refinery

SK Innovation, which owns South Korea’s top refinery SK Energy, plans to build a new desulphurisation unit in its 840,000 barrels per day refinery in the south-eastern city of Ulsan to produce cleaner fuels for the upcoming global sulphur cap in 2020. The investment amounts to almost $900 million. Cha Jinseok, head of SK Innovation’s finance division, said that the new unit is planned to start commercial operation in July 2020.

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Generous bunker credit terms could become a thing of the past come 2020

The new regulations of the global sulphur cap, coming into force at 2020, are not only likely to put pressure on the supply of suitable fuel oil to the market but also to the supply of credit. In a recent presentation at the Aracon bunker event, head of credit Paul Millar at physical supplier and bunker trader Bomin Group outlined his views on the subject. The increase in bunker prices post-2020 may force some shipping companies out of the market while credit managers will also come under pressure to raise credit lines to cover increased fuel costs. According to Millar, those companies in the bunker supply chain that are least equipped to handle any inflated financial demands will be most likely to suffer.

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Bank of Amerika predicts distillates to dominate initial post-2020 bunker scene

Refinery

According to a report from the Bank of America Merrill Lynch ship owners are likely to go for distillate bunker fuel over other alternatives to heavy fuel oil to meet the requirements of the new global sulphur cap in 2020. Furthermore, BofAML believes that the refining sector is not ready for the changes ahead and questions the infrastructure for LNG bunkering.

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