IMO sulfur cap – the only certainty is uncertainty

IMO sulfur cap – the only certainty is uncertainty

There was still a lot of uncertainty surrounding the IMO’s forthcoming IMO 0.5% sulfur cap, North P&I Club has warned.

Both commercial and technical problems could occur for years after the 1st January 2020 deadline and will cost the shipping industry billions of dollars, the P&I club said at a presentation in London last week on its ‘2020 Vision’ initiative.

Also contractual issues will emerge in the form of charterparty disputes, especially with timecharters where the charterer pays for the fuel. The industry needs to think about charterparty clauses of those charters overlapping the enforcement date and beyond.

Alvin Foster, deputy director loss prevention said that many owners and operators will opt for distillates. “Tank cleaning will be difficult, but there will be less engine maintenance needed,” he said.

As for hybrid fuels and blends, there will be so many available that there could be incompatibility problems when using these types of fuels.

If the forecasts of around $400 per tonne of HFO is correct, then the payback for fitting a scrubber could be as little as one year. However, wash water effluent rules could be introduced at a later date, Foster warned.

Another alternative, LNG appears to be cheap but the associated transport costs to bunker a vessel, plus other costs, could push the price much higher.

North has also published a ‘Marine Fuels: Preventing Claims and Disputes’ loss prevention guide in the light of the forthcoming legislation.

This 110-page guide covers both technical and commercial issues and aims to help on board officers, operators, managers and timecharterers understand what could go wrong when purchasing and using marine fuels and what steps can be taken to prevent disputes and mitigate their impact.

Tanker Operator will look at possible charter party disputes in the August/September issue, courtesy of North.