IMO 2020 : ExxonMobil Sights Marine Fuels Business Prospects


  • The IMO responsible for the safety and environmental performance of the shipping sector, has set sulphur cap to reduced sulfur emissions by over 80%.
  • ExxonMobil, the oil major views the IMO 2020 sulphur cap as an emerging opportunity and not an operational problem.
  • The company had been preparing for a low sulfur climate since 2015 and now their points of sales and infrastructure are planned with cost effective supply chain.
  • ExxonMobil is aspiring for the widest possible IMO 2020 compliant fuels provision, by formulating some low sulfur fuels through science, rather than just manufacturing.
  • IMO 2020 help and guidance are provided to those who work with ExxonMobil.

As the shipping world scrambles to get ready for the IMO 2020 ruling, oil major ExxonMobil’s marine fuels outfit is “digging deep” to be at the forefront of the emerging low sulfur market, writes Gaurav Sharma a UK-based oil & gas analyst and market commentator of Forbes.

Emissions to be slashed

United Nations’ body IMO is responsible for the safety and environmental performance of the shipping sector.

The IMO has ruled that from January 1, 2020, marine sector emissions in international waters be slashed to reduce sulfur emissions by over 80%. This can be achieved by switching to lower sulfur fuels.

The current maximum fuel oil sulfur limit of 3.5 weight percent (wt%) is to be reduced to 0.50 wt%, which is as much a challenge for shipping companies as it is for their fuel vendors.

An opportunity or a problem?

According to Luca Volta, Marine Fuels Venture Manager at ExxonMobil (NYSE:XOM), the oil major views the impending low-sulfur marine fuels climate as an emerging opportunity and not an operational problem.

“We will be ready with the products and point of sales by the third quarter of 2019. That’s when we expect marine customers will start to bunker as the deadline of January 1, 2020 approaches,” Volta told Forbes.

Focus of ExxonMobil

ExxonMobil Fuels had been preparing for a low sulfur climate since 2015 and when finality was achieved on the IMO ruling, the oil major rapidly set wheels in motion: “Our choices of marking points of sales and support infrastructure largely related to where we can deploy a cost effective supply chain. Product moves easily but then the cost effectiveness of the supply chain comes into play.”

“Logically we can deploy an effective supply chain where ports are in proximity of our manufacturing assets. This is where we are focusing our first wave of IMO 2020 compliant fuels.”

Compliant fuel availability

Initially ExxonMobil has named the ports of Antwerp, Rotterdam, Genoa, Marseilles, Singapore, Laem Chabang (Thailand) and Hong Kong, where compliant fuels would be available, with locations in North America to follow.

However, Singapore was the obvious choice to get the drive going.

“Singapore is the largest bunkering fuel market in the world, and from ExxonMobil’s standpoint we also have one of our largest manufacturing facility there [in Jurong]. Capacity expansion at the site means we are also going increase our capability to produce marine gasoil and fuels.”

Working for a smooth change

Volta stressed that ExxonMobil wants to be at the forefront of a competitive and changing marine fuels environment. That means aspiring for the widest possible IMO 2020 compliant fuels provision. The top ten global ports account for 50% of bunkering fuels, and the next ten account for a mere 5%, followed by a plethora of other ports.

“It will be challenging for all of them to adapt; but all the top ten ports will have product available. ExxonMobil wants to be a significant player in this post IMO 2020 marine bunker and fuel market, and we are digging deep to make it happen.”

Compliant fuel through science?

IMO 2020 presents a multi-dimensional problem that needs addressing and ExxonMobil has done that by going back to basics. “We formulate some of the low sulfur fuels through science, rather than just manufacture those fuels. Our compliant [0.50%] sulfur fuels range from RMD80 to RMG380 with a density of between 900 and 970 at 15 degrees Celsius, and catalytic fine content meeting ISO 8217:2017 parameters.”

“The compatibility characteristics of these fuels leverage ExxonMobil’s proprietary technology.”

Operational challenges faced

Volta admitted there were operational challenges. “Marine fuels do have some latitude over say ground transportation and aviation fuels. While both transportation and aviation fuels have several stringent parameters, in the case of shipping fuels two keenly regulated aspects are sulfur and flash, where we worked with the industry to make it happen on combustion and compatibility properties.”

Is shipping industry gearing up?

There are operational anxieties. But very detailed compliance plans are being instituted by shipping companies. The largest of these, especially publicly-listed ones, are reporting an advanced state of preparedness.

Small shipping companies are facing challenges in what is a very conservative industry that looks at the here and now, rather than tomorrow.

Volta said, “We are giving IMO 2020 help and guidance to those who work with us.”

ExxonMobil to support scrubbers

For an industry facing a seismic change, anecdotal evidence also points to an exponential rise in the use of scrubber systems or scrubbers – air pollution control devices that can be used to remove some particulates and/or gases from exhaust streams.

Volta agreed with the anecdotal evidence and said ExxonMobil will work with shipping customers opting to go down that route.

However, that exponential rise in the deployment of scrubbers is from a relatively low base. The latest market projections point to a couple of thousand scrubbers by 2020.

The fuel mix

Ships powered by LNG have a great potential, especially for newly built additions to the global fleet, again rising from a low base, Volta added.

“Today bunker consumption is around 5 million barrels per day (bpd) and we see that increasing to more than 8 million bpd by 2040. Notionally, when we look at the fuel mix – only 10% will be LNG, 30% will be distillates, i.e. marine gas oil, and the remainder will be residual in nature from high to low sulfur. We are heading to the ’0.50 world’ and not sitting back.”

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Source: Forbes


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