In 2020, change is coming to the industry with new global sulphur limits for bunker fuel as a result of the IMO’s MARPOL Annex VI regulation.
Uncertainty comes to an end
The regulation will see new, lower, limits being implemented, affecting over 3 million bpd of residual fuel oil (resid). Uncertainty over whether this change was coming, has existed for years. So the clarity now provided is a relief for many.
But what the key impact of the MARPOL Bunker Fuel Regulation will be and what challenges and opportunities could arise from it, remains unanswered.
The impact of sulphur cap
The new regulation will lower global sulfur limits for bunker fuel. The current 3.5% limit, when the regulation comes into effect in 2020, will be reduced to 0.5%. The demand for high-sulfur resid for ship bunkers reached 95.4 million b/d of total oil demand in 2016.
So, the regulation is likely to have an impact on refiners in regions all over the world, as well as on crude producers, bunker suppliers and shipping lines.
Analysis report
According to an analysis by Concawe, out of approx. 30 million t of bunker fuels that will be consumed in Europe in 2020, only 3 million t will remain high-sulphur.
The rest will be residual fuel with a sulphur content of up to 0.5% (8 – 13 million t) or marine gas oil (13 – 19 million t).
Is legal framework in place?
For the MARPOL Bunker Fuel Regulation to have any real impact, enforcement of breaches of its requirements should be strict. Risk-free non-compliance as a result of inadequate detection methods, few sanctions and a lack of robust legal framework is a serious cause for concern.
Currently, no global entity is responsible for enforcement of sanctions, as these are made locally and could differ significantly from one location to the next, making consistent and effective enforcement a real challenge.
What alternate solution for refiners?
As a leading independent consulting company focused on the refining industry, Euro Petroleum Consultants (EPC) pays close attention to the discussions that accompany the enforcement of these regulations.
Stefan Chapman, Vice President, Euro Petroleum Consultants says, “With 2020 just around the corner meeting the new IMO requirement is a big challenge for both the refining and shipping industries. For refiners it is already late in the day for any important residue upgrading investments not already in the works to come on stream by 2020 – so what are the alternative solutions and what will happen to the HSFO currently being produced by refiners for bunker fuel?”
Event “IMO 2020 Are You Ready”
On 17th January 2019 in London, Euro Petroleum Consultants are hosting a unique event “IMO 2020 Are You Ready: Debate with the Specialist” which will gather refiners, shipowners, traders, regulators and solution providers all in one place.
Speakers from companies such as International Maritime Organisation, Essar Oil UK, Wood Mackenzie, Carnival Corporation, UK Chamber of Shipping, Port of Rotterdam, Honeywell UOP and Wood amongst others will discuss and debate with delegates.
This will be a knowledge sharing and insight into how IMO 2020 will shape the bunker fuels market and affect the industry as a whole. Along with valuable networking opportunities, this important event will provide an unrivalled opportunity to gain valuable information on this vital topic.
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Source: HydrocarbonEngineering
