Frustration over 2020 IMO sulphur regulations

Bunkering industry leaders discuss the Marpol regulations at RESCON.
The Port of Fujairah is most famous for its bunkering operations.
The Port of Fujairah is most famous for its bunkering operations.

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Bunkering industry leaders discuss the Marpol regulations on fuel oil sulphur limits at RESCON

The International Maritime Organization (IMO) regulations on sulphur emissions from fuel oil are the cause of major confusion and frustration within the shipping industry.

During a lively opening panel discussion at the Red Sea and Gulf Bunkering Conference (RESCON) last month, a number of industry figures spoke of the uncertainty surrounding the International Convention for the Prevention of Pollution from Ships (Marpol) regulations.

Marpol Annex VI – the prevention of air pollution from ships – sets limits on sulphur oxide and nitrogen oxide emissions from ship exhausts and has seen the introduction of a number of designated emission control areas (ECA).

The sulphur oxides (SOx) Marpol regulation 14 states that outside an ECA a limit of 0.50% m/m SOx and particulate matter emissions will be introduced on or after January 1, 2020. However, depending on the outcome of a review to be concluded in 2018 into the availability of the required fuel oil, this date could be deferred to January 1, 2025.

The uncertainty about the 2018 review and the costs and short time frame required for infrastructure upgrades to refineries, storage, ports and vessels if the 2020 date is confirmed brought a number of concerns from the panellists speaking at RESCON.

Chris Hunt, director general at the UK Petroleum Industry Association, said: “How are we going to meet and comply with these regulations and how is it going to pan out? The simple answer is I don’t know. It’s going to be an interesting and game changing set of circumstances that we face in the very near future, because 2018 to 2020 is basically around the corner in terms of investment.

“When you talk about European refining there are a huge amount of environmental regulation rights, but when you are in a global market, this is enormous pressure.

“When every dollar you may or may not make is all going on compliance and not going on enhancement or processes, you then have on the horizon this enormous potential expenditure.
“Nothing is clear in terms of who is going to invest? Will they invest? Is it going to be the refineries or the shipowners who are going to invest?”

Morten Dehn, general manager bunker department at MUR Shipping, agreed: “I have to say from a shipowner’s perspective, it is extremely frustrating.

“There is so much uncertainty and we cannot get any clear answers. It is a gigantic game changer. Why are we having regulations that are clearly not going to be enforced?”

Most ships which operate both outside and inside the ECAs will need to operate on different fuel oils in order to comply with the respective limits. What this means is that prior to entry into the ECA, ships are required to have fully changed-over to using the ECA compliant fuel oil.

Captain Farhad Patel, general manager at Sharaf Shipping Agency, questions the availability of the required fuel oil (the basis of the 2018 review). He said: “What we see happening today is we have a shipping market which is in a depressed condition.

“We have additional scrubbers being put on the ships which have significant additional costs for the owners.

“The refiners find fuel oil a low budget product and they are not interested in refining fuel oil. I personally believe in the next two years, once the shipping market bounces back, there will be a heavy demand for fuel. Where are we going to get that additional fuel oil from?”

RESCON also featured Clyde & Co senior associate Patrick Murphy who spoke about the effects of the US Office of Foreign Assets Control (OFAC) Iran sanctions on the regional bunker market; a port spotlight discussion; advanced bunker hedging techniques; LNG bunkers in the Middle East; and an assessment of spot prices.

  

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