OREANDA-NEWS. September 20, 2012. The recent decision passed by the European Parliament (EP) to reduce the allowed sulphur content in marine fuel to 0.1% as from 2015 will have limited impact on the operation of the JSC “Latvijas kungnieciba” (Latvian Shipping Company, LSC) fleet. LSC ships are mainly time chartered, in which case fuel costs are covered by the charterer, not the ship owner. In any event there are provisions in individual shipping contracts that the additional costs of low sulphur bunker oil in emission control areas are reimbursed by the charterer of the vessel owners.

All ships within the LSC fleet are suitable for marine fuel with considerably reduced sulphur content.

The EP Directive foresees reduction of the allowed sulphur content in marine fuel – from the now permitted 1% to 0.1% for vessels shipping in the Baltic Sea, the North Sea and the English Channel. It should be noted that legislation to reduce sulphur content has been initiated in a number of areas worldwide, most recently in the USA from August 2012. The rest of the world drops to 0.5% in 2020, unless a review reveals a lack of low sulphur fuel that will see the move delayed to 2024. The rules allow for abatement technology or the use of liquid natural gas.

The new regulations will increase fuel price, that most likely will result in higher transportation costs and possibly increase the price of the transported commodities.

At the moment we cannot forecast whether fuel manufacturers – the refineries will be ready to supply the new fuel with considerably reduced sulphur content in the necessary amounts.