25.10.2016, 16:57
IMO on cusp of sulphur decision
OREANDA-NEWS. A decision on the timing of a global sulphur content cap of 0.5pc for marine fuels could arrive as soon as tomorrow, although the International Maritime Organisation (IMO) has been hearing conflicting views on how much low-sulphur fuel will be available by the expected implementation date of 2020.
The 70th meeting of the IMO's Marine Environment Protection Committee (MEPC70) is being held in London this week and is looking to reach an agreement on when to bring in the global reduction from 3.5pc sulphur to 0.5pc sulphur limit for marine fuels. The IMO's official study has given support to the 2020 date, although some are pushing for 2025 and say low-sulphur fuels could be pushed into shortages by the expected sharp upswing in demand for shipping.
The committee was presented with a report showing the availability of low-sulphur fuel will be able to meet demand in all the scenarios it looked at, from low- to high-demand models. The rate of refinery upgrading work will exceed the higher demand for better quality, predominantly distillate fuels, according to the report by environmental consultant CE Delft, which said any global shortages of low-sulphur fuel supplies would be "improbable".
IMO secretary general Kitack Lim said the decision would be made based on the review of fuel oil availability and the final report of a steering committee.
With the officially sanctioned report suggesting global middle-distillate production will rise faster than demand, it could be enough to persuade most at the meeting to support the 2020 implementation.
The CE Delft study assumes 3,800 ships with exhaust gas cleaning systems, or scrubbers, on board, which would allow vessels to use 36mn t of high-sulphur fuel still, or 11pc of total shipping demand, in 2020. Figures from 2012 show 228mn t of high-sulphur fuel oil consumed.
The International Energy Agency (IEA) estimates shipping will go from 3pc of global distillate demand in 2015 to 9pc by 2020.
Other studies have concluded there will be shortages for low-sulphur fuels when the limit is imposed. A study presented to conference, commissioned by parties including shipping association Bimco and conducted by Navigistics and EnSys Energy, suggests supplies could be uneven globally and suffer disruption.
Costs are also likely to increase significantly. Currently at Rotterdam, high-sulphur 380cst bunker fuels (3.5pc sulphur) are available at around $265/t, while marine gasoil is priced around $440/t (0.1pc sulphur). Low-sulphur fuel oil of 0.1pc sulphur, suitable for use inside the northwest Europe Emission Control Area (ECA), would be typically priced $15-20/t below that of MGO supplies. The ECA sulphur limit was cut to 0.1pc at the start of 2015 leading to an increase use in the new category of low-sulphur fuel oil.
The 70th meeting of the IMO's Marine Environment Protection Committee (MEPC70) is being held in London this week and is looking to reach an agreement on when to bring in the global reduction from 3.5pc sulphur to 0.5pc sulphur limit for marine fuels. The IMO's official study has given support to the 2020 date, although some are pushing for 2025 and say low-sulphur fuels could be pushed into shortages by the expected sharp upswing in demand for shipping.
The committee was presented with a report showing the availability of low-sulphur fuel will be able to meet demand in all the scenarios it looked at, from low- to high-demand models. The rate of refinery upgrading work will exceed the higher demand for better quality, predominantly distillate fuels, according to the report by environmental consultant CE Delft, which said any global shortages of low-sulphur fuel supplies would be "improbable".
IMO secretary general Kitack Lim said the decision would be made based on the review of fuel oil availability and the final report of a steering committee.
With the officially sanctioned report suggesting global middle-distillate production will rise faster than demand, it could be enough to persuade most at the meeting to support the 2020 implementation.
The CE Delft study assumes 3,800 ships with exhaust gas cleaning systems, or scrubbers, on board, which would allow vessels to use 36mn t of high-sulphur fuel still, or 11pc of total shipping demand, in 2020. Figures from 2012 show 228mn t of high-sulphur fuel oil consumed.
The International Energy Agency (IEA) estimates shipping will go from 3pc of global distillate demand in 2015 to 9pc by 2020.
Other studies have concluded there will be shortages for low-sulphur fuels when the limit is imposed. A study presented to conference, commissioned by parties including shipping association Bimco and conducted by Navigistics and EnSys Energy, suggests supplies could be uneven globally and suffer disruption.
Costs are also likely to increase significantly. Currently at Rotterdam, high-sulphur 380cst bunker fuels (3.5pc sulphur) are available at around $265/t, while marine gasoil is priced around $440/t (0.1pc sulphur). Low-sulphur fuel oil of 0.1pc sulphur, suitable for use inside the northwest Europe Emission Control Area (ECA), would be typically priced $15-20/t below that of MGO supplies. The ECA sulphur limit was cut to 0.1pc at the start of 2015 leading to an increase use in the new category of low-sulphur fuel oil.
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