THOUSANDS of ships worldwide will face using marine fuel containing no more than 0.5 per cent sulphur to meet the UN's International Maritime Organisation's new regulation from January. Those who don't could face penalties and even imprisonment.
Ports are deploying drones to sniff out
wrongdoers. The regulations are having a profound effect on oil
refineries and the cost of seaborne trade looks set to rise, reports
Bloomberg.
When the regulations were mandated back in October 2016, they came as a
shock to many observers who had expected a later start date. While a
panic about getting ready has subsided, there's clearly still work to
do.
"IMO 2020 is the most fundamental and dramatic product specification
change the oil industry has experienced, with an impact on both shipping
and refining," said chief executive officer Torbjorn Tornqvist of
Gunvor Group, one of the world's largest oil and gas traders. "It has
the potential to change every product and crude differential out there."
The cost of shipping a laden TEU from Latin America to Europe could rise
by US$26, according to IHS Markit, equivalent to $0.05 on a crate of
bananas.
It's still too early to say exactly who the biggest winners and losers
will be among refineries because there are thousands of variables that
shape their profit - 600 grades of crude, and many ways of setting up
the plants.
The shipping industry has been consistent in flagging a safety concern
about the rules. As yet, there's no single global standard. The new fuel
must simply have certain properties - including sulphur and other
important metrics - that don't exceed specified levels.
Yet, the lack of a single global product means refineries can make a
compliant fuel in different ways. It's thought that some will
essentially be low sulphur crudes that are carefully mixed with other
oils. Another way of making the product is to mix the residues from
crude that have gone through what's known as vacuum processing in a
refinery with other material.
Proof of the greater risks have emerged in northwest Europe, where
supplies of the new fuel have been found to contain too much sediment.
If such fuel found its way onto ships, it could potentially clog filters
and lead to engine problems.
"We still have concerns over safety and availability of compliant
fuels," said International Chamber of Shipping secretary general Guy
Platten. "This is a pressing issue."
There are already signs that the changeover is having an impact on maritime logistics.
In Singapore, the world's biggest refuelling centre, vessels have had to
wait longer than normal to collect bunker fuel. Likewise, the
government of Gibraltar said that a lack of refuelling barges has
emerged.
"When you consider that 90 per cent of global trade is carried out by
seas, it is very important," said Frontline Ltd chief executive officer
Robert Hvide Macleod. His company is one of the world's biggest
supertanker owners.
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