In recent years, one of the most discussed issues among maritime transport companies, refiners, and authorities regulating maritime transport is the hardening of the requirements of the International Maritime Organization (IMO) in terms of permissible emissions of sulphur oxides from ships - MARPOL 2020.
As a leading independent consulting company focused on the refining industry, Euro Petroleum Consultants (EPC) pays close attention to the community discussions that accompany the enforcement of these regulations, which is coming into force in January 2020. On November 6, the UK Chamber of Shipping held a focused event on the 2020 Sulphur Cap, which was attended by EPC. What will be the effect on the UK market and what are the planned actions and solutions?
First of all, it is necessary to note the high importance of this issue for the country's ecology – according to the UK Department of Transport in 2016 only, domestic shipping released 10 times more sulphur oxides than road transport. And this is without taking into account emissions from international shipping and transiting ships, from ships at berth, and emissions from ports such as operation of shore equipment!
Obviously, any issue of hardening emissions from ships to a large extent affects bunker fuel suppliers – refineries. Above all, this refers to the ability to sell residual fuel with a sulphur content of up to 3.5%. According to an analysis by Concawe, who specialise in environmental studies for the oil industry, out of about 30 million tons of bunker fuels that will be consumed in Europe in 2020, only 3 million tons will remain high-sulphur, the rest will be residual fuel with a sulphur content of up to 0.5% (8-13 million tons) or marine gas oil (13-19 million tons).
With such a market structure forecasted, the formulation for obtaining low-sulphur bunker fuels by compounding various oil fractions in terms of their compatibility is of great importance. This was the subject of a Chevron report; the quality of such fuels and safety issues surrounding their use was also raised in the report of OCIMF, a voluntary association of oil companies involved in the shipment and terminalling of crude oil and oil products.
It was interesting to hear the opinion of the ship owners, one of which was Carnival Corporation, amongst the largest cruise operators in the world. Currently, the company's fleet is represented by 105 cruise ships carrying 12 million passengers a year. According to the company's plans for MARPOL 2020 compliance, most of the existing ships will be equipped with exhaust gas cleaning systems (scrubbers), which will allow the continued use of high-sulphur residual bunker fuel. As for the new ships, all of them will be equipped with engines capable of operating on LNG and marine gas oil, which will be used only for safe return to port and as a backup fuel. The company has already placed orders for 11 such ships, the first of which will be launched by the end of 2018.
EPC will continue to monitor the situation around the implementation of MARPOL 2020 and the impact of these requirements on the refining industry. To learn more, do not miss our focused event 'IMO 2020 – Are You Ready?', being held in London on January 17, 2019, as well as Middle East and Northern Africa Bottom of the Barrel Technology Conference – BBTC MENA 2018, being held in Bahrain on December 3-4, 2018.