Page 29: of Maritime Reporter Magazine (January 2017)

The Ship Repair & Conversion Edition

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market economics leads us to believe no reason why ships without alterna- implementation date.

Global Enforcement that owners will not switch to far more tive compliance methods should have However, IBIA has questioned to what

Another issue is the enforcement of the expensive lower-sulfur fuels before they high-sulfur fuel in their tanks and that extent physical bunker suppliers will regulations. Will enforcement be pos- if it were an offence to do so then PSCs continue to offer HFO after 2020 when have to, resulting in a virtual overnight sible when ships are sailing on the high would have to be able to take direct ac- it looks set to become a relatively niche shift,” the IBIA’s IMO representative, seas and will the IMO be able to ensure

Unni Einemo, told the Committee. The that it actually happens? The IBIA has tion such as detaining vessels until they product and said that this may cause debunker the non-compliant fuel and in- some of the HFO supply infrastructure IBIA had therefore suggested a phased stated that the current enforcement pow- approach, bringing in the global sulfur ers are not strong enough and that low sisting that compliant fuel is bunkered. to disappear by that time, creating a limit over a period rather than on a spe- “This would be a very powerful deter- HFO supply/demand mismatch if scrub- levels of policing will enable some oper- ci? c date. rent,” said the IBIA, noting that MEPC ber uptake increases sharply from 2020 ators to avoid complying simply because

The US Energy Information Adminis- they will not be prosecuted. This will 70 agreed to have the subject examined onwards. The Association has therefore tration has also commented on the im- distort the competition landscape with by its Sub-Committee on Pollution Pre- suggested that the IMO consider allow- plications of the new limit, noting in its vention and Response (PPR) when it ing ships that have con? rmed contracts an uneven playing ? eld between compli- publication This Week in Petroleum that meets in January 2017 as part of a plan to install a scrubber before 2020 but ant and non-compliant operators.

ships also have the option of switching “Port state control (PSC) authorities for effective implementation of the glob- were unable to complete this in time due to new lower-sulfur blends or to nonpe- al cap. to installation bottlenecks to be allowed can only enforce against foreign ? ag troleum-based fuels. The Administration to continue to use HFO until the scrub- vessels for sulfur limit breaches occur-

Alternative Fuels stated that vessel operators and shippers ber is in place, providing this period is ring within their own waters,” said the will likely be faced with higher costs as The CE Delft study commissioned by strictly speci? ed and limited:

IBIA in its statement. “If they see evi- the sulfur content in marine fuels de- the IMO predicted that by 2020 ships “This could serve to reduce the initial dence that a ship did not comply prior to creases and the role of distillate in the entering the waters they have legal au- equipped with scrubbers will consume sharp drop-off in HFO demand and help bunker fuel market increases. It quoted thority over, all PSC of? cers can do is to about 11% of total global demand for ease a subsequent supply/demand mis- as an example of the kind of price differ- HFO and that lique? ed natural gas match. It remains to be seen if this pro- notify the ship’s ? ag state. The question ence between fuels that may be observed then becomes what ? ag states will do (LNG) will account for about 4% of total posal will be heeded as part of the effort recent ? gures released by the Amster- global marine fuel consumption. Several to make the transition to the new global about vessels not following the rules.” dam-Rotterdam-Antwerp re? ning and of the major oil suppliers are now seri- low-sulfur regime a bit smoother,” the

To address these issues, the IBIA co- trading hub in Northwest Europe, with sponsored MEPC 70/5/2 calling for the ously considering expanding their LNG IBIA concluded.

2016 prices for low-sulfur gasoil, a type supply activities in response to notice- The IMO has yet to respond (as of De-

IMO to consider how PSC of? cers can of distillate, having averaged more than able interest from shipping companies cember 14, 2016) to the various reserva- detect and take action against ships us- $20 per barrel above prices for residual ing fuel oil that exceeds the 0.5% limit in adopting LNG as a marine fuel. It is tions that have been expressed about its high-sulfur fuel oil. The EIA concluded also likely that the expected price differ- proposals.

unless that ship is equipped and certi? ed

For further information visit: that fuel blends used to meet the new to operate an approved alternative com- ence between compliant fuel and HFO

IMO regulations were likely to be priced (for which demand is expected to drop pliance system, for example a scrubber. somewhere between these two fuels. dramatically in 2020) will lead to more

The Association also said that there was ships installing scrubbers prior to the

The Re? ners

The IBIA also noted that when the emission control area (ECA) limit fell to 0.1% in 2015, the introduction of a range of novel fuel formulations that cost less than marine gas oil (MGO) was seen, pointing to a future where the global 0.5% cap would not rely on a wholesale switch to distillates, and stated that it is indeed likely that professional blend- ers and re? neries will supply many new types of fuel blends to meet the 0.5% limit, including more widespread use of vacuum gas oil and the use of very-low- sulfur heavy fuel oil (HFO) where avail- able with low levels of low-sulfur blend stock added. It also observed that some re? neries were exploring opportunities to produce speci? c 0.5% marine fuels from existing product streams and that some re? neries may desulfurise HFO, with a number of independent innova- tors looking to get into the marine fuel market through this route.

The IBIA reminded the MEPC that while experience with these fuels had largely been positive, their use to date had not been entirely problem-free, a number of dif? culties with new ECA fu- els (NEFs) having been reported both in 2015 and very recently. 29

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