Consultancy Rystad Energy stated that IMO’s 2020 regulation, concerning sulphur emissions, will result to a deficit of 600,000 barrel per day of marine gasoil in 2020. The share of VLSFO and other compliant fuel oil blends will be low, because ship owners seem reluctant to adopt the new fuel immediately; first, they aren’t confident that these fuels will be widely available already in 2020, and second, because they are unsure if the low sulphur fuel oil offered at different ports will be compatible.
Generally, IMO’s regulation is to come into effect on January 1, 2020. The sulphur content limits in bunker fuels that are used outside ECAs will be decreased to 0.5%, from 3.5% to reduce air emissions from shipping.
For the time being, high sulphur fuel oil reflects the 80% of the 5.0 million bpd global bunker demand, which will become non-compliant.
According to the consultancy, ship owners have three options:
- Switch to compliant fuels, such as oil products with low sulphur content or alternative fuels such as LNG;
- Install SOx scrubbers (exhaust gas cleaning systems);
- Fail to comply with regulations (non-compliance).
Moreover, it is estimated that about 700.000 bpd of VLSFO will be available in 2020, which is seen to be increased to 1.3 million bpd in 2025.
Yet, in 2020 it is estimated that additional 600.000 bpd of marine fuel demand will be satisfied by blends manufactured from existing low-sulphur fuels, middle distillates and high sulphur fuel oil, which they call MGO & FO blend.
In addition, about 15.000 bpd of the marine fuel demand will be met by other fuels, as the LNG. Yet, the 1.5 million remaining is expected to keep on using HSFO through the installation of scrubbers and non-compliance.
Concluding, Rystad Energy estimates that by the end of 2020 the marine industry will have installed about 2.800 scrubbers, consuming 690.000 bpd of HSFO. In the meantime, non-compliance will reach the 860.000 bpd of HSFO demand in 2020, coming from sectors where compliant fuel is not readily available or with low monitoring.