Speaking at the “2020: Getting down to Business” Technology Forum, which was held by the UK Chamber of Shipping and the International Bunker Industry Association (IBIA) in April, Justin Longhurst, marine fuels supply and trading manager at BP, gives an oil major’s perspective on the challenges ahead.
The IMO decision on 2020 marine fuel sulphur requirements is a call to action for the industry. For shipping operators, decisions need to be made whether to plan to purchase marine fuel with 0.5% sulphur content or to invest in exhaust gas cleaning systems (EGCS) that would enable continued use of fuels with a higher sulphur content.
For fuel suppliers, it appears that even if EGCS are chosen by some operators, there will still be a very substantial increase in demand for very-low-sulphur marine fuels, and a corresponding reduction in demand for high-sulphur fuel oil (HSFO).
Within the global refining system, there is scope to convert a portion of current HSFO production to lower sulphur fuels through a number of approaches. One of the most important will be segregating low- and medium-sulphur components that already exist in the refining system for use in the marine fuel oil pool.
Another option, likely to be chosen by some refineries, is to adjust the types of crude oil processed, so as to improve the yield of low-sulphur materials.
While these actions are expected to enable production of considerable quantities of very-low-sulphur fuel oil (VLSFO with 0.5% sulphur or less), on their own they are not expected to be sufficient to meet demand from the shipping industry.
However, this shortfall can be met through an increase in the supply of marine gasoil (MGO), which is expected to become the key marginal source of 0.5% sulphur marine fuels.
To ensure that environmental objectives are achieved, it is vital that the regulation is implemented consistently across the global industry, which will also maintain investment confidence and support fair competition.
This has been recognised by the IMO, which has initiated the development of a new output to promote consistent implementation of the 0.5% sulphur standard, and is considering wide-ranging actions to enforce global compliance.
It is important to progress this work as soon as possible to ensure that the required measures are in place in good time and consistently around the world.
