As the IMO 2020 sulphur cap is nearing, shipping companies are taking their measures to comply with the regulation. However, a solution might be the use of crude oil. Namely, such an oil requires blending, but no refining, before being used as a ship fuel, while they could also be used with little modification. These fuels could prove to be low in sulphur and not too flammable.
As Bloomberg reports, oil from UK’s coast, which needs blending, without refining, before being used as a fuel, is presented as such a fuel. In addition, similar crudes from West Africa and Australia could be used as well, after a little modification. If they are suitable, these supplies can be low in sulphur and not too flammable.
While some crudes go directly into the ships’ fuel tanks, these new crudes can simply be blended with other products to create something that can be use for fueling vessels.
The UK grade comes from a field in the North Sea operated by EnQuest Plc, and it has a sulphur content a little more than 0.5%, which the required amount under IMO 2020. This fuel will only ignite at a high temperature, thus becoming a potential for compliance.
This solution has already received feedback, and it is positive. As Russell Wall, a commercial and marketing manager at EnQuest, highlighted the market has given positive feedback. In fact, a cargo has been sold to a ship owner.
In addition, Cosmo Kedros, a senior trading specialist at Vortexa, a shipping analytics firm, believes that shipowners are motivated by price and the fact that this fuel is impacting their engines. Namely, if a company is able financially and in practice to blend their own bunkers, then they will consider this solution.
Regarding this type of crudes, they will be blended in certain ways, in order to comply with the upcoming regulation. UK’s crude is slightly over the 0,% cap, while Congo’s is low enough in sulphur, but is very viscous, or thick.
Moreover, as far as other crudes are concerned, some of them only need to be ‘topped’.
However, the potential of these fuels, does not mean that they do not have challenges. Specifically, anyone seeking to buy crude to blend into a marine fuel, will first have to compete with a normal refinery that wants to make oil turn into products such as gasoline and diesel.
Furthermore, there is uncertainty regarding the future price of shipping fuel, and thus it is challenging to say to what extent crudes will be used as ship fuel ingredients.