Amsterdam - Shipowners, who are facing one of the biggest changes in the oil industry in decades, are seeing more fuels that will be compliant with new rules on sulfur emissions from ships, but some say the way forward is far from clear.
The United Nations shipping agency the International Maritime Organization (IMO) will from January 2020 limit the sulfur content in fuel ships use to 0.5%. With the exception of some zones around northwest Europe and North America known as Emission Control Areas where maximum sulfur content is restricted to 0.1% sulfur, the current global cap is 3.5%.
The sulfur switch will be a mammoth task as it requires adapting the 300 million tonne a year bunker fuel market, valued at over $200 billion at current prices. Oil majors, including BP and Royal Dutch Shell, have announced they are producing very low sulfur fuels that meet the 0.5% requirements but the specifications of those products are not yet clear nor are the ports where they will be available.
A source at a major shipowner told Reuters his company has tested fuels from both Shell and BP and have not had any issues with quality. “We do see a lot more refiners, a lot more smaller, second-tier refiners coming up with 0.5% fuel as well, so we don’t think there will be much of an issue with the supply side,” Rutstin Edwards, head of fuel oil procurement at Euronav, one of the world’s largest shipowners said. He was speaking at the Platts European Bunker Fuel Conference in Amsterdam on Thursday. Claus Kesting, general manager of bunker procurement at Danish shipowner J. Lauritzen, said that suppliers at smaller ports where his firm operates are yet to start complying.