New Orleans - Oil major BP expects more than 90 percent of the world’s shipping fleet will comply with new regulations slashing sulfur levels ships are allowed to burn starting 2020, a company executive said on Tuesday.
Coming International Maritime Organization (IMO) rules will cut the amount of sulfur emissions that ships worldwide are allowed from 3.5 percent to 0.5 percent by 2020. “Potential non-compliance is a significant issue that the market has been contending with,” Jason Breslaw, who leads BP’s distillate trading origination across the Americas, said at an industry conference in New Orleans.
Breslaw said BP expects only about 9 percent of the industry is likely to be non-compliant as the rule takes effect. BP’s estimates, however, fall well short of other analyst estimates of about 30 percent non-compliance.
Massimo Trani, Eni Vice President Technology Licensing, estimates that “at least for the first five years from 2020 onward the use of HS (heavy sulfur) fuels for ships equipped with scrubbers will be limited to around 45 million mt/year”.
Citing industry estimates, Trani said at the S&P Global Platts 5th Annual Asian Refining Summit in Singapore last week that transport consumption of high sulfur heavy fuel oil would be around 240 million mt in 2019.
To comply with the law shipowners have a variety of options: 0.5% sulfur bunker fuels, marine gasoil, scrubbers with HSFO, or alternatives such as LNG, LPG and even methanol. But of the about 95,000 ships on water nowadays only less than 300 are installed with scrubbers, John D’Ancona, divisional director, dry cargo, at Clarksons Platou, said at the conference on Friday.
“The reasons are quite simple: uncertainties surrounding the options going forward, particularly fuel choices and pricing, and the fact that shipping has gone through some of the worst markets in history over the last several years,” he said.