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Bomin foresees use of distillates to dominate come 2020

Bomin foresees use of distillates to dominate come 2020
The use of low sulphur distillates will be the most widely adopted solution for shipowners come 2020 upon the implementation of the IMO Marpol Annex VI regulation, according to physical bunker fuel supplier Bomin Group.

While there is uncertainty amongst shipowners and operators in deciding which compliance solution they should adopt amid a handful of options, the reality is that distillates and distillate-based products will be the most widely used solution, believed Jan Christensen, head of global bunker operations, Bomin.

“Distillates and distillate-based products will be the most widely used compliance solution in the short to medium term post 2020,” Christensen told Seatrade Maritime News.

“While we have seen a recent number of scrubber installations, the upfront capital cost is prohibitive for an industry with little liquidity, as well as questions over yard space if there is a sudden surge in demand,” he said.

Christensen noted that major shipping player Maersk has announced its lack of intention to use abatement technology such as scrubbers as a compliant solution.

“However, we have to consider that there will be a glut of heavy fuel oil – a by-product – that refiners will still want to sell, and for which shipping is the most viable market. This could act as a catalyst for an increase in scrubbers if the price of heavy fuel oil is low enough to create a sufficient spread between distillates, which will make the payback and return on investment interesting,” he said.

On the part of physical fuel suppliers, according to Christensen, they would need to ensure that their global infrastructure and operations are calibrated to meet the demands of their customers. This includes reconfiguring tanks to hold clean products rather than fuel oil; ensuring that they have the right products and a presence in the right markets; and delivering the highest levels of service standards on a global basis.

The 2020 IMO regulation stipulates that all ships need to burn bunker fuel with less than 0.5% sulphur content, down from the current limit of 3.5%.

“As we enter this new era for shipping, owners and operators need our energy and knowhow to help them navigate this fundamental transition within the industry. Now is the time for physical suppliers to really step up to the mark,” Christensen said.

Another compliance solution to meet the regulation is the use of clean product LNG, but this solution is considered a long term play, Christensen explained, as there needs to be significant development in global infrastructure and bunkering standards, as well as a process of education to build confidence in the actual product amongst owners and operators. He added that there are also other interesting innovations, in developments such as desulphurisation technologies.

“Right now, the focus needs to be on dealing with the challenges of 2020 and helping shipowners and operators manage this transition, rather than looking too far ahead,” he said.

“Physical suppliers need to work closely with their customers to put a compliance strategy in place on a vessel-by-vessel basis depending on their trading routes and operations; one that is fully modelled and costed as far as is possible, which will provide insights on the financial and operational impact of the new regulation,” Christensen commented.

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