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Uncertainty continues to loom over global 0.5% sulphur cap

Uncertainty continues to loom over global 0.5% sulphur cap
With the 2018 review on a IMO planned global marine fuel sulphur content cap of 0.5% just a couple of years away, uncertainty continues to loom over the regulation particularly of supply from the oil refiners.

The 2018 review will decide if the 0.5% bunker sulphur content limit is to be implemented in 2020 or 2025, tightening from the current global 3.5% sulphur content limit enforced since 2012.

Gerard Rohaan, ceo of Veritas Petroleum Services (VPS), a global fuel testing and surveying firm, said ongoing concerns are the refining capacity to produce the low-sulphur products and possible lack of available distillates to cover all the varying market requirements.

“It has always seemed questionable to leave a review until only two years before a possible implementation of this lower limit. It is really difficult to predict if the review will look to implement this in 2020 or 2025,” Rohaan told Seatrade Maritime News.

Rohaan pointed out that the EU has stated they plan to go ahead and enforce the 0.5% sulphur content cap regardless of the 2018 review outcome by the IMO. “If the EU goes ahead as planned in 2020, then maybe it would make sense to introduce this limit globally in order to prevent ships having to carry multiple fuel varities onboard depending on where they are sailing,” he reasoned.

Rohaan, who previously worked in oil major Shell for about 10 years, opined that “a lot of investment” will be needed in desulphurisation capacity in refineries around the world, if the 0.5% sulphur cap rule enters into force.

“Secondly I believe we will witness a strong increase in number and types of hybrid fuels. How much will depend on how bullish refiners will be in investing. The more ‘black oil’ there will be left, the more hybrid fuels we will see in order to blend away those black oils and keep the refineries feasible,” he explained.

“Last but not least, alternative marine fuels (LNG, biofuels) might also become a viable option, especially if there is surge in demand for distillates, and consequently, an increase in its price. Investments in scrubber installation are likely to increase only when there is greater clarity on the implementation of the global cap.”