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Low sulphur fuel best solution to meet IMO cap: Maersk chief

AP Moller Maersk ceo Soren Skou believes that best solution for meeting the International Maritime Organization’s (IMO) 0.5% sulphur cap is for refineries to provide low sulphur to shipping.

Speaking at the 12th Singapore Maritime Lecture on Thursday Skou noted that there were multiple options available to the industry to comply with the new regulation including low sulphur fuel, scrubbers, and alternative fuels such as LNG.

“This is an event that has major implications for our industry and individual shipping lines. We have to find solutions,” he said.

In the case of Maersk it believes that low sulphur fuels are the best option. “We think the most sensible solution is to have the refineries remove the sulphur from the fuel instead of us having to construct a desulphurizing plant on the ship, and these scrubbers are huge. So we would like to buy clean fuel from the refineries,” Skou stated.

The Singapore Maritime Lecture organised by the Maritime & Port Authority of Singapore (MPA) is one of the flagship events of Singapore Maritime Week. Read all the news from Singapore Maritime Week on our dedicated Live From Singapore Maritime Week 2018 page

Although agreeing with the need for the sulphur cap Skou also noted the high cost to the industry associated with its implementation. “We strongly believe that a sulphur cap is a good thing because sulphur is something that kills people today. But we also have to understand that the sulphur cap is something that will push upon our industry a very heavy burden.”

While enough low sulphur fuel was expected to available come 2020 it would cost the industry as whole $50bn - $60bn, and container shipping $10bn, based on current prices for low sulphur fuel oil versus high sulphur fuel oil.

While Maersk sees low sulphur fuel as the solution to meeting the cap Skou said that at the current price spread scrubbers would have a relatively short payback period.

“Of course is you look at the fuel spreads today and look at what the price is of clean fuel versus heavy fuel oil and the price gap is say $200 (per tonne) the economics are actually very favourable for a scrubber,” he said.

“The big question is what happens to the fuel spread as we move closer to 2020, but not that many scrubbers have been installed an we are only two years away so to my mind the industry will have to rely on low sulphur fuel.”

On the question of LNG he said if Maersk was planning to order newbuilds, which he clarified he they were not, the company would definitely look at LNG as fuel.

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