October Commerce Club: The IMO 2020 and Preparing for the Regulation Compliance

Melissa Williams, Shell

Speaker Melissa Williams, Global Sales & Marketing Manager, Marine Bunker Fuel for Shell Trading presented: IMO 2020 – The Journey to Compliance. She has played a key role in Shell to prepare for IMO 2020 fuel specification change and provided her insight on the rule and its implementation.

On 1 January 2020, the International Maritime Organization (IMO) will implement from a 3.50% to 0.50% global sulphur cap for marine fuels. Under the new global cap, ships will have to use marine fuels with a sulphur content of no more than 0.50% sulphur cap in an effort to reduce the amount of sulphur oxide. The Emission Control Areas (ECAs) will remain at the 2015 standard of 0.1%S content.

Williams cited ship owners will have three options: Ships sizes are growing. More cargo can be carried with fewer vessel movements, so although several ports have seen flat or declining vessel movements, cargo volumes are stable or growing. Larger ships create challenges for improving port infrastructure to enable continued ship size growth and for managing onshore logistics with higher surges of cargo movements per vessel.

Williams cited ship owners will have three options:

  1. Do nothing but buy different fuel but take a risk of the “blend fuel” make up.
  2. Invest in scrubbers
  3. Invest in new builds

Seaeagle LNG Tanker

These choices range from $0 capex with a simple fuel change or several million to install scrubber or new build for LNG. There are still issues lingering such as: purchasing bunkers- you need to know the source of the fuel or how do barges carry the fuel-how clean do the barges need to be cleaned? What do you do with the waste if you have a scrubber or what are the costs and terms of new builds?

Refinery capacity being added Williams stated will keep up with demand while the new complexity will help to increase fuel oil conversion and improve the yield of gasoil. Composition of the blends will include more distillates than current fuel. The increase use of distillates increases the potential for compatibility issues. For this reason, segregation is critical to maintain the integrity of the fuel.

Williams cited 30% of vessels account for 70% of the demand which most are carriers in Asia and Europe. Most global trade will ensure compliance only in these parts.

Shell has developed a variety of fuel product offerings to the shipping industry that include:
• Marine gasoil (MGO)
• Low sulphur fuel oil (VLSFO) supply in key bunker ports
• High sulphur fuel oil (HSFO) supply for ships with on-board scrubbers
• Liquefied natural gas (LNG)

-Will provide multiple products at key ports.
-Is partnering with ship owners so they can better understand compatibility and handling operations.
-Is developing key supply locations to serve LNG fuel to make it readily available, clean and cost competitive.
-Is investing in their refineries producing high-sulphur fuel oil to process a broader range of crude oils, increase low-sulphur oil and distillate production, and increase product stream segregations and blending capabilities.

In concluding, Williams stated there are a lot of variables in this IMO 2020 fuel specification but no constant. The change impacts EVERYONE. Products move over water therefore this change not only impacts ship owners, refineries, etc, but also the end-use who buys the products.

  • Date October 22, 2018
  • Tags 2018 October