News & Updates: Port Bureau News: Dec. '19/Jan. '20

January 2020 Commerce Club

Monday, February 3, 2020  
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Industry Outlook on IMO 2020 Sulphur Cap Compliance

The first Commerce Club of the new year was a sell out! Hosted on January 9, 2020, at the Houston Hobby Marriott, the event featured the global sales manager of Shell Trading, Melissa Williams. Williams shared the outlook for 2020 as the International Maritime Organization’s (IMO) low-sulphur cap has now been implemented for ports worldwide. “The IMO 2020: the Y2k of our generation. Is it all that it has been put up to be?” Williams said humorously as she introduced her presentation, “Are We There Yet”.

For shipowners, significant decisions had to be made to prepare for the change. Shippers could continue to use high-sulphur fuels and install scrubbers; convert to diesel; or invest in new-builds utilizing LNG. For Shell’s role as a supplier of marine fuels, preparations required study – what will shipowners do – and working with their refineries and supply chain to produce and deliver fuels to the market. Shell tested over 100 strains and partnered with shipowners to try the fuels. This enabled Shell to produce fuels, develop handling guidelines, and learn storage requirements to manage the changeover. Development did not only include fuel, but lubricant as well. Shell developed Alexia 40 that complement’s all the company’s low-sulphur fuels.

Williams also stressed the infrastructure needed to get to fuel to customers globally. She showed a current map of product availability. (The map can be found at www.shell.com/business-customers/marine/fuel/marine-network.html.) Some issues with fuel availability rely on the amount of available storage and barging. For example, four times the number of barges is required for a lower volume of low-sulphur fuels.

Another factor that must be considered is the carriage ban scheduled to go into effect on March 1, 2020. Williams believes many ports will not allow vessels to debunker the high-sulphur fuel. She also touched on the responsibility of shipowners to ensure Marpol 8217 compliance for bunker fuel testing for all fuels.

“Initially, we were expecting more high-sulphur [fuel demand] because of the scrubber options,” reported Williams. “Actually, now shippers want lower-sulphur.”

Summing up, Williams said that true stabilization has yet to be reached, with everyone still “trying to understand the details” of the changeover.  She then presented a video of reprising Shell’s work with their Very Low Sulphur Fuel Oil (VLSFO) partners. The video can be viewed at www.shell.com/business-customers/marine/imo-2020.html.

“Are we ready? We believe we are,” concluded Williams.