Strevens: It's a Mistake to Think Low Bunker Prices Means No Impact From New ECA Rules

Roger Strevens is VP of Environment at Wallenius Wilhelmsen Logistics & Chairman of Trident Alliance

In the lead up to Platts European Bunker Fuel Conference 2015, we spoke with conference speaker Roger Strevens, VP of Environment at Wallenius Wilhelmsen Logistics & Chairman of Trident Alliance.

What effect has the low oil price had on your sector?

For years contracts in our sector have tended to cater for fluctuation in HFO prices to the effect that benefits of price reductions are shared with customers.

However, the additional cost arising from the switch to MGO that most have made to be in compliance with the January 1st SECA regulation change is not covered by this mechanism.

This is particularly important given that the price differential between HFO and MGO is large and has not changed a great deal even though the price of both products has.

In short, it is a mistake to believe that just because the prices of HFO and MGO are much less than this time last year, that the regulation change has effectively made no difference; 'mind the gap' is the phrase that fits.

What are your views on 2015 so far and the rest of the year?

Technically and operationally the change, which we'd prepared carefully for, has gone smoothly.

Among our main concerns now is the issue of enforcement.

Good efforts are being made to address the issue in ports, but there remain far more questions than answers in regard to how this will be approached in the international waters of the European SECA.

This is important considering that how the issue is approached in the European SECA can be used as a model / guide for how next global cap change will be enforced.

What do you feel will be the key discussion points at the conference?

Given the very large portion of the cost base that fuel represents for shipping companies,

I'd expect much attention will be given to how fuel prices are expected to develop over the next months.

Looking further ahead, I would hope that there will be a good discussion around the availability of various compliance solutions and the implications of same on the implementation date for the 0.5% global cap.

As a closely related issue I think it would be useful to draw the highseas enforcement issue out into the open because the successful implementation of the global gap will after all depend as much on having an effective global enforcement mechanism in place as on the availability of compliance solutions.

Hear more from Roger Strevens on Day 1 of the conference where he will provide a thorough and in-depth perspective this coming May.