Ship Owners Have "Little Incentive" to Invest in Scrubbers Prior to 2020, Says OPEC

OPEC says there is currently little incentive for ship owners to invest in scrubbers prior to 2020

There is currently little incentive for ship owners to invest in scrubbers prior to 2020, the Organization of Petroleum Exporting Counties (OPEC) argues in its latest World Oil Outlook.

2020 is the year that the International Maritime Organisation (IMO) is planning to introduce a 0.5 percent global sulfur cap for bunkers, but this could be pushed back to 2025 pending a review which is now expected later this year.

Equivalent methods of compliance, such as using otherwise non-compliant bunkers in conjunction with scrubbing technology, will be permitted.

"Firstly, the costs for the fuel used can generally be passed through – for example, by raising delivered costs per container, per tonne of coal or per barrel of crude," the cartel said.

"Secondly, questions remain over the scrubber waste stream disposal and, thus, the future acceptability of the technology.

"Furthermore, the current uncertainty over whether IMO regulations will come into effect in 2020 or 2025 is a deterrent to investing now."

OPEC says the same factors also deter refiners from investing in refinery upgrades to meet a potential surge in demand for compliant bunkers.

"Any investment to process high sulphur IFO into 0.5% sulphur marine distillate or a heavier compliant fuel grade would likely be substantial," OPEC said.

"Therefore, the risks for refiners are that they could find themselves investing five years too early and/or that eventual scrubber take-up leaves them with stranded investments."

Last year oil and bunker industry veteran Dr Rudy Kassinger argued there is little point in delaying the implementation of the new global sulfur cap for marine fuels because, given the amount of time and investment it would take for the oil industry to alter its current practices, there will be little change to the refining picture over the next decade.