Shipowners Should Not Underestimate 2020 Low Sulfur Bunker Costs, Warns Nick Confuorto of CR Ocean Engineering

Tuesday December 6, 2016

When considering how they will comply with the upcoming global 0.50 percent sulfur cap for bunkers in 2020, shipowners should not underestimate the future price realities of low sulfur fuel, Nick Confuorto, President and COO of CR Ocean Engineering has told Ship & Bunker.

The comments come during an inevitable period of debate over the available choices for compliance, with a switch to burning more expensive MGO currently expected to be the choice of the majority.

Among the leading alternatives is installing a scrubber that will allow vessels to continue to burn the otherwise noncompliant HFO they use today, which is not only already less expensive but is expected to see its differential with MGO widen even further.

But it has been suggested by some that the ROI for the technology will make it uneconomical for older vessels.

"Of course there is an initial cost and clients need to evaluate the payback for each installation. If an old vessel only has a few years left of active life, then a decision has to be made as to whether the payback is short enough to make sense. It will all come down to economics," Confuorto told Ship & Bunker.

"I think the mistake most companies make is that they underestimate the cost of low sulfur fuel in 2020.  I believe it will cost significantly more than the high sulfur fuel presently being used. 

"At such high differential even a few remaining years for a vessel can make sense and produce overall savings."