Analyst: Falling Oil Will Not Deter Eco-Ship Orders

by Ship & Bunker News Team
Tuesday December 30, 2014

The falling price of oil is unlikely to deter sales of eco-ships, according to a South Korean analyst, reports IHSMaritime360. 

Hana Daetoo Securities' analyst Park Moo-hyun said that any gains made from low oil would in part be negated by upcoming sulfur regulations, which will limit sulfur content in marine fuel used in Emission Control Areas (ECA) to 0.10 percent by weight. 

The new limits will push many companies to switch to low-sulfur marine fuels such as marine gas oil (MGO) or marine diesel oil (MDO), which are substantially more expensive than traditional heavy fuel oil. 

"The requirements for sulfur emission will be strengthened from next year, but MGO production cannot meet the demand according to the industry," he said. 

"Therefore, the MGO price will inevitably soar."

Given the higher price tag attached to low-sulfur fuel, Park predicted South Korean shipbuilders would see more orders for eco-ships in the coming year, in particular LNG bunkering ships.

"Given this situation, expense burden of fuel oil is increasing regardless of fall in the oil price," he said.

"And due to MGO being much more expensive, this would still encourage ship owners to invest in eco-ships."

It was reported last month that there were some concerns about cheaper bunkers eroding the cost benefits of having an eco-ship as cost advantages start to tip more in favour of cheaper, less-environmentally-friendly Chinese-made ships. 

Ship & Bunker News Team
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