World News
Independent Fuel Availability Study Suggests "Extreme Difficulty" in Meeting Demand for 0.50% Sulfur Cap in 2020
An independent fuel availability analysis for the upcoming global bunker sulfur cap of 0.5 percent has found that if it comes into effect in 2020, refiners could have "extreme difficulty" in meeting demand for low sulfur fuels, IHS Fairplay reports.
The study was submitted to the International Maritime Organization (IMO) by BIMCO and global oil and gas industry association IPIESA, and contrasts sharply with IMO's "official" study undertaken by CE Delft that found there are no major barriers to producing enough compliant bunkers for the proposed 2020 date.
The independent study was conducted by EnSys Energy & Systems Inc. (EnSys), who it is understood also unsuccessfully bid for the IMO study, and Navigistics Consulting (Navigistics),
It finds that there could be "extreme difficulty – and indeed potential infeasibility – for the refining sector to supply the needed fuel under the Global Sulfur Cap and to simultaneously meet all other demand without surpluses or deficits."
"The global refining industry is unlikely to be able to meet the needed extra sulfur removal demand because 2020 sulfur plant (and hydrogen plant) capacity will not be adequate based on current capacity plus projects."
The study further suggests that market impacts of the global cap will be substantial, reaching beyond marine fuels, resulting in "potentially significant impacts" on economies and market sectors around the world.
As Ship & Bunker has previously reported, the IMO is expected to decide on a 2020 or 2025 start for the new sulfur cap at the Marine Environmental Protection Committee's (MEPC's) 70th session (MEPC 70) in October.
In May, Adrian Tolson, Senior Partner at 20|20 Marine Energy, said concerns over a shortage of distillates to meet compliance requirements for the upcoming 0.50 percent global sulfur cap in 2020 or 2025, could be misguided.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 547.50 | 2.50 | 679.50 | 0.50 |
| Rotterdam | 513.50 | 0.00 | 652.00 | 1.00 |
| Houston | 547.00 | 3.50 | 679.00 | 0.50 |
| Fujairah | 544.00 | 4.50 | 747.50 | 1.00 |
| Global 20 Ports Average | 574.50 | 1.00 | 760.50 | 0.50 |
| Global 4 Ports Average | 538.00 | 2.50 | 689.50 | 0.00 |
| Global Average Bunker Price | 626.50 | 0.00 | 804.50 | 0.50 |
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