Bunker Supply Chain Needs Significant Infrastructure Investment for 2020 Cap: BRS

by Ship & Bunker News Team
Monday November 28, 2016

With IMO having made its decision to implement a 0.50 percent global sulfur cap in 2020, questions over vessel compliance and enforcement have now taken centre stage; but a new report from Barry Rogliano Salles' (BRS') Tanker Department has highlighted that the cap will also require investment across the bunker supply chain.

This infrastructure investment will be required primarily due to the anticipated shift to MGO as the "fuel of choice" for marine, and BRS says midstream infrastructure will need to be adapted to handle the required middle distillates efficiently.

"A large proportion of the required product will be supplied by large refineries which will ship product, especially to Europe, on larger and larger vessels, thereby utilising economies of scale. This will necessitate the construction of larger terminals or dredging existing ones to make them accessible to larger vessels," BRS wrote.

"In certain areas, notably the Mediterranean, this trend could actually increase demand for smaller tankers whereby bulk would be broken by ship-to-ship transfers to small tankers which would be used to transfer product to regional terminals. This could also require the construction of new bunker barges as well as the reconfiguration of storage tanks to hold clean products rather than fuel oil."

BRS says the increased distillate demand may also require the construction and reversal of pipelines to take the middle distillates towards, rather than away from coastal terminals.

"Despite the remaining uncertainty over how the legislation will be introduced and enforced, it is clear that in order for bunker markets to function efficiently, significant investment in infrastructure is required across the supply chain," BRS concluded.