Shippers "Playing Chicken" over IMO2020 with 30% Noncompliance Expected: Wood Mackenzie

Wednesday March 14, 2018

With many shipowners / operators seemingly still in "wait and see mode" when it comes to making a decision on how they will comply with the new global sulfur cap,  Wood Mackenzie says the shipping industry is "playing chicken" over the upcoming IMO2020 rule.

When the new global 0.50% sulfur cap on marine fuel come into force from January 1, 2010, the global consultancy group is expecting there to be noncompliance from about 30% of the industry.

"At the moment nobody is really doing anything ... with a number of the shippers playing chicken with the regulator, does the regulator blink? We don’t know," Alan Gelder, vice president of refining, chemicals and oil markets told Reuters.

But speaking at the American Fuel & Petrochemical Manufacturers' (AFPM) annual meeting in New Orleans this week, BP Plc (BP)'s Jason Breslaw struck a far more optimistic tone.

“Potential non-compliance is a significant issue that the market has been contending with,” Breslaw conceeded, but nevertheless expects noncompliance levels at just 9%.

While many players have already said they do not expect everyone to comply with the new IMO2020 rule, at least one report has suggested noncompliance may well play an important part of the industry's response to the new rules as it could help keep demand and price spikes for compliant fuel in check.