Gibson says shipowners have taken on a "wait and see approach" ahead of 2020.
E.A. Gibson Shipbrokers Ltd. (Gibson), in its most recent Weekly Tanker Market Report, said it is no surprise that shipowners have taken on a "wait and see approach" before deciding upon their compliance solution to meet the global 0.50 percent sulfur cap on bunkers set to come into force in 2020.
Shipowners' compliance options are well noted to include a switch to using MGO, use of another alternative compliant fuel such as liquefied natural gas (LNG), or the use of exhaust gas scrubbers in order to continue burning HFO.
"Shipowners appear to have adopted a wait and see approach, while many refiners have the headache of whether to make considerable investment in upgrading, in what are in, many cases, old inefficient production facilities," said Gibsons.
"In addition, what will become of all the surplus of high sulfur fuel (HSFO), effectively a by-product of the current cracking process?"
As Ship & Bunker has previously reported, John Mahon, director at Kinder Morgan Terminals, speaking at a Connecticut Maritime Association (CMA) event last year, said that so far refiners had expressed "little interest" in making a compliant bunker fuel.
And indeed, Gibson questions why refiners would work to develop cheaper alternative fuels when owners already pay a premium for distillates and the incentive to develop cheaper cleaner fuels could be negated if a large proportion of owners adopt scrubbers.
The headache of current trading environment is perhaps prohibitive for owners to sanction more debt
"It will be difficult to pick a winner here. In reality each solution has its own merits in the right set of circumstances and in all probability, each will take a share of the prize," concludes Gibsons of shipowners' anticipated choices on compliance solutions.
"It is not surprising that shipowners have adopted a wait and see approach. The headache of current trading environment is perhaps prohibitive for owners to sanction more debt and in the end owners will leave the party without clutching any awards."
A recent report published by global banking firm UBS Limited (UBS) indicates 19 percent of shipowners are currently planning to install scrubbers and carry on using HFO.