Currently "No Incentive" for Movement Toward 2020 Compliance, Says Industry Player

Paul Nix of Gulf Petrochem says there is currently "no incentive" for the shipping industry to make 2020 preparations. Image: LinkedIn

Paul Nix, General Manager of Terminal Operations at Gulf Petrochem Pte Ltd (Gulf Petrochem), says there is currently "no incentive" for the shipping industry to make preparations to comply with the global 0.50 percent sulfur cap set to be implemented in 2020, Platts reports.

The comments came at an industry conference in Fujairah earlier this month.

"Everybody is waiting because there is no incentive in place to do anything right now," said Nix.

"Banks are not going to give money for scrubbers unless they know the repayment or payback time and find the economics attractive, while LNG is for the future as infrastructure is insufficient and capital intensive. The majority [of customers] will be hoping that refineries and trading companies can provide blended fuels although the supply chain will not be able to adapt that quickly."

Nix suggests that incentives may be more effective than penalties in encouraging shipowners to comply with sulfur regulations on bunkers, noting some shipowners opted to pay fines over investments for compliance when Europe's emission control areas (ECAs) were first introduced.

However, Andrew Laven, Manging Director at Bomin Oil DMCC (Bomin Oil) suggested at the conference that penalties, if high enough, could be enough for the industry to invest in compliance solutions.

"By 2020, we will have some sort of compliance; we'll know how regulation will be enforced and how effective it is. If the industry has clarity, then solutions will be found and it will work its way through it," said Laven, adding: "unless there is a level playing field, everybody will wait and watch before adopting a solution."