IMO2020: Tanker Operator Moving Towards Distillates Solution

Augmenting bunker tanks an option (file image/pixabay)

Tanker operator Teekay Tankers is mulling the distillates option to meet the new sulfur cap in place from 2020, a company manager has said.

The 0.5% cap means that ship operators must switch to alternative forms of bunker fuel, install scrubbers (emisions abatement technology) or burn low sulfur bunker fuel.

"We are certainly not going to modify our existing vessels for liquefied natural gas and there is not enough time left to install scrubbers, so the majority of our vessels are going to use distillates," Ashley Noronha, the company's regional commercial operations manager was quoted as saying by maritime news provider Lloyd's List.

Noronha, who was speaking at a maritime event in Singapore, continued: "We will also be looking at increasing the number of bunker tanks in our existing fleet by comparting and other modification methods."

While the availability of distillate fuel is a fairly safe bet, price could affect the eventual decision of which avenue to go down, Noronha added.

A widely expressed view of market fundamentals in the run up to and beyond January 2020 is that high sulfur fuel oil (HSFO) will fall in price while distillates will rise. A period of price volatility is also expected, certainly over the short term, as the market adjusts to the new reality.

The  HSFO future price tends to drop off the closer it moves to the 2020 deadline.

The move to a 0.5% sulfur cap comes through the International Maritime Organisation and aims to reduce pollution from international shipping. In some areas, called emission control areas, a lower sulfur cap, of 0.1%, is already in place.