SIBCON 2024: Minerva Sees Med ECA Driving Sharp Boost to Global MGO Demand

Baron appeared in a panel session at Sibcon on Wednesday. Image Credit: Ship & Bunker

The imposition of a 0.1% sulfur emissions control area (ECA) on the Mediterranean is set to deliver a profound shift in demand for various bunker grades next year, according to global marine fuel supplier Minerva Bunkering.

From next year ships in the Mediterranean will either need to use maximum 0.1% sulfur fuels -- down from 0.50% at the moment -- or use a scrubber, with the grace period for compliance coming to an end on May 1.

Minerva expects to see a 30% increase in global MGO demand and a 5% cut in fuel oil demand as a result, CEO Tyler Baron told Ship & Bunker on the sidelines of the Sibcon event in Singapore on Wednesday.

"It's going to require a supply chain response in terms of reconfiguring tank capacity, segregation on board barges," Baron said.

"That's already well on the way for us, in terms of our West Med position, our East Med position and our Red Sea position."

Unlike in 2015 with the introduction of the Northwest European 0.1% sulfur ECA, this time little in the way of ULSFO demand is expected to emerge in response to the regulation. ULSFO is a fuel oil grade blended to a 0.1% sulfur specification, designed to be a cheaper means of ECA compliance than switching to MGO.

Ships with unpredictable schedules are unlikely to want to keep a fuel tank spare for ULSFO in the Mediterranean, Baron argued.

"For the tramp fleet, taking a small amount of ULSFO to transit the Med, having excess quantity tying up one of your bunker tanks, not knowing when you're going to be back into the Med and not being able to use it in your diesel generators -- it doesn't make much sense," he said.

"So we think there'll be limited demand for ULSFO."