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Event X

IMO Regulations on Bunker Fuel Provide Food For Thought

Attendees at a breakfast briefing heard an alarm call on the potential impact of IMO regulations on bunker fuel from January 2020 which could result in higher ocean transportation costs and profound changes in ship design.

SSY Consultancy & Research joined forces with Peninsula Petroleum and Bloomberg Intelligence to stage the bunker fuel focussed event at Bloomberg's London headquarters.

Three expert speakers examined the choices available to ship owners for compliance ahead of the 2020 deadline. They discussed options including retrofitting scrubbers (exhaust gas cleaning systems) or turning to low sulphur marine fuel alternatives or LNG, with an eye to who, ultimately, in the shipping industry will pay for the changes.

Derek Langston, Senior Director, SSY Consultancy & Research, explained: “The upcoming IMO legislation has major implications for vessel design with both dual-fuelled engines and ‘scrubber-ready’ designs under discussion. This raises a key question: will the widening spreads in vessel earnings between modern “eco” designs and older units shorten trading lives for less fuel-efficient vessels?”

SSY profiled vessel specifications from the older segments of the dry bulk carrier and tanker fleets to assess the potential impact and outlined the number of vessels potentially approaching demolition age.

Of critical importance for the shipping industry in the light of the postponement of IMO ballast water management is whether broader environmental pressures will maintain the schedule for low sulphur fuel adoption in 2020, or, if not involving outright postponement, will there be a “softer” implementation of the regulations?

William Bathurst, Head of Credit and Market Analysis for the Peninsula Petroleum Group and a bunker fuel specialist, speaking at the event said: “When deciding how to comply with 2020 sulphur emissions it’s impossible to ignore other environmental legislation ranging from ballast water management, to oxides of nitrogen (NOx), particulate matter and, in the future, potentially carbon dioxide.”

Talon Custer, Bloomberg Intelligence’s European Freight Transportation and Logistics Analyst, provided a point of view on the refiners’ role in the 2020 IMO regulations.