A global effort is underway to slash harmful emissions from ocean-going ships. Liquefied natural gas will likely play an important — but only partial — role in that endeavor.
A supply-demand imbalance and oceanic low-sulfur fuel regulations are making air freight more attractive relative to ocean freight. Or, at least, that is what air carriers hope.
Oil giant ExxonMobil (NYSE: XOM) has announced a multi-billion dollar upgrade of its Singapore integrated manufacturing complex to convert more fuel oil and other “bottom-of-the-barrel” crude products into higher value lube base stocks and distillates. The upgrade will also increase the capacity of the facility to produce an extra 48,000 barrels per day (b/d) of low-sulfur fuels to meet the International Maritime Organization’s 0.5 percent sulfur regulation (IMO 2020), which goes into effect on January 1, 2020.
International oil major BP has announced that it will retail a new very low sulfur fuel oil following successful sea trials, however, it has not released a date when sales will begin. The fuel will have a maximum sulfur content of 0.5 percent and will be sold by BP around the world. BP is one of several refiners, such as Shell and Sinopec, that are offering or are researching low-sulfur fuel.
Costs for transporting cargo by sea could increase substantially with the introduction of emission control regulations on 1 January 2020. Precursor rules are already being enforced from this January. Regulations could push the cost of fuel and the costs associated with complex new technology significantly higher that could be passed on to shippers.
Saudi Arabia and Russia agree on further production cuts to prop up crude prices; Qatar leaves OPEC to focus on nat gas; heavy sweet crudes are trading at a premium in anticipation of IMO 2020.
Oil Major Shell has announced upcoming availability its newly developed Very Low Sulphur Fuel Oil (VLSFO) ahead of the IMO 2020 – 0.50% global sulphur limit for marine fuels. FreightWaves has the charts.
As late as last month, Maersk leadership insisted that scrubbers were not a solution for the new fuel regulations imposed by the International Maritime Organization beginning in 2020, but now they’ve admitted they will install scrubbers on some vessels.
