IMO 2020 — Sailing through a sea of chaos

Author Caroline Varin

“With shipping transporting more than 80pc of global trade to people and communities all around the world, it is clear that IMO’s actions have an effect beyond the ships it regulates,” the maritime organisation said in the spring edition of its online magazine.

With around a year and a half left before the IMO’s new global sulphur limit comes into force, the International Chamber of Shipping (ICS) suggested today that the effect of one of the IMO’s pieces of regulation could well be “chaos and confusion”.

The IMO will cap the sulphur content of bunker fuel globally at 0.5pc in January 2020, down from 3.5pc today. If this deadline seems rather comfortable to some, it is approaching fast.  And as the chief executive of shipowner Euronav, Paddy Rodgers, said, a lot of people are “still left a little bit scratching their head”.

Shipowners know that they cannot use bunker fuel with a sulphur content above 0.5pc after 2020 unless they invest in scrubbers. Yet they still do not know what kind of 0.5pc fuels will be available to them, or when.

There is still uncertainty over whether "sufficient quantities of compliant fuels will be available in every port worldwide" on 1 January 2020, while ships will need to start buying suitable bunkers "several months in advance", ICS chairman Esben Poulsson said.

The uncomfortable reality is that if the global fleet has to be ready to run on 0.5pc sulphur fuel oil by 1 January 2020, shipowners will have to start buying bunker fuel in the last quarter of 2019, at the latest.

Meanwhile, refiners are still working on their 0.5pc blends. So far, all the big refiners have said they will offer a variety of compliant fuels. But details on progress and when the blends will be ready to be commercialised are still slow to emerge.

Total and Shell have said they will supply low-sulphur compliant fuels to their customers. BP unveiled two 0.5pc blends to shipowners during IP week in February, and Italian firm Eni said last week that it will make its 0.5pc fuel available for testing at the end of this year.

Russia’s Lukoil said the blend it will produce at its 290,000 b/d Volgograd refinery will be ready in late 2019, while ExxonMobil confirmed in April that it will have some 0.5pc fuel on sale ahead of 1 January 2020.  The major said its new 0.5pc sulphur products are being tested for compatibility and stability — crucial issues for shipowners who cannot afford to load and segregate multiple bunker fuels on board their vessels.

"In the absence of global standards for many of the new blended fuels that oil refiners have promised, there are some potentially serious safety issues due to the use of incompatible bunkers,” Poulsson said.

"[At] the moment no-one knows what types of fuel will be available or at what price, specification or in what quantity." If unresolved this could result in "an unholy mess, with ships and cargo being stuck in port”, he added.

Such an outcome would result in something more than a bit of head scratching, although the likelihood of global trade grinding to a halt because of the IMO cap seems slim.

New York-listed tanker owner DHT’s chief executive, Svein Moxnes Harfjeld, offered a more upbeat tone on fuel availability earlier this month.  “When talking to refiners, you get a sense that at least a number of the big ones are confident that compliance will be available in some shape or form. But there is a price,” he said.