Scrubbers will keep HSFO in play for bunkers: IEA
Installation levels of the marine-exhaust cleaning equipment known as scrubbers will be enough to ensure demand for high-sulphur bunker fuel will remain above 1mn b/d between 2022 and 2024, the IEA said today.
Use of high-sulphur fuel oil (HSFO) by ships could amount to around 0.7mn b/d in 2020, about 16pc of total bunker demand, arising from both deliberate non-compliance and an inability to source suitable bunkers.
The IEA said around 5,200 vessels will have scrubbers fitted by 2024, around 5pc of the global fleet. The IEA forecast that scrubber installation will run at 1,900 vessels this year and a further 1,500 in 2020, but levels will then fall to around 200 installations a year by 2024 as the fuel oil differential becomes less attractive. The IEA said the business case for fitting ships with a scrubber would largely disappear in 2021, as refiners increase gasoil output and because of competition for fuel oil from the power sector.
The IEA expects fitting scrubbers will be almost solely associated with newbuilds by 2022; by 2024, newbuilds will represent 43pc of the total capacity versus 57pc for retrofits.
The IEA said oil tankers and bulk carriers would make up 75pc of the scrubber-enabled fleet by 2024. Because these types consume the most fuel, it makes the most economic-sense in terms of payback time to fit the equipment. Fuel oil prices are likely to drop from 2020, while marine gasoil values will rise by at least 20pc.
The IEA predicts that non-compliance with the IMO 2020 sulphur-cap regulations might be "relatively high" next year but will not persist, and is likely to be less of a factor in the tanker and dry bulk sectors.
"It is also possible that enforcement by some governments will be patchy at the beginning," it said, but it does not thing this will be a lasting phenomenon. The "vast majority of commercial sea voyages" are between countries committed to IMO 2020 enforcement, it said — for example OECD nations, China and Singapore. The IEA said "85pc of oil flows, 93pc of coal voyages and 94pc of iron ore trips either originated or ended in these countries" in 2018. Non-compliance is likely to be highest at smaller ports, but the availability of HSFO at those locations "will likely decrease sharply after 2020".
The IEA forecasts that HSFO usage by vessels without scrubbers — essentially non-compliance — will decline to 0.3mn b/d by 2021 and as little as 60,000 b/d, or 1pc of total bunker demand, by 2024.
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