Graph: Rystad Energy
When new International Maritime
Organization’s (IMO’s) bunker fuel regulations come into effect on January 1,
2020, there remains uncertainty regarding the availability and pricing for all
marine fuel, as owners grapple with technical solutions for compliance.
The sulfur content limits in bunker fuels used outside the designated Emission
Control Areas (ECAs) will be reduced to 0.5% (from 3.5%) to reduce air emissions
from shipping.
High sulfur fuel oil (HSFO) currently represents nearly 80% (approx. 3.84
million bpd) of the 5.0 million bpd global bunker demand, which will become
non-compliant.
Essentially, ship owners have three options: 1) Switch to compliant fuels, such
as oil products with low sulfur content or alternative fuels such as LNG; 2)
Install SOx scrubbers (exhaust gas cleaning systems); or 3) Fail to comply with
regulations (non-compliance).
“We estimate that around 700,000 bpd of very low-sulfur fuel oil (VLSFO)
will be available in 2020, rising sharply to 1.3 million bpd in 2025,”
said Rystad Energy, energy research and business intelligence company.
In 2020, we estimate that another 600,000 bpd of marine fuel demand will be
satisfied by blends manufactured from existing low-sulfur fuels, middle
distillates and high sulfur fuel oil, which we call “MGO & FO blend”.
The share of VLSFO and other compliant fuel oil blends will be initially low,
as ship owners seem reluctant to adopt the new fuel immediately; first, they
aren’t confident that these fuels will be widely available already in 2020, and
second, because they are unsure if the low sulfur fuel oil offered at different
ports will be compatible.
A small share (15,000 bpd) of the marine fuel demand will be met by other fuels
such as LNG. The remaining 1.5 million bpd of the bunker market is expected to
continue using HSFO through the installation of scrubbers and non-compliance.
“We estimate that by end-2020 there will be around 2,800 scrubbers installed
consuming 690,000 bpd of HSFO. In addition, we expect non-compliance to retain
860,000 bpd of HSFO demand in 2020. This will come from areas where compliant
fuel will not be readily available, or with low monitoring,” said
Rystad Energy.
Source: MarineLink