Future fuel bottleneck requires industry action

12 November 2010

Speaking at the world’s largest bunker fuel conference, Maersk Oil Trading’s Niels Henrik Lindegaard said shipping companies and regulators must work together now to prepare for future IMO sulphur regulation or face potentially crippling costs.

The shipping industry can meet the strict sulphur emission reductions the International Maritime Organisation (IMO) has planned for 2015 and 2020, Lindegaard said in his keynote speech at the Singapore International Bunkering Conference (SIBCON). But if the industry doesn’t immediately begin researching the safest, most sensible ways to do that, he said, it will be costly for everyone.

Short on time and alternatives
As the rules are now, if the shipping industry is to comply with the 2015 sulphur reductions required by IMO first in the English Channel, Baltic and North Seas as well as a 200 Nautical Mile zone around the USA and Canada, the only available fuel alternative to traditional bunker fuel will be what’s called “marine gas oil.”

The effect on shipping companies from this could be severe. The current annual global supply of marine gas oil is about 15 million tons. As a result of the IMO rule, the demand will jump to 45 – 60 million tons in 2015, according to Lindegaard. As the largest fuel buyer in the world, Maersk estimates this will increase its operational cast by $300 million a year.

Challenging tradition, eye on safety
One obvious alternative is to consider using “inland gas oil,” which is more widely available than marine gas oil. However, under current IMO regulations regarding fuel flashpoint, inland gas oil is not eligible for use at sea. “The IMO rules regarding flashpoint were created in 1974. The technology and knowledge of safe fuel handling has come a long way since that time,” says Lindegaard.

Indeed, there is some indication the limitation is being tested already. “Increasingly we see marine fuel supplies with flashpoints closer to the 60 degree marine limit, suggesting inland gas oil is occasionally used already,” says Jørn Kahle, senior general manager of Maersk Maritime Technology.

Since raising the issue at SIBCON, Lindegaard says oil major, Shell, has expressed support for researching flashpoint limits and the International Organisation for Standardization (ISO), the world’s largest developer and publisher of international standards, has put flashpoint on the discussion agenda for its marine fuel meeting later this month.

Environmental impact too important
Environmental performance is a top priority for Maersk. Maersk Line’s ambition is to drive down its own sulphur emissions and the industry’s to zero, so the IMO rules are a welcome push.

“These regulations are important because they will help the industry reduce its environmental impact. And we should assume they will take effect,” says Lindegaard. “Now we just have to start discussing the most sensible way to meet them.”

A.P. Moller - Maersk A/S, press release