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GPCA: IMO2020 to affect Gulf Cooperation Council chemical industry

New IMO regulation may create more losers than winners in challenging market environment, Dr. Abdulwahab Al Sadoun, Secretary General, GPCA shares with Manifold Times.

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The following article is written by Dr. Abdulwahab Al Sadoun, Secretary General, Gulf Petrochemicals & Chemicals Association and shared with Manifold Times:

In recent decades, sustainability has come to play a larger role in influencing global industry regulations. More and more, we see governments and international organizations combine their efforts to reinforce regulations at both regional and global level in line with wide spread targets to mitigate climate change and lower harmful emissions to the environment. One such initiative that carries significant implications for businesses worldwide is the new 2020 IMO sulfur fuel regulation. Due for full implementation by January 2020, the regulation is calling for the reduction of sulfur content in marine bunker fuel from 3.5% to 0.5% or below. The switch to a compliant low-sulfur bunker fuel, considered as “the most disruptive product quality change in decades”, is expected to cost the shipping industry billions of dollars globally, causing freight rates to go up and raising costs for their customers.

As the world prepares to adopt the new regulation, it is important to measure the impact on both sides. In the Arabian Gulf, Saudi Arabia and Kuwait are both signatories to the IMO, and the UAE is yet to sign. As one of the most heavily export-oriented industries in the region, with 83% of chemical output being shipped to over 100 countries worldwide, the GCC chemical industry will be heavily impacted as major pressure would be put on its supply chain costs. Let’s take for example the so-called Emission Control Areas comprising northern Europe and the US. When low-sulfur fuel became compulsory in 2015, Maersk Line introduced “low sulfur surcharges” ranging between USD 15/teu and usd 80/teu, depending on the route. If we take the same scenario for the new IMO regulations, export freight rates for GCC producers could rise by as much as 10% to USD 1,688 on average.

The regional chemical industry has one of the longest and most costly supply chains, and after the increase in freight rates transportation will account for 6% of total chemicals sales, up from 5% previously, warehousing – for 3.5%, and other logistics expenses for 1.5%. Thus, the chemical industry’s supply chain costs will increase to 11% of landed products prices.

Following the upcoming changes in bunker fuel content, across all shipping sectors bunker costs may take up 70-80% of total voyage expenses, with the lion’s share of the increase likely to be absorbed by the customer. Compliance with the new fuel specification will involve significant costs for the refining and shipping industries; it will also influence all shippers, who would face significant compliance costs by having to upgrade equipment or switch to more expensive fuels. By some estimates in a full compliance scenario, shipping costs could rise by up to USD 60 billion annually from 2020 onward.

According to consultancy firm Wood Mackenzie, switching to marine gas oil (MGO) will be a more costly solution, and at 100% adoption would see freight rates go up by around USD 1 a barrel. In any case higher freight rates will influence relative differentials on both the feedstock and product sides of the supply chain, but the effect will vary depending on the dynamics present in each value chain and market.
 

Impact on projects in the GCC
Greenfield upgrading investments from refiners are unlikely to be purely driven by the IMO regulation, and there is a need to look at longer-term rationale and strategic fit of these projects. For refiners choosing not to invest, the focus should be on infrastructure to capture the opportunity from their existing configuration and internal streams.

Changes in refined product spreads will affect crude producers’ sales netbacks, while chemical producers will see the cost of their oil-based feedstocks also change. Market price for crude oil and naphtha feedstocks are likely to rise as the refining system increases crude runs to supply the additional demand for distillate bunker fuels and also “pushes” some volume of high-sulfur fuel oil to the power sector. The gasoline crack spread, and associated naphtha to crude crack spread, is projected to increase, while FCC propylene production is likely to decline. The aromatics and olefins chains are closely connected to the refining chain, and the IMO bunker quality changes are significant enough to substantively move refined product price relationships.

The new IMO specification change will create winners and losers on both sides. The winners will be highly complex refineries and refiners with deep conversion/distillate-oriented configurations. Refiners, particularly in the US and China, will also benefit from the changes by capturing the value of their ULSFO component streams and growing their share of the global bunker market.

Confronted with a more level playing field, GCC chemical producers would need to examine additional opportunities to improve their performance and overall completeness. Companies would need to pursue excellence across functions including manufacturing; marketing and sales; and capital productivity. Manufacturing excellence programs can drive gains in margins through improved variable and fixed costs; they can also help to unlock further production capacity through improvements in plant reliability and throughput.

Marketing and sales excellence can contribute not only to performance-related improvements via higher margins driven by more effective pricing, but also to additional volume growth based on an enhanced and more granular understanding of markets as well as more effective allocation of marketing and sales resources. And finally, capital productivity (CAPEX excellence) will ensure that future investments are fit for purpose and delivered on budget and on time. 

Photo credit: Gulf Petrochemicals & Chemicals Association
Published: 17 August, 2018
 

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Alternative Fuels

Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

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Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Taiwanese shipping firm Yang Ming Marine Transport Corporation (Yang Ming) and South Korean shipbuilder Hanwha Ocean on Wednesday (2 September) signed a shipbuilding contract for six 13,000 TEU class LNG dual-fuel container vessels. 

The contract was signed by Dr. Chuck Tsai, Chairman of Yang Ming, and Mr. Charles Kim, CEO of Hanwha Ocean. The vessels are scheduled for delivery between 2028 and 2029. 

They will complement Yang Ming’s existing fleet of 10,000+ TEU vessels and serve as key vessels on East-West services, with deployment flexibility across trade lanes connecting Asia with the East and West Coasts of North America, South America, and the Mediterranean. 

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

“As Yang Ming transitions toward net-zero emissions, LNG provides a relatively mature and economically viable alternative fuel solution, capable of reducing greenhouse gas emissions by approximately 20%,” the company said. 

“At the same time, ammonia can serve as a carbon-free fuel by utilising converted LNG storage facilities, while offering relatively lower conversion costs and comparatively well-developed supply chains and infrastructure. The Ammonia Fuel Ready design will therefore provide Yang Ming with greater flexibility in responding to increasingly stringent international regulations on greenhouse gas emissions.”

In addition, the vessels will be equipped with Type B LNG fuel tanks with a design pressure of 1.0 bar to enhance the safety and efficiency of LNG operations, together with a range of energy-saving technologies, including Wind Shields, Rudder Bulbs, Pre-Swirl Stators, and Shore Power Systems. Smart ship technologies and cybersecurity protection features will also be incorporated to enhance operational efficiency, safety, and reliability while effectively reducing fuel consumption and greenhouse gas emissions.

Deliveries under Yang Ming’s next-generation fleet optimization plan commenced earlier this year. By 2030, a total of 24 new vessels are expected to enter service. 

This includes 18 LNG dual-fuel vessels—comprising five 15,500 TEU, seven 16,000 TEU, and the six 13,000 TEU vessels under this contract—alongside six 8,000 TEU methanol dual-fuel-ready ships. 

 

Photo credit: Yang Ming Marine Transport
Published: 4 September, 2026

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Alternative Fuels

LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Both secured AiP for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

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LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Lloyd’s Register (LR) and the Marine Design and Research Institute of China (MARIC) on Thursday (3 September) have secured Approval in Principle (AiP) for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

Announced at SMM 2026, the concept addresses one of the biggest investment challenges facing shipping today: the need to develop vessels and capabilities that can support a range of alternative fuel options and pathways as technologies, infrastructure and regulations evolve.

While LNG is already a mature fuel pathway, methanol and ammonia remain at an earlier stage of development, with questions around global fuel availability, infrastructure development, economics and long-term adoption.

The 114,000 DWT tanker concept has been designed as a product and crude oil carrier that can accommodate future conversion to LNG, methanol or ammonia as technologies, regulations and fuel supply chains mature. By incorporating conversion readiness at the design stage, the concept aims to reduce future retrofit complexity and provide owners with greater confidence when planning long-term fleet investments.

The design concept was reviewed against LR’s July 2026 class rules and regulations, including requirements relating to ships using gases and other low-flashpoint fuels, alongside relevant IACS Common Structural Rules for oil tankers. Final classification and statutory approval remain subject to full compliance with all applicable rules and regulations.

Theo Kourmpelis, Global Business Director for Tankers, Lloyd’s Register, said: “Shipowners are being asked to make major investment decisions today despite continued uncertainty around which fuels will dominate in the decades ahead. Alternative fuel solutions each offer potential pathways to compliance, but fuel infrastructure, regulation and economics continue to evolve at different speeds around the world.

“Designs that preserve flexibility will be critical in helping owners manage risk while preparing for multiple future scenarios.”

Si Nan, Marine & Offshore Marketing Department Vice Director, MARIC, said: “As the industry explores different decarbonisation pathways, shipowners need vessel designs that can adapt alongside technological and regulatory developments. This concept was developed specifically to provide greater fuel flexibility and long-term resilience, allowing owners to respond to changing market requirements without being locked into a single fuel strategy.

“Receiving Approval in Principle from Lloyd’s Register is an important milestone that validates the design concept and supports its future development.”

 

Photo credit: Lloyd’s Register
Published: 4 September, 2026

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Alternative Fuels

DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

LNG-fuelled vessels accounted for the vast majority of August activity while the strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year.

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DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

Latest data from classification society DNV’s Alternative Fuels Insight (AFI) platform alternative-fuelled vessel ordering was strong in August, with 52 new vessels added to the platform.

This is the highest monthly total since October 2024 and follows another active month in July, when 47 vessels were added to the database.

LNG-fuelled vessels accounted for the vast majority of August activity, with 46 orders recorded. The container segment led the way with 30 orders, while the car carrier segment contributed a further 12 LNG-fuelled vessels. In addition, four ethanol-fuelled bulk carriers and two hydrogen-powered bulk carriers were added during the month, as well as one LNG bunker vessel.

The strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year. In total, 242 alternative-fuelled vessel orders have been placed in the first eight months of 2026, representing a 27% increase compared with the same period in 2025.

LNG remains the dominant fuel choice, accounting for 63% of all alternative-fuelled vessel orders registered so far this year. Container vessels represent the largest share of these LNG orders (59%), followed by car carriers (30%).

Jason Stefanatos, Global Decarbonization Director at DNV Maritime, said: “The past two months have been particularly strong for alternative-fuelled vessel ordering, with August recording the highest monthly total we’ve seen since October 2024. This has helped lift year-to-date orders to a level well above the same period last year.

“LNG remains the leading fuel choice, driven largely by activity in the container and car carrier segments. These sectors have been among the earliest adopters of alternative fuels, supported by predictable liner operations and increasing demand from cargo owners to reduce emissions across supply chains. 

“For many owners, LNG offers a combination of emissions reductions, fuel availability and future flexibility while the longer-term fuel landscape continues to evolve. 

“At the same time, the latest figures include orders for ethanol- and hydrogen-fuelled vessels, highlighting that owners continue to explore a range of decarbonization pathways. Different segments are making different fuel choices, but the overall level of activity demonstrates continued investment in lower-emission shipping.”

Screenshot 2026 09 04 at 12.29.26 PM Screenshot 2026 09 04 at 12.29.36 PM

 

Photo credit: DNV
Published: 4 September, 2026

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