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IHS Markit: Refining, shipping sectors ill-prepared for massive change

IMO 2020 regulations to roil oil markets, creating market uncertainty and higher costs, says new report.

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A research paper by IHS Markit has found the refining and shipping industries ill-prepared for a massive change in the IMO 2020 fuel regulation to cap the limit of sulphur content in marine fuel from the current 3.5% to 0.5% in 2020.

First announced by the IMO in 2008, the IMO confirmed in 2016 that global refiners and shippers would have to comply with these new environmental regulations by 2020—five years earlier than many anticipated.

The 2016 decision sent tidal waves through two industries that typically take many years to adapt to such significant change that requires tens of billions in investment, said IHS Markit.

The new report, titled Navigating Choppy Waters: Marine Bunker Fuel in a Low-Sulfur, Low-Carbon World, says that compliance remains the greatest uncertainty with the new regulation and that there is concern whether sufficient supplies of compliant fuels will be available in the world’s many ports.

The result will be higher freight costs for most cargoes—including electronics, autos, petrochemicals and even cruise ship fares. Ultimately, those costs will be passed to consumers.

“Shippers will face significant compliance costs to either upgrade equipment or switch to more expensive, cleaner fuels,” said Spencer Welch executive director, oil, midstream and downstream for Europe, CIS and Africa at IHS Markit, and manager of the study.

“Refiners – and fuel buyers – will experience significant price impacts as they shift production to deliver greater volumes of very low-sulfur fuel oil (VLSFO) and find a market for their less valuable fuels.”

“The IMO is taking positive action to address shipping pollution, but the rapid pace of the implementation of this new regulation is making it very challenging for the refining and shipping industries to respond,” said Sandeep Sayal, vice president of downstream research at IHS Markit.

“The global scope, the significant uncertainty in fuel-formulations, and the volume of new lower-sulphur fuel demand, are causing a scramble.”

The IMO has signalled that it plans to take enforcement of the new regulation—which goes into effect January 1, 2020—seriously. Non-compliant vessels could suffer loss of charter to sail. And major insurance companies have also indicated compliance assurance would be essential to vessel insurability.

Shippers have several options for compliance, including low-sulphur bunker fuels and liquefied natural gas.

However, IHS Markit researchers expect on-board ship scrubbers, devices that clear harmful pollutants from exhaust gas, will be the primary compliance path for larger ships which could continue to burn cheaper, higher-sulphur fuels.

Until those scrubbers can be installed—which for numerous ships will not happen before the IMO January 2020 deadline, many ships will have to burn the more expensive, IMO-compliant VLSFO fuels.

“We estimate between 5,000 and 10,000 ships will undergo scrubber installation at a cost of between $2 million and $7 million each, plus increased operations costs,” said Krispen Atkinson, senior consultant, IHS Markit maritime & trade research.

“To date, the industry has spent or committed more than $6.6 billion to fit more than 2,000 ships with scrubbers.”

Other ships will convert to compliant fuels with sulphur levels below 0.50 percent. But those ship owners will see fuel costs escalate significantly due to the higher-quality fuel required and may face fuel compatibility issues, IHS Markit said.

Each refinery complex could produce different – but compliant – regional formulations to meet the new fuel standard based on available crude oils, product slates, costs and supply chain logistics, presenting operational and continuity challenges for shippers.

Refiners will produce more distillates (higher-value components derived from crude) as new demand arises, with about half of the new compliant fuel coming from non-distillate sources within the refinery, but the remaining 50 percent will need to be sourced from refinery distillates.

However, these same distillates are also needed for other growing diesel markets. As a result, refiners will likely have to make significant operational changes and ultimately invest billions to shift their existing product slates, increasing costs and distillate prices (relative to crude oil prices).

“Highly complex refineries, which have the flexibility to convert various grades of crude oil into a wide range of refined products to meet market demand, will benefit most from the IMO-specification change,” Welch said.

“Highly complex refiners produce the least amount of residual fuel oil and the highest amount of distillate and gasoline compared to lower-complexity refiners. Less integrated and less complex refiners will likely experience the greatest market risk.”

The new report Navigating Choppy Waters: Marine Bunker Fuel in a Low-Sulfur, Low-Carbon World can be found here.

Photo credit: IHS Markit
Published: 13 February, 2019

 

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Ammonia

AM Green plans to build green ammonia plant at Indian port

Initiative also includes development of green ammonia handling, storage and bunkering infrastructure, pilot bunkering operations, safety procedures and training programmes, says VOC Port Authority.

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VO Chidambaranar (VOC) Port Authority on Friday (29 May) said it has signed a Memorandum of Understanding (MoU) with India’s ammonia producer AM Green Ammonia to collaborate in the development of a green ammonia production plant.

The plant will have a capacity of one million tonnes per annum (MTPA) at Tuticorin.

The initiative also includes development of green ammonia handling, storage and bunkering infrastructure, pilot bunkering operations, safety procedures and training programmes. 

The project is expected to support the development of green fuel corridors connecting VOC Port with major ports in Europe and Asia, thereby strengthening India’s position in the global green fuels value chain.

VOC Port also signed a Memorandum of Understanding (MoU) with Bureau Veritas (India) Pvt. Ltd., to collaborate on Green Port certification, emissions accounting, ESG reporting, safety validation, development of green bunkering practices, and establishment of a Centre of Excellence for green fuels and sustainability.

The port also plans for an upcoming 750 m³ green methanol bunkering facility.

 

Photo credit: Naveed Ahmed on Unsplash
Published: 3 June, 2026

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Port & Regulatory

Study: Major drop in ship sulphur emissions confirmed following IMO regulations

National Centre for Atmospheric Science study found that the average sulphur content in ship fuel dropped nearly tenfold in open ocean areas following IMO’s 2020 regulation.

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Recent global regulations have significantly reduced sulphur emissions from ships, helping to improve air quality in coastal regions – confirmed by a recent international study led by researchers at the National Centre for Atmospheric Science. 

The research, published in Environmental Science: Atmospheres, used aircraft and ground-based instruments to measure sulphur dioxide and nitrogen oxides emitted by ships in the North-East Atlantic and European coastal waters between 2019 and 2023.

The team found that the average sulphur content in ship fuel dropped nearly tenfold in open ocean areas following the International Maritime Organization’s 2020 regulation, which capped sulphur content in marine fuel at 0.5%. 

Before the change, many ships exceeded the previous 3.5% limit. After 2020, only a small number of ships were found to breach the new standard.

In European sulphur Emission Control Areas (SECAs), such as the English Channel and the Port of Tyne, sulphur levels were even lower – well below the stricter 0.1% limit. Interestingly, ports outside these zones, like Valencia in Spain, also showed low sulphur levels, likely due to EU rules requiring cleaner fuel when ships are docked for extended periods.

This is the first study to use aircraft-based measurements and predictions from the Ship Traffic Emission Assessment Model (STEAM3) to assess ship emissions outside of sulphur control zones since the 2020 regulation came into effect. The findings support the widely held view that ships now emit around seven times less sulphur than before the rule change – an important step toward cleaner air and healthier coastal environments.

Note: The research, titled ‘SO2 and NOx emissions from ships in North-East Atlantic waters: in situ measurements and comparison with an emission model’ can be found here. 

 

Photo credit: shraga kopstein on Unsplash
Published: 8 December, 2025

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Interview

IBIA Annual Convention 2025: ‘Exciting times’ for post IMO 2020 bunker suppliers, states Equatorial

Choong Sheen Mao, Chief Operating Officer, Equatorial, describes to Manifold Times the pre/post IMO 2020 challenges and evolution of bunker suppliers.

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The International Bunkering Industry Association (IBIA) will be hosting its flagship Annual Convention in Hong Kong at the Hong Kong Convention Exhibition & Convention Centre between 18 to 20 November 2025, as part of Hong Kong Maritime Week.

Choong Sheen Mao, Chief Operating Officer, Equatorial Marine Fuel Management Services (Equatorial), speaks to bunkering publication Manifold Times about the challenges of a post IMO 2020 bunker supplier.

MT: How does Equatorial continue to offer customer assurance and maintenance of marine fuel quality to ISO8217 standards despite increasing complexity of bunker fuel blends?

We maintain our focus to provide compliant, quality and competitively priced products to our customers. There is no shortcut. We source our products from a wide range of cargo producers and suppliers. We continue to be strict and vigilant with our testing programme for our products before delivering them to our customers. Equatorial has deepened our engagement with the wider industry to have a better and up-to-date understanding of the existing and new marine fuels.

MT: Can you share the evolution of commercial marine fuel procurement, blending and trading strategies on the back of increasing fuel types (pre/post IMO 2020)?

Pre IMO 2020, the main types of marine fuel procured and consumed by vessels were high-sulphur fuel oil, marine diesel oil and marine gas oil. Trading strategies were therefore closely linked to that within the oil industry.

However, many of the new fuel types are from other industries. For example, biofuels, methanol and ammonia are mainly products from the chemical and agriculture industries. There are marked differences between these industries and the energy industry (in particular, the marine fuels industry). LNG is from the gas industry which is distinct from the oil industry.

Without an existing liquid paper market for many of these commodities (especially as a marine fuel), the price risk management is less straightforward. Furthermore, commodity prices are no longer the sole consideration for price itself. The price of compliance must be considered. This could range from guaranteeing the origin of the marine fuel, its sulphur properties as well as its carbon intensity. The list goes on.

MT: Operational wise, what are the changing role and responsibilities of a bunker supplier to date, compared to before IMO 2020?

The role and responsibility of a bunker supplier have evolved. Fundamentally, it has been about providing quality marine fuels at competitive prices. Quantity assurance has been a critical concern which led to the mandatory implementation of the mass flow meter system for bunkering in the Port of Singapore. Interestingly, due to the nature of credit terms in the bunker industry, bunker suppliers also performed the role of “bankers” by extending favourable credit terms to shipowners and charterers.

These days, post IMO 2020, things have become even more complicated. Today, a bunker supplier retains the abovementioned roles and responsibilities, and much more – it has to ensure compliance with a plethora of rules and regulations. Compliance not only with sulphur cap requirements, but with international and regional sanctions and restrictions unrelated to the quality of the marine fuel itself. In fact, especially with alternative low- and zero-carbon marine fuels, this means compliance with standards, rules and regulations on sustainability such as the European Renewable Energy Directive and/or International Sustainability and Carbon Certification. There is also the need to comply with increasingly stringent safety regulations on both conventional and alternative marine fuels.

In addition to the above, a post IMO 2020 bunker supplier is still expected to supply compliant and quality fuel at competitive prices.

MT: Equatorial is Singapore’s largest local-born supplier; what is the next big thing for the company?

Equatorial continues to adapt and improve with the times, while maintaining its core values – Integrity, Teamwork, Commitment, Proficiency and Quality, and Safety and Environment. The bunker industry is a highly competitive one, and it is our intention to keep our competitive edge and remain relevant. This means that we have had to step out of our comfort zone and embrace the two mega trends of our time – digitalisation and decarbonisation.

We have been early adopters and developers of the electronic bunkering note as part of our own digital bunkering efforts. We have diversified our product offering to include low carbon marine fuels and are proud to be one of the pioneers for bunkering B100 biofuels earlier this year. This was made possible by the arrival of our IMO Type II chemical and oil bunker tankers. These same bunker tankers are also capable for carrying and delivering methanol. Equatorial has invested in an LNG bunkering vessel (LBV) newbuilding that is set to be delivered in Q3 2027. We are also involved in a study to develop low- or zero-carbon ammonia bunkering in Singapore.

These are exciting times.

Note: Choong Sheen Mao is amongst panellists featured in ‘Session Three: Bunker Sellers Panel’ at the IBIA Annual Convention 2025.

Join the Conversation

With over 300 delegates expected, the IBIA Annual Convention 2025 is set to be a defining moment for the marine fuels industry. Registration is now open via the IBIA Annual Convention website.

 

Photo credit: Manifold Times
Published: 31 October 2025

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