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Bunker One highlights ‘compliance concerns’ regarding 2020

10 Jul 2018

The following article is written by Peter Zachariassen, Global Director of Bunker Holding subsidiary Bunker One, in regards to navigating safely thought compliance concerns for 2020:

Ever since the IMO signalled the implementation date for Annex VI to be January 2020, the concerns from customers and suppliers around enforcing and monitoring compliance have been top of the list.

Luckily for the industry, there has been a lot of activity around the topic, as multiple NGOs and working groups have been working on ways to minimise the risk of non-compliance.

The real exposure and areas of non-compliance
At the same time lots of analyses have been done trying to assess the real exposure and areas where non-compliance situations may occur and be undetected. There is also the potential; although very rare, where vessels are navigating within shipping routes, exclusively between non-signatory flag states to Annex VI which could be burning HSFO and not be at risk of being non-compliant.

To demonstrate the level of activity regarding this topic, we will highlight some of the key findings or facts supporting our view:

  • Around 90% of global marine trade goes through ports in countries that are signatories to Annex VI.
  • Around 95% of the bunkers purchased around the world are purchased by flags that are signatories to Annex VI.
  • Ship owners and suppliers have vested interest on making sure that there is an equal playing field for everyone and that there is not an easy way to take advantage of the new specs.
  • Port state inspections are likely to be more diligent and focus on compliance especially in the early stages of the implementation.
  • Charter contracts already have a clear and strong language regarding bunker procurement practices.

Additionally, the IMO has through different working groups come up with two very strong process recommendations to help strengthen the level of compliance:

  • Ban of carrying non-compliant fuels on board ships without the proper abatement technology on board the ships (scrubbers).
  • A BDN/BDR Certification section that requires the suppler to certify the fuel is compliant with the sulphur spec or that the fuel provided exceeds the spec but was ordered by the purchaser and that the vessel will have the means to comply with the regulation (by using abatement technology) or the vessel is subject to an exemption.

Supply of the right fuel for the customers
When we look at the different activities, studies/analysis and actions that have been taken to this point, Bunker One believes that the suppliers should be focused on making sure they provide the fuels that customers are ordering within the specifications outlined in their contracts.

Suppliers should not be expected to play a role in the monitoring and enforcing compliance. Just like ship owners, they should not be responsible for monitoring the specifications coming out of refineries and blending operations. They should expect their suppliers to deliver within the specifications of the bunker fuel being ordered.

ISO Specifications for 2020 are not going to be ready. Instead, there is a possibility that there will be a “publicly available specification” by the time the new sulphur cap comes into effect. However, even this would be a challenge during the first 12 months or so, as no official ISO standards will be available when the new sulphur cap goes into effect. However, the official specifications are not likely to be ready until late 2020 or early 2021.

In summary, we believe that the monitoring and enforcement of the IMO specification should be left to the resources or authorities identified within the flag states. Suppliers and ship owners should be focusing on their core activities and make sure to follow agreed procedures or policies in support of strengthening compliance to the new specifications. There is no question that there is a potential for non-compliance to take place. Most of the recent estimates forecast the level of non-compliance to be around 10%.

Photo credit: Bunker Holding
Published: 10 July, 2018

 

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