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IEA: IMO 2020 rule to cause ‘huge disruption’ for shipping

19 Apr 2018

The International Maritime Organization (IMO) rule to cap the limit of sulphur content in marine fuel from the current 3.5% to 0.5% from 2020 will cause ‘huge disruption’ for the shipping sector, says the head of the International Energy Agency’s (IEA) oil industry and market division, according to Reuters.

The development is caused by the shipping industry and oil refineries not doing enough to prepare for the change.

“The reality is that the industry has already passed the date beyond the smooth transition,” says Neil Atkinson at an Oslo energy seminar. “We don’t think it’s going to be a smooth transition.”

The change will cause in increase in demand for lower sulphur marine fuel, and a drop in high sulphur fuel oil demand by 2-3.5 million barrels per day (bpd).

Atkinson noted a lack of investment for scrubbers by shipowners and the IEA being concerned about the availability of low sulphur marine fuel for non-scrubber equipped vessels.

“There will be a scramble for new compliant fuel […] it could be a huge issue in terms of a spike in prices for marine fuel and a very, very disruptive market, and that’s only 18 months away,” he said. 

Meanwhile, analysts at KBC noted approximately 40% of Middle Eastern and European oil refineries not ready for the new IMO rules as the 2020 deadline is now too close for new refinery upgrades to be ready in time.

“There is going to be a huge disruption in the shipping markets, particularly in those markets where (there) is rigorous enforcement,” Atkinson said.

Source: Reuters
Published: 19 April, 2018

 

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