Dire Warning Over Shipping's Fuel Future

SINGAPORE - Speaking at the Singapore International Bunkering Conference (SIBCON), the world’s largest bunker fuel conference, Maersk Oil Trading’s Niels Henrik Lindegaard gave a keynote speech warning that shipping companies and regulators must work together now to prepare for future IMO sulphur regulation or face potentially crippling costs. If the industry doesn’t immediately begin researching the safest, most sensible ways to meet the strict sulphur emission reductions the International Maritime Organization (IMO) has planned for 2015 and 2020, economic problems await said Lindegaard.

As the fuel rules now stand, 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 cost by $300 million a year.

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,” commented the Maersk executive. Since raising the issue at SIBCON, Lindegaard says oil major, Shell, has expressed support for researching flashpoint limits and the International Organization 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.

Flashpoint refers to the lowest temperature at which a fuel can vaporize to form an ignitable mixture in air. Under current rules, marine gas oil has a minimum flashpoint of 60 deg, whereas inland gas oil is 55 deg. At the moment marine fuel used in Emission Control Areas (ECAs) must have no more than 1.00% sulphur content. In 2015, that will be reduced to .10%. The current non-ECA global cap is 4.50%, which is planned to be reduced to .50% in 2020.

Maersk believe 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.

What is certain is that for the world’s major ocean freight carriers it is essential that they are seen to lead the way in cleaning up their act. Many ecologists have, rightly or wrongly, pointed at the pollution from vessels as one of the most corrosive environmental factors. In the modern world perception is everything and the need to utilise cleaner burning fuel for the world’s container and bulk cargo fleets has become an immediate necessity.