Gothenburg, 2020

Let’s talk about bunkers 2020

That’s exactly what the delegates from a number of Swedish authorities, ship owners and the Swedish transport agency did at a seminar held in Sweden end May. The outcome was valuable input on how to operate under the new market conditions after 2020.
Let’s talk about bunkers 2020

In beautiful settings at the Dockyard Hotel in Västra Frölunda near Gothenburg, Sweden, more than 35 delegates were gathered to discuss the radical changes and industry-wide challenges driven by the IMO 2020 - and even more important - to gain input on how to operate their business going forward.

During the past months we have been consulted by several customers asking for input and advice in relation to the MARPOL Sulphur 2020 regulations and how to prepare for the impending 0.50% Sulphur limit on marine fuel. This was the key trigger for facilitating this event.

A strategy for future investments

The discussion was concentrated on the key issue: How to choose the right MARPOL compliant fuel solution among the many alternatives - LNG, Duel fuel, DMA, HS 0.5%, Methanol or scrubbers?

Some delegates stated that in the Nordic region many ship owners have decided to invest heavily in LNG, which in the long run may be the right way to go. Other delegates pointed out that leading Swedish players within the shipping industry are planning to fit their fleet of vessels with scrubbers.

In addition to this, the experts from Bunker One pointed out that - based on our local expertise, our insight into the development of the oil prices and the transformation of local refineries to meet the higher demands - a scrubber solution may also be advisable going forward.

Thoughts and conclusions

Looking back the implementation of the Sulphur legislation 2015 taught us that it is in fact quite difficult to predict the development of price levels and alternatives. As you remember, the high prices we all anticipated due to shortage of products (to meet the legislated Sulphur content) did not materialize. This was largely due to the falling oil prices, which gave ship owners the advantage of burning DMA at a price level of half the predicted.

As our experts argued at the event, we believe that 2020 will turn out to be different. The demand to meet Sulphur content at a 0.5% level is at a considerably larger scale. Either you decide to implement scrubbers or to go for other options. Here, both price, time and supply are critical factors. And talking about supply, the big question is: Will there be sufficient supplies of High Sulphur Fuel Oil by 2020? Yes, we believe so - and the demand for middle distillates will intensify pressure on price structures.

Increased demand for DMA

Following the ongoing discussion and the challenges we see today concerning the compatibility of the 0.5% products (considering the base of the blend), it is our conclusion that many owners will go for DMA in the beginning. The demand for DMA will increase and so will the price level, which will generate an even stronger incentive for choosing a scrubber solution. Many ship operators, who choose to adopt scrubbers as their MARPOL compliant solution, will not have the time to have their vessels fitted with scrubbers by 2020.

Looking into the crystal ball the next large focus areas in the environmental programme will probably be a CO2 emission tax. This will affect the investments required to enable the refineries to meet the demand for distillates by 2020. More importantly legislators must work together to introduce our global industry to one single global legislation to ensure a fair competition going forward.

“Bunker One Sweden was an excellent host and I had a lot of valuable input for my 2020 strategy.”

Participant at “Let’s talk about bunkers 2020”.

Posted on June 28, 2018
Written By
Carl Johan von Sydow
Phone +46 31 69 61 50
Mobile +46 709 75 92 18
csy@bunkerone.com
Contact page

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