We'll analyze your refinery's unique situation and the organization's capability to deliver the operational changes and capital investments needed to achieve your desired outcomes. Ships do emit pollutants and other harmful emissions. We have also made selective investments in our refineries producing high-sulphur fuel oil today to enhance their flexibility to process a broader range of crude oils, increase low-sulphur oil and distillate production, and increase product stream segregations and blending capabilities. Distillate prices particularly in coastal markets may also increase relative to gasoline. What are your thoughts regarding alcohols such as methanol or ethanol? As world trade increases, more ship capacity will be needed.
Globally, the prevalence of full conversion refineries varies widely. Optimization of crude slates and product mixes will bear significant fruit. There is an even stricter limit of 0. Countries that are exporters of sour crude and importers of high-priced clean product will see export revenue decline and import cash spend increase resulting in a large drain on its balance of trade. We invite your questions and comments on this evolving significant issue. Small ships operating in the designated emission control areas will use fuel oil that meets the 0. The new limit will be 0.
Fuel oil providers already supply fuel oil which meets the 0. Ships are the largest machines on the planet and the largest diesel engines in the world can be found on cargo ships. At the same time their short-haul competitors might have a good reason to smile. Simply put, limiting sulfur oxides emissions from ships reduces air pollution and results in a cleaner environment. Given the scale of the change, the oil value chain is likely to see high volatility during 2020.
Finally, while contracts made before 2019 will continue to utilize the previous Standard Adjustment Factor, all contracts created afterwards will use this new updated formula. By signing up for the Stillwater Newsletter, you will receive a monthly email with links to our latest blogs, white papers, and transportation energy industry news. Ships can reduce air pollutants by being, even more, energy efficient, so they burn less fuel and, therefore, their emissions are lower. Only larger vessels with a gross tonnage of 400 or more that travel to ports or offshore terminals under the jurisdiction of other parties must have an International Air Pollution Prevention Certificate, issued by the flag State of the ship. Increased capacity utilization could come from purchasing residual stocks from other refineries, modifying crude slates to capitalize on the ability to handle more high sulfur residual material, increasing refinery runs, or some combination of these. For refineries with existing residual destruction and associated processing facilities capacity, there will be a strong driver to fully utilize or debottleneck that capacity. Options available to comply The new rules will have a direct bearing on the ship-owners and refiners.
It is also relevant to remember that shipping responds to the demands of world trade. In the longer term, this means eliminating the need for residue bunker fuel. Ships can reduce air pollutants by being even more energy efficient, so they burn less fuel and therefore their emissions are lower. That makes a decision by the marine sector commercially attractive. However, before that happens, the coal industry should start keeping a beady eye on what is happening with bunkers and shipping to avoid nasty surprises on their balance sheets in the new decade. These refiners should start thinking about options for placing their fuel oil.
Close-up of a slide being placed under a microscope. What to keep in mind Developing a ship-specific implementation plan is necessary to prepare for 1 January 2020. From January 1, 2020, the limit for sulfur in fuel oil used on board ships operating outside designated emission control areas will be reduced to 0. Heavy fuel suppliers already supply the other fuel that meets the 0. Share this Oct 26, 2017 Duncan Micklem, Strategy Director The speed of business has been rapidly re-writing the job description of an engineer in the oil and gas industry in recent years. Most of this fuel oil has a sulphur content of between 1 and 3. The economic viability of each of these compliance options is heavily influenced by market dynamics.
The current maximum fuel oil sulphur limit of 3. But the largest container ships can carry more than 20,000 containers and the biggest bulk carriers can carry more than 300,000 tons of commodities, like iron ore. Close-up of a hand pouring some lubricant from a jar into a beaker. Do small ships have to comply with the sulfur limit after 2020? Are combustible oils with a low sulfur mixture safe? Distillate prices particularly in coastal markets may also increase relative to gasoline. Removing sulphur is capital intensive.
Scale of the Issue The marine sector, which consumed 3. A failure to properly maintain the log or make false entries is likely to be considered a non-compliance by port state control and other authorities, even if exhaust emission levels are within limits. To learn more about how Breakthrough Marine Fuel Management can elevate your freight strategy, please visit our. Low penalties might incentivise breach of the regulations. From the supply side, there are only a handful of suppliers of scrubbers. It is important to consider the amount of cargo carried and the emissions per tonne of cargo carried, per kilometer traveled. The penalties for non-compliance are to be set individually by the member countries.