A recent survey conducted by Sustainable Shipping found that 47% of respondents felt that the availability of low sulphur fuel oil was the main issue when operating within an ECA, whilst a similar percentage felt that the determining factor was its cost. Our understanding is that the poll focussed primarily on operators in the North American ECA which came into force in August of 2012. Only 5% of those polled cited immature technology as a concern, a point which is further reinforced by the announcement last week by Alfa Laval that it has taken an order for a US$9million scrubber installation.
The Sustainable Shipping article cited the differential between low and high sulphur fuel oil in the US as having been as high as US$270 pmt last year and around US$117 pmt at the beginning of 2013. Some ship owners have reported being unable to source appropriate low sulphur fuel oil and having had to procure distillate fuels at in excess of US$1000 pmt.
The differential between low and high sulphur fuel oil in Europe, with its more mature ECA has not been anywhere near the levels seen in the US, this because the European refining industry was exporting significant quantities of low sulphur fuel oil before the ECA was implemented and thus availability was not as tight as in the US. Nevertheless, when the sulphur limit in ECA reduces to 0.1% in 2015, vessels operating in the European ECA’s without scrubbing equipment will be faced with similar challenges to the US in that the distillate differential will be equally intimidating.
We are now less than two years from the implementation of the reduction in sulphur limits in ECA and we are pleased to see that there are signs that the industry is starting to generate a momentum towards achieving compliance in a viable way. Orders are being placed for scrubbing equipment and at a UK Department for Transport meeting last week ship owners and technology providers began a process designed to help them work collaboratively.
As always there is no “one size fits all” solution, for some consumption of distillate fuels will be the answer, whilst others will look for technical solutions such as scrubbing or LNG. What is absolutely clear though is that inactivity represents the largest risk to ship owners.
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