In International Shipping News 20/03/2018
Global tanker owner and operator Teekay Tankers is likely to opt for distillates over other marine fuel options such as high sulfur fuel oil with scrubbers, to comply with the International Maritime Organization’s 0.5% global sulfur cap rule, a company executive said last week.
“January 1, 2020, is just around the corner and we are all bracing ourselves for it,” Ashley Noronha, the company’s regional commercial operations manager, said at the IBIA Asia Bunker Symposium organized during the Asia Pacific Maritime event in Singapore.
The IMO global sulfur cap rule requires shipowners to burn 0.5% sulfur-compliant bunker fuel compared with 3.5% sulfur currently, starting January 1, 2020.
Less than two years remain for the rule to be implemented, however, confusion reigns as the industry grapples with the magnitude of the change, the possibility of additional costs, and the various marine fuel choices to comply with this rule.
Shipowners have a variety of options — distillates, other 0.5% sulfur bunker fuels and blended fuels, marine gasoil, premium ECA category fuels, HSFO with scrubbers and alternative fuels such as LNG — to comply with the upcoming rule.
Every owner would like to be optimally positioned to have a strategic advantage as IMO 2020 looms, Noronha said.
Teekay Tankers, for its part, is opting for a distillates-based solution for the majority of its fleet, he said.
“We are certainly not going to modify our existing vessels for LNG; scrubbers not to meet the deadline; [so] majority of our vessels are going to be using distillates,” Noronha said.
It will also have a small percentage of its vessels using premium category ECA fuels as well as other 0.5%-sulfur compliant fuels, Noronha added.
The high costs associated with retrofitting vessels with scrubbers, the need for new port facilities to deal with sludge treatment, maintenance costs and continuous monitoring that abatement systems necessitate are some of the reasons that would likely impede its widespread adoption, Noronha said. Installation and equipment testing before putting them into actual use can also be time consuming, he added.
The availability and quality of HSFO could be a concern post-2020, Noronha noted, adding that shipowners will probably have to secure contracts for HSFO in the trading area of that particular vessel, in case they opt for scrubbers. In such a scenario, distillates are among the viable options, Noronha said.
Although stability is a concern while using distillates, that can be mostly overcome by securing fuel from reputed suppliers, Noronha added.
Compatibility is a challenge when using distillates, he said. “[However] ships for owners who are fortunate to have vessels with a lot of bunker tanks have a big advantage because then you would be able to segregate the different categories of fuels that you have.”
“For our current existing vessels, we will also be looking at probably increasing the number of bunker tanks by compartmentalizing and also having the modifications made,” he added.
Teekay Tankers currently owns a fleet of about 52 double-hull tankers. Its vessels are employed through a mix of short- or medium-term fixed rate time charter contracts and spot tanker market trading.
Teekay Tankers was formed in December 2007 by Teekay Corporation as part of its strategy to expand its conventional oil tanker business.
Source: Platts
