LNG As A Shipping Fuel: Can Producers Capitalize On IMO 2020 Sulfur Cap?

26 Jan 2018 Issue: 61 / 4 By: Basim Itayim

The global shipping industry is bracing itself for tighter sulfur regulation from 2020. LNG is increasingly promoted as an alternative to high-sulfur content fuels at a time of growing global supplies. However, ship owners are still grappling with risks surrounding future emissions rules and fuel strategy, and it remains to be seen whether LNG can ever hit serious volumes in the global bunker mix.

From 1 January 2020, shipping companies will be required by the International Maritime Organization (IMO) to burn fuels with less than 0.5% sulfur content, a sharp reduction from the current 3.5% sulfur limit in place since 2012.

With less than two years to the deadline, the response of ship owners regarding bunker fuel strategy remains uncertain, with the industry generally adopting a wait and see approach. The general expectation is that shippers will opt for more expensive lower-sulfur fuels including marine gasoil, low-sulfur fuel oil or new blends of various refined products – although blended products have yet to be tested to be fully compliant and commercially viable (MEES, 4 November 2016). But ship owners are worried among other concerns, that compliant fuels may not be available on a regional or local level, especially if there are supply problems or in the event of price hikes post-2020. (CONTINUED - 1188 WORDS)