SINGAPORE: Fujairah in the UAE has become the latest major port to ban a type of fuel exhaust cleaning system to comply with a coming tightening in rules regarding global sulfur emissions, mirroring similar moves in Singapore and China.
Under International Maritime Organization (IMO) rules that come into effect from 2020, ships will have to reduce the sulfur content in their fuel to less than 0.5 percent, compared with 3.5 percent now, forcing huge changes upon global shippers and also oil refiners.
Fujairah’s harbor master said in a faxed document seen by Reuters that the port “has decided to ban the use of open-loop scrubbers in its waters ... (and) ships will have to use compliant fuel once the IMO 2020 sulfur cap comes into force.”
This follows top marine fueling port of Singapore announcing a similar move in November, while China banned the use of open-loop scrubbers from Jan. 1, 2019.
Singapore, China and Fujairah marine sales volumes represent a quarter of global ship refueling, also known as bunkering.
Impact for shippers
To comply with IMO 2020 rules, shippers can switch to burning cleaner but more expensive oil, invest in exhaust cleaning systems known as scrubbers that may allow them to still use cheaper high-sulfur fuels, or redesign vessels to run on alternatives like liquefied natural gas (LNG).
Scrubbers use water to clean up fuel emissions, preventing them from being released into the atmosphere.
Open-loop scrubbers are the cheapest option, but they have come under criticism as they wash heavy metals and sulfur from the waste water into seas instead of storing it for a controlled discharge in ports, as closed-loop scrubbers do.
Of the more than 2,000 ships that have so far opted to invest in scrubbers, around three-quarters have installed the cheaper, open-loop type, shipping sources estimated.
Closed-loop scrubbers, which store wash water for later discharge, are still accepted in most ports.
Despite the spreading bans of open-loop scrubbers, Douglas Raitt of ship classifier Lloyd’s Register said vessels can still benefit from such systems as they can pump out the waste water in open seas, outside a port’s jurisdiction.
“The benefits of open-loop scrubbers are largely realized in open water during transit from one port to the next,” he said.
Raitt said shippers, however, should consider alternative measures to prepare for IMO 2020, considering that when the new rules come into force refueling infrastructure will be mostly geared toward compliant low sulfur fuel oil (LSFO) rather than high sulfur fuel oil (HSFO).
“Prevailing wisdom would be for operators opting for scrubbers to have a meaningful dialogue with their supplier base to secure HSFO post-2020 in ports of call,” Raitt said.
Fujairah joins other ports, tightens exhaust rules ahead of 2020 regulations
Fujairah joins other ports, tightens exhaust rules ahead of 2020 regulations
- Under International Maritime Organization (IMO) rules that come into effect from 2020, ships will have to reduce the sulfur content in their fuel to less than 0.5 percent
- Singapore, China and Fujairah marine sales volumes represent a quarter of global ship refueling, also known as bunkering
European gas prices soar almost 50% as Iran conflict halts Qatar LNG output
- Analysts warn prolonged disruption could push prices higher
- Some shipments of oil, LNG through Strait of Hormuz suspended
- Benchmark Asian LNG price up almost 39 percent
LONDON: Benchmark Dutch and British wholesale gas prices soared by almost 50 percent on Monday, after major liquefied natural gas exporter Qatar Energy said it had halted production due to attacks in the Middle East.
Qatar, soon to cement its role as the world’s second largest LNG exporter after the US, plays a major role in balancing both Asian and European markets’ demand of LNG.
Most tanker owners, oil majors and trading houses have suspended crude oil, fuel and liquefied natural gas shipments via the Strait of Hormuz, trade sources said, after Tehran warned ships against moving through the waterway.
Europe has increased imports of LNG over the past few years as it seeks to phase out Russian gas following Russia’s invasion of Ukraine.
Around 20 percent of the world’s LNG transits through the Strait of Hormuz and a prolonged suspension or full closure would increase global competition for other sources of the gas, driving up prices internationally.
“Disruptions to LNG flows would reignite competition between Asia and Europe for available cargoes,” said Massimo Di Odoardo, vice president, gas and LNG research at Wood Mackenzie.
The Dutch front-month contract at the TTF hub, seen as a benchmark price for Europe, was up €14.56 at €46.52 per megawatt hour, or around $15.92/mmBtu, by 12:55 p.m. GMT, ICE data showed.
Prices were already some 25 percent higher earlier in the day but extended gains after QatarEnergy’s production halt.
Benchmark Asian LNG prices jumped almost 39 percent on Monday morning with the S&P Global Energy Japan-Korea-Marker, widely used as an Asian LNG benchmark, at $15.068 per million British thermal units, Platts data showed.
“If LNG/gas markets start to price in an extended period of losses to Qatari LNG supply, TTF could potentially spike to 80-100 euros/MWh ($28-35/mmBtu),” Warren Patterson, head of commodities strategy at ING, said. The British April contract was up 40.83 pence at 119.40 pence per therm, ICE data showed.
Europe is also relying on LNG imports to help fill its gas storage sites which have been depleted over the winter and are currently around 30 percent full, the latest data from Gas Infrastructure Europe showed. In the European carbon market, the benchmark contract was down €1.10 at €69.17 a tonne
