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Bunker gasoil demand to rise ahead of new sulfur cap: IEA
Bunker demand was expected to shift to gasoil from fuel oil ahead of the introduction of a 0.1% sulfur cap, down from 1%, within the International Maritime Organization's emission control areas next year, the International Energy Agency said Thursday.
The new ECA sulfur limit was expected to result in a sharp upturn in OECD marine gasoil demand, at the expense of marine fuel oil," the IEA said in its monthly report.
The sulfur emissions control areas place restrictions on nitrogen and sulfur oxide emissions from ships within the Baltic Sea, English Channel, the North Sea and both US coasts.
The bunker industry is in a state of flux, with many ship fuel suppliers and their customers uncertain about how the market will evolve in 2015.
"We want to understand in better detail what is going to be available next year. It seems that not all the solutions are in place," a fuel oil trader said.
There are three options. The first, and most feasible according to the bunker community, is to replace 1% sulfur fuel oil with a gasoil variant, such as a dirty gasoil blend.
Some shippers have also considered installing scrubbers, which will limit ship emissions to 0.1%, and enable vessels to continue burning 1% fuel oil or perhaps even 3.5% sulfur fuel oil, both of which trade at a significant discount to gasoil.
"All vessels can burn gasoil instead of LSFO, but it is extremely expensive...it raises a big question for bunker suppliers," a Scandinavian bunker supplier said.
A third option that has been explored, though already written off by many due to a lack of infrastructure, is a switch to LNG.
The price of marine gasoil is around $320/mt higher than 1% LSFO basis Rotterdam, Platts data showed.
Source: Platts
The new ECA sulfur limit was expected to result in a sharp upturn in OECD marine gasoil demand, at the expense of marine fuel oil," the IEA said in its monthly report.
The sulfur emissions control areas place restrictions on nitrogen and sulfur oxide emissions from ships within the Baltic Sea, English Channel, the North Sea and both US coasts.
The bunker industry is in a state of flux, with many ship fuel suppliers and their customers uncertain about how the market will evolve in 2015.
"We want to understand in better detail what is going to be available next year. It seems that not all the solutions are in place," a fuel oil trader said.
There are three options. The first, and most feasible according to the bunker community, is to replace 1% sulfur fuel oil with a gasoil variant, such as a dirty gasoil blend.
Some shippers have also considered installing scrubbers, which will limit ship emissions to 0.1%, and enable vessels to continue burning 1% fuel oil or perhaps even 3.5% sulfur fuel oil, both of which trade at a significant discount to gasoil.
"All vessels can burn gasoil instead of LSFO, but it is extremely expensive...it raises a big question for bunker suppliers," a Scandinavian bunker supplier said.
A third option that has been explored, though already written off by many due to a lack of infrastructure, is a switch to LNG.
The price of marine gasoil is around $320/mt higher than 1% LSFO basis Rotterdam, Platts data showed.
Source: Platts
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