Friday, August 11, 2017

Solving Global 0.5% S Bunker Conundrum

All you hear these days, is the IMO 2020 Global Sulfur Cap and crude price volatility. What  is the current state of affairs?

     Hardly anybody Is doing anything about it, publicly
     Refiners are sensitive to crude volatility, and so far resisting  “tooth-and-nail”   changing their crude diet or reconfiguring their processes to make 0.5% S
     Some vessel owners are making Inquiries regarding scrubbers prices and delivery times
     Blenders are studying reformulation of recipes assuming certain blendstock properties
o    Blended fuel compatibility and catfines issues will be on the rise due to increased use of cracked stocks, and will get worse
     LNG is dead for another 10 to 20 years, killed by low crude prices, lack of infrastructure, and safety engineering issues
     Everybody assumes prices will go up, no matter what

You have 5 realistic alternatives to the run-of-the-mill IFO.380 with 3.5% S:
     Use scrubbers; this will cost you about US $ 5 millions to install   on each ship, but will pay for itself in a matter of months for a large (e.g. Panamax) vessel
     Use Marine Gasoil; this will cost you an additional $200/MT over IF0380,  and you can ask Germany's Ms. Merkel to bail you out before applying to a bankruptcy court
    You can use an ECA fuel (a "trans-gender'' fuel, not bunker, not gasoil) at a premium of about $100+/MT over IF0380 price
     You can use specially formulated "hybrid" 0.5% IFO380 by using desulfurized residuals or very low Sulfur crudes to make the low Sulfur residue to prepare IF0380, at a premium of about $20 to 100/MT over IF0380, depending on your crude choice and availability
    You can ignore IMO and continue burning cheap IFO380 w 3.5% S on the open seas. The risk of IMO "Sulfur Police" to catch you: the probability of that outside EU and USA: zero
Happy 2020 Bunkering!


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