January 22, 2019 / 4:19 PM / 5 months ago

Fujairah joins other ports to tighten exhaust rules ahead of 2020 fuel rules

SINGAPORE (Reuters) - Fujairah in the United Arab Emirates 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.

FILE PHOTO: Capesize dry-bulk ship, the Great Tang, takes on bunker fuel in the Singapore Strait from the Kantek 2 bunker barge December 17, 2017. REUTERS/Roslan Khasawneh/File Photo

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 fuelling 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.

Ashok Sharma, managing director of shipbroker BRS Baxi in Singapore, said “the bigger ships with larger fuel consumption on long haul voyages will still realize substantial savings” from open-loop scrubbers that can pump the waste water into the ocean.

Lloyd’s Raitt said shippers should also 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.

In a sign of how the industry is preparing for the IMO change, Sinopec’s (600028.SS) Shanghai refinery has produced its first batch of low-sulfur bunker fuel totaling 6,000 tonnes, the company said on Wednesday.

Sinopec, which is Asia’s biggest oil refiner, said the Shanghai refinery was the first in China to produce low sulfur fuel oil to meet new IMO rules.

Reporting by Roslan Khasawneh in SINGAPORE; Additional reporting by Nina Chestney and Jonathan Saul in LONDON; Editing by Henning Gloystein, Tom Hogue and Christian Schmollinger

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