January 1, 2020 / 12:10 AM / a month ago

Factbox: IMO 2020 - a major shake-up for oil and shipping

(Reuters) - Tougher rules on sulphur emissions from ships came into effect on Wednesday, in the biggest shake-up for the oil and shipping industries for decades.

IMO 2020

From Jan. 1, United Nations shipping agency the International Maritime Organization (IMO) will ban ships from using fuels with a sulphur content above 0.5%, compared with 3.5% now.

The regulations are aimed at improving human health by reducing air pollution.

Only ships fitted with sulphur-cleaning devices, known as scrubbers, will be allowed to continue burning high-sulphur fuel. Ship owners can also opt for other sources of cleaner fuel such as liquefied natural gas (LNG).

Failure to comply with the global regulations will result in fines or vessels being detained and in some jurisdictions the risk of imprisonment, which could affect vital requirements such as insurance cover.

Enforcement will be policed by flag and port states rather than the IMO and industry officials are still unsure about whether there will be full compliance when it kicks in.

“There are still questions of what will happen at sea and how will this be enforced in terms of how compliance will be measured. While there is great momentum, there are still more questions than answers,” said Paul Taylor, global head of shipping & offshore with France’s Societe Generale CIB (SOGN.PA).

Refineries separately face significant costs to adapt to the new fuel specifications.

WILL THERE BE ENOUGH LOW SULPHUR FUEL?

Oil majors including BP (BP.L) and Royal Dutch Shell (RDSa.AS) have announced they are producing very low sulphur fuels that meet the 0.5% requirements.

While major fuel bunkering ports such as Singapore, Fujairah in the United Arab Emirates and Rotterdam in the Netherlands have compliant-fuel supplies, analysts and shipping firms are still unclear what will happen at smaller ports given the need for ships to plan their sailing routes.

ARE THERE ANY SAFETY ISSUES WITH THE NEW FUEL?

It remains unclear what impact there will be with mixing very low sulphur fuels of 0.5% together, which at this stage have not been fully tested on ship engines. One of the risks is that the level of sediment created could damage engines at sea.

While guidance has been issued on avoiding mixing different fuel batches, the issue continues to raise worries especially after a major problems with bunker fuel contamination in 2018.

“We still have concerns over safety and the availability of compliant fuels in every port worldwide. This is a pressing issue,” said Guy Platten, secretary general of the International Chamber of Shipping trade association.

WHAT ABOUT SCRUBBERS?

There is still a question over whether jurisdictions and ports could restrict the use of certain types of scrubbers due to uncertainty over the effects of the waste water that gets pumped into the sea.

Last year, ten environmental groups called on the IMO to impose an immediate ban on the use of scrubbers.

Users of the devices argue that there is no conclusive scientific research showing that discharges from open loop scrubbers - which wash out the sulphur - cause environmental harm and their use was safe. Analysts say there is still the possibility of tighter restrictions, which would add to the costs of those investing in them.

The IMO has encouraged further study into the impact of scrubbers on the environment.

Editing by Veronica Brown and Louise Heavens

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