IMO Archives - Page 15 of 24

The main type of “bunker” oil for ships is heavy fuel oil, derived as a residue from crude oil distillation. Crude oil contains sulphur which, following combustion in the engine, ends up in ship emissions. Sulphur oxides (SO_x) are known to be harmful to human health, causing respiratory symptoms and lung disease. In the atmosphere, SO_x can lead to acid rain, which can harm crops, forests and aquatic species, and contributes to the acidification of the oceans.

Limiting SO_xemissions from ships will improve air quality and protects the environment.

IMO regulations to reduce sulphur oxides (SO_x) emissions from ships first came into force in 2005, under Annex VI of the International Convention for the Prevention of Pollution from Ships (known as the MARPOL Convention). Since then, the limits on sulphur oxides have been progressively tightened.

From 1 January 2020, the limit for sulphur in fuel oil used on board ships operating outside designated emission control areas is reduced to 0.50% m/m (mass by mass). This will significantly reduce the amount of sulphur oxides emanating from ships and should have major health and environmental benefits for the world, particularly for populations living close to ports and coasts.

Below you will find answers to some of the frequently asked questions about the sulphur limit.

Watch the video: IMO 2020 – cleaner shipping for cleaner air (1.27 minutes)

IMO 2020 – five key changes

Limiting SOx emissions from ships will have a very positive impact on human health: how does that work?

Simply put, limiting sulphur oxides emissions from ships reduces air pollution and results in a cleaner environment. Reducing SO_xalso reduces particulate matter, tiny harmful particles which form when fuel is burnt.

A study on the human health impacts of SO_x emissions from ships, submitted to IMO’s Marine Environment Protection Committee (MEPC) in 2016 by Finland, estimated that by not reducing the SO_x limit for ships from 2020, the air pollution from ships would contribute to more than 570,000 additional premature deaths worldwide between 2020-2025.

So a reduction in the limit for sulphur in fuel oil used on board ships will have tangible health benefits, particularly for populations living close to ports and major shipping routes.

IMO 2020 – A Breath of Fresh Air – download the infographic (PDF) by clicking on the image.

Why are ships already less harmful than other forms of transport?

Ships do emit pollutants and other harmful emissions. But they also transport large quantities of vital goods across the world’s oceans – and seaborne trade continues to increase. In 2016, ships carried more than 10 billion tons of trade for the first time, according to UNCTAD.

So ships have always been the most sustainable way to transport commodities and goods. And ships increasingly becoming even more energy efficient. IMO regulations on energy efficiency support the demand for ever greener and cleaner shipping. A ship which is more energy efficient burns less fuel so emits less air pollution.

It has sometimes been quoted that just a few ships (all using fuel oil with maximum permitted sulphur content) emit as much harmful air pollutants as all the cars in the world (if the cars were all using the cleanest fuel available).

Not only is this the very worst case scenario, but this does not take into account the amount of cargo that is being carried by those ships and the relative efficiency. It is important to consider the amount of cargo carried and the emissions per tonne of cargo carried, per kilometre travelled. Studies have shown that ships are by far the most energy-efficient form of transportation, compared with other modes such as aviation, road trucks and even railways.

It is also relevant to remember that shipping responds to the demands of world trade. As world trade increases, more ship capacity will be needed.

Do small ships have to comply with the sulphur limit from 2020?

Yes, the MARPOL regulations apply to all ships. Only larger ships of 400 gross tonnage and above engaged in voyages to ports or offshore terminals under the jurisdiction of other Parties have to have an International Air Pollution Prevention Certificate, issued by the ship’s flag State. But all sizes of ships will need to use fuel oil that meets the 0.50% limit from 1 January 2020.

Some smaller ships may already be using fuel oil that meets the limit, such as a marine distillate suitable for their engines. (Small ships operating in the already-designated emission control areas will be using fuel oil that meets the 0.10% limit in those emission control areas.)

How can ships carry so much cargo so efficiently?

Ships are the largest machines on the planet and the world’s largest diesel engines can be found on cargo ships. These engines can be as tall as a four-storey house, and as wide as three London buses. The largest marine diesel engines have more than 100,000 horsepower (in comparison, a mid-sized car may have up to 300 horsepower). But the largest container ships can carry more than 20,000 containers and the biggest bulk carriers can carry more than 300,000 tons of commodities, like iron ore.

So powerful engines are needed to propel a ship through the sea. And it is important to consider how much energy is used to carry each ton of cargo per kilometre. When you look at the relative energy efficiency of different modes of transport, ships are by far the most energy efficient.

Ships can reduce air pollutants by being even more energy efficient, so they burn less fuel and therefore their emissions are lower.

Does the sulphur limit apply only to ships on international voyages?

The sulphur oxides regulation (MARPOL Annex VI, regulation 14) applies to all ships, whether they are on international voyages, between two or more countries; or domestic voyages, solely within the waters of a Party to the MARPOL Annex.

What was the regulation on SOx in ships emissions and by how much has it improved?

We have seen a substantial cut: to 0.50% m/m (mass by mass) from 3.50% m/m.

For ships operating outside designated emission control areas the previous limit for sulphur content of ships’ fuel oil was 3.50% m/m.

The limit is now 0.50% m/m, since1 January 2020.

There is an even stricter limit of 0.10% m/m in effect in emission control areas (ECAS) which have been established by IMO. This 0.10% m/m limit applies in the four established ECAS: the Baltic Sea area; the North Sea area; the North American area (covering designated coastal areas off the United States and Canada); and the United States Caribbean Sea area (around Puerto Rico and the United States Virgin Islands).

(Countries bordering the Mediterranean Sea are currently considering the possibility of applying to designate the Mediterranean Sea or parts thereof as an ECA. Read more here.)

Fuel oil providers supply fuel oil which meets the 0.10% m/m limit (such as marine distillate and ultra low sulphur fuel oil blends) to ships which require this fuel to trade in the ECAs.

What must ships do to meet the new IMO regulations?

The IMO MARPOL regulations limit the sulphur content in fuel oil. So ships need to use fuel oil which is inherently low enough in sulphur, in order to meet IMO requirements.

Refineries may blend fuel oil with a high (non-compliant) sulphur content with fuel oil with a sulphur content lower than the required sulphur content to achieve a compliant fuel oil. Additives may be added to enhance other properties, such as lubricity.

Some ships limit the air pollutants by installing exhaust gas cleaning systems, also known as “scrubbers”. This is accepted by flag States as an alternative means to meet the sulphur limit requirement. These scrubbers are designed to remove sulphur oxides from the ship’s engine and boiler exhaust gases. So a ship fitted with a scrubber can use heavy fuel oil, since the sulphur oxides emissions will be reduced to a level equivalent to the required fuel oil sulphur limit.

Ships can have engines which can use different fuels, which may contain low or zero sulphur. For example, liquefied natural gas, or biofuels.

Are all types of scrubbers allowed under IMO rules?

Yes, so long as they achieve the same level of emissions reduction.

Regulation 4 of MARPOL Annex VI allows for Administrations (flag States) to approve “equivalents” – any “fitting, material, appliance or apparatus to be fitted in a ship or other procedures, alternative fuel oils, or compliance methods used as an alternative to that required” – that enables the same standards of emission control to be met.

For reduction of sulphur oxide emissions, some flag States have accepted and approved scrubbers – otherwise known as “Exhaust Gas Cleaning Systems”, as meeting the requirements for sulphur oxide reduction.

There is an important requirement in the same regulation on Equivalents, which says that in paragraph 4 “The Administration of a Party that allows the use of an equivalent …. shall endeavour not to impair or damage its environment, human health, property, or resources, or those of other States”.

IMO has adopted strict criteria for discharge of washwater from EGCS. Any residues, where generated by the EGC unit usually in a closed-loop configuration, should be delivered ashore to adequate reception facilities. Such residues should not be discharged to the sea or incinerated on board.

Open-loop scrubbers add water to the exhaust gas which turns sulphur oxides (SOx) to sulphates/sulphuric acid. Open-loop scrubbers return washwater to the sea. The washwater must meet strict criteria, so that discharge washwater should have a pH of no less than 6.5. There are also strict limits on discharge of PAHs (Polycyclic Aromatic Hydrocarbons) and nitrates.

The guidelines, with the washwater criteria, (last revised and adopted in 2015), have been under review in the IMO Sub-Committee on Pollution Prevention and Response (PPR). The Sub-Committee finalized its work on revising the 2015 Guidelines in February 2020 and they will be submitted to MEPC 75 for adoption.

The Marine Environment Protection committee (MEPC) at its session in May 2019 asked the PPR Sub-Committee to look into “Evaluation and harmonization of rules and guidance on the discharge of liquid effluents from EGCS into waters, including conditions and areas”.

To assist the discussions, a report from a task team established by the Joint Group of Experts on the Scientific Aspects of Marine Environmental Protection (GESAMP) was submitted. This report contains the conclusions of the task team in relation to the available evidence on the environmental effects of discharge water from EGCS, as well as recommendations on the data, tools and approaches that could be used as basis for conducting a risk assessment of the possible effects of discharges.

Following discussion in a working group, the PPR Sub-Committee (February 2020) agreed to recommend to the MEPC that its future work should look at evaluation and harmonization of rules and guidance on the discharge of discharge water from EGCS into the aquatic environment, including conditions and areas.

The scope of the work should include:

risk assessment (development of risk assessment guidelines for the evaluation of possible harmful effects of the discharge water from EGCS, taking into account existing methods and mathematical models);
impact assessment (to consider developing impact assessment guidelines);
delivery of EGCS residues (developing guidance on delivery of EGCS residues to port reception facilities, regarding volumes and composition of residues);
regulatory matters (including assessing state of technology for EGCS discharge water treatment and control, identifying possible regulatory measures, developing a database of local/regional restrictions/conditions on the discharge water from EGCS;
database of substances (establishing a database of substances identified in EGCS discharge water, covering physico-chemical data, ecotoxicological data and toxicological data, leading to relevant endpoints for risk assessment purposes).

The MEPC was invited to approve the planned scope of work and to consider involving GESAMP for scientific advice.

Why have some ports already banned discharge of washwater?

Some IMO Member States have taken a precautionary approach towards washwater discharge and have taken measures to limit or restrict discharge of washwater in their local ports and coastlines.

States have the right under UNCLOS to adopt their own laws and measures to reduce and control pollution of the marine environment from ships in their ports, internal waters and territorial seas.

Where can I find out which ships have EGCS or are using other equivalents?

The IMO GISIS module on MARPOL annex VI includes a list of notifications received from IMO Member States in relation to Regulation 4.2 Equivalent compliance method. You can view the database here.

Consistent compliance with the 0.50% limit is vital. What is IMO doing about that?

Monitoring, compliance and enforcement of the new limit falls to Governments and national authorities of Member States that are Parties to MARPOL Annex VI. Flag States (the State of registry of a ship) and port States have rights and responsibilities to enforce compliance. IMO has adopted 2019 Guidelines for port State control under MARPOL Annex VI Chapter 3 (download here).

IMO has worked with Member States as well as industry (including the shipping industry and the bunker supply and refining industry) to identify and mitigate transitional issues so that ships may meet the new requirement.

For example, developing guidance, developing standardised formats for reporting fuel oil non availability if a ship cannot obtain compliant fuel oil and considering verification and control issues.

The MEPC has issued guidance on ship implementation planning, part of a set of guidelines being developed by IMO for consistent implementation of the MARPOL regulation coming into effect from 1 January 2020.

Guidance on best practice for fuel oil suppliers has also been issued. The Guidance is intended to assist fuel oil purchasers and users in assuring the quality of fuel oil delivered to and used on board ships, with respect to both compliance with the MARPOL requirements and the safe and efficient operation of the ship. The guidance pertains to aspects of the fuel oil purchase up to the loading of the purchased fuel oil on board.

A full list of guidance and guidelines can be found on the infographic.

In October 2018, IMO’s Marine Environment Protection Committee (MEPC) adopted a MARPOL amendment to prohibit the carriage of non-compliant fuel oil for combustion purposes for propulsion or operation on board a ship – unless the ship has an exhaust gas cleaning system (“scrubber”) fitted.

How have ship operators and owners planned ahead for the 0.50% sulphur 2020 limit?

To assist ship operators and owners to plan ahead for the 0.50% sulphur 2020 limit, the MEPC approved various guidance and guidelines.

The 2019 Guidelines on consistent implementation of 0.50% sulphur limit under MARPOL Annex VI adopted by resolution MEPC.320(74) are available here.

These comprehensive guidelines include a template for a “Fuel Oil Non-Availability Report (FONAR)” set out in Appendix 1 and a “Technical review of identified possible potential safety implications associated with the use of 2020 compliant fuels” set out in appendix 2.

Guidance on ship implementation planning (issued November 2018) can be downloaded here.

The ship implementation planning guidance includes sections on: risk assessment and mitigation plan (impact of new fuels); fuel oil system modifications and tank cleaning (if needed); fuel oil capacity and segregation capability; procurement of compliant fuel; fuel oil changeover plan (conventional residual fuel oils to 0.50% sulphur compliant fuel oil); and documentation and reporting.

See also outcome of MEPC 74 here. A joint industry group has also developed its own guidance, which IMO has shared with its Member States and international organizations in a circular letter. You can view the Joint Industry Guidance on the Supply and Use of 0.50% Sulphur Marine Fuel here.

What is the “carriage ban” and how does it work?

The carriage ban refers to the MARPOL amendment adopted in 2018 to prohibit the carriage of non-compliant fuel oil for combustion purposes for propulsion or operation on board a ship – unless the ship has an exhaust gas cleaning system (“scrubber”) fitted.

The amendment is intended as an additional measure to support consistent implementation and compliance and provide a means for effective enforcement by States, particularly port State control.

The specific provision requires that fuel oil used on board ships shall not exceed 0.50% sulphur limit. The amended provision to prohibit the carriage of non-compliant fuel oil reads as follows: “The sulphur content of fuel oil used or carried for use on board a ship shall not exceed 0.50% m/m.”

So, carriage of fuel oil for use on board ships has been prohibited since 1 March 2020 – if the sulphur content exceeds 0.50%.

Regulation 2.9 of MARPOL Annex VI provides the definition for ‘fuel oil’ – “Fuel oil means any fuel delivered to and intended for combustion purposes for propulsion or operation on board a ship, including gas, distillate and residual fuels.”

The provision does not apply to fuel oil being carried as cargo.

This MARPOL amendment will enter into force on 1 March 2020. The full text of the MARPOL amendment can be downloaded here.

Is a FONAR a waiver?

No.

The 2019 Guidelines on consistent implementation of 0.50% sulphur limit under MARPOL Annex VI adopted by resolution MEPC.320(74) here clearly states (in APPENDIX 1):

“3.1 A fuel oil non-availability report is not an exemption. According to regulation 18.2 of MARPOL Annex VI, it is the responsibility of the Party of the destination port, through its competent authority, to scrutinize the information provided and take action, as appropriate.””3.2 In the case of insufficiently supported and/or repeated claims of non-availability, the Party may require additional documentation and substantiation of fuel oil non-availability claims. The ship/operator may also be subject to more extensive inspections or examinations while in port.”

“3.3 Ships/operators are expected to take into account logistical conditions and/or terminal/port policies when planning bunkering, including but not limited to having to change berth or anchor within a port or terminal in order to obtain compliant fuel.”

“3.4 Ships/operators are expected to prepare as far as reasonably practicable to be able to operate on compliant fuel oils. This could include, but is not limited to, fuel oils with different viscosity and different sulphur content not exceeding regulatory requirements (requiring different lube oils) as well as requiring heating and/or other treatment on board.”

Are new fuels being used to meet the 2020 limit?

Yes, new blends of fuel oil for ships have been developed. For example, a gas oil, with a very low sulphur content can be blended with heavy fuel oil to lower its sulphur content.

Ships can also choose to switch to a different fuel altogether. Or they may continue to purchase heavy fuel oil, but install ”scrubbers” to reduce the output of SO_x in order to have an equivalent means to meet the requirement.

Of course, some ships were already using low sulphur fuel oil to meet the even more stringent limits of 0.10% m/m when trading in the established emission control areas. So those fuel oil blends suitable for ECAS, also meet the 0.50% m/m limit in 2020.

A study commissioned by IMO into the “Assessment of fuel oil availability” concluded that the refinery sector has the capability to supply sufficient quantities of marine fuels with a sulphur content of 0.50% m/m or less and with a sulphur content of 0.10% m/m or less to meet demand for these products, while also meeting demand for non-marine fuels. The full study can be downloaded here.

Are low sulphur blend fuel oils safe? Can new low sulphur fuels cause problems for a ship’s engine?

All fuel oil for combustion purposes on a ship must meet required fuel oil quality standards, as set out in IMO MARPOL Annex VI (regulation 18.3). For example, the fuel oil must not include any added substance or chemical waste that jeopardizes the safety of ships or adversely affects the performance of the machinery.

IMO has discussed how to identify any potential safety issues related to new blends of fuel oil as it is recognized that if these fuels are not managed appropriately, there could be compatibility and stability issues. Guidance on best practice for fuel oil suppliers has also been issued. The Guidance is intended to assist fuel oil purchasers and users in assuring the quality of fuel oil delivered to and used on board ships, with respect to both compliance with the MARPOL requirements and the safe and efficient operation of the ship. The guidance pertains to aspects of the fuel oil purchase up to the loading of the purchased fuel oil on board.

An International Standardization Organization (ISO) standard (ISO 8217) specifies the requirements for fuels for use in marine diesel engines and boilers.

ISO has issued a further standard: ISO/PAS 23263:2019 Petroleum products – Fuels (class F) – Considerations for fuel suppliers and users regarding marine fuel quality in view of the implementation of maximum 0.50 % sulphur in 2020. It addresses quality considerations that apply to marine fuels in view of the implementation of the sulphur 2020 limit and the range of marine fuels that will be placed on the market in response. It defines general requirements that apply to all 0.50% sulphur fuels and confirms the applicability of ISO 8217 for those fuels. It gives technical considerations which might apply to particular fuels for the following characteristics: kinematic viscosity; cold flow properties; stability; ignition characteristics; and catalyst fines. Additionally, it provides considerations on the compatibility between fuels and gives additional information on ISO 8217.

Source: imo.org

The Chinese authorities have caught two vessels for low sulphur fuel violations, the first reported cases of breaches of IMO 2020.

The Standard Club said that the first vessel was in Qingdao when it underwent a Port State Control (PSC) inspection by the Chinese Maritime Safety Administration (MSA) and was found to be using fuel with a sulphur content of 0.6777% mm.

The second vessel was in Xiamen and found by the MSA to be using non-compliant fuel having been at a berth for six days after changing to compliant fuel.

However, it is likely that previous high sulphur fuel residue remained in the engine fuel system resulting in emissions over the China ECA limit. The ship was ordered to take effective measures to purify the fuel system.

The P&I insurer said it was unclear whether the Chinese authorities would fine the vessels involved. They can be fined no less than RMB10,000 ($1,445) up to a maximum of RMB100,000 under Chinese regulations.

The violations are the first reported since the 0.5% cap on sulphur for marine fuel came into force on 1 January, with the transition appearing to have been relatively smooth so far.

Read: IMO 2020 – A smooth transition?

The Just In Time Arrival Guide has been developed by the Global Industry Alliance (GIA) to support low carbon shipping, based on research and discussion amongst its membership, the International Maritime Organization (IMO) said.

As explained, the guide documents the findings of a series of industry roundtables which brought together nearly 50 companies and organizations who are key stakeholders in the port call process.

Widely recognized as a means of increasing port efficiency and port call optimization, the successful implementation of JIT Arrivals can have a significant environmental impact through reduced greenhouse gas (GHG) emissions from optimizing the ships’ speed to arrive just in time. The concept is based on the ship maintaining an optimal operating speed, to arrive at the pilot boarding place when the availability is assured of: 1. berth; 2. fairway; and 3. nautical services.

The JIT Arrivals concept is also said to contribute to reduced time at anchorage and therefore reduced congestion in the port area. It is estimated that ships spend up to 9 per cent of their time waiting at anchorage, which could be reduced through the implementation of JIT Arrivals.

The guide is said to provide “a holistic approach” to Just In Time Arrivals, considering contractual aspects to its implementation as well as operational. It is envisaged as a useful toolkit for many stakeholders including shipowners, ship operators, charterers, ship agents, shipbrokers, port authorities, terminals, nautical and vessel service providers. All these actors ultimately play a key role in implementing the necessary changes and facilitating the exchange of communication required to realize JIT Arrivals.

The Low Carbon GIA is a public–private partnership with the aim to identify and develop innovative solutions to address common barriers to the uptake and implementation of energy efficiency technologies and operational measures.

The Low Carbon GIA was originally established under the framework of the GEF-UNDP-IMO Global Maritime Energy Efficiency Partnerships Project (GloMEEP Project), and since the conclusion of the GloMEEP Project at the end of 2019, the Low Carbon GIA has been operating under the framework of the IMO-Norway GreenVoyage2050 Project.

Source: offshore-energy

Global shipping regulator, London-based UN Agency, the International Maritime Organization released a statement on the effect of the fuel that spilled into the waters of Mauritius from Japanese vessel, The Wakashio, in which they admit they do not know the effects of releasing this amount of fuel (VLSFO) into the biodiversity-rich coral lagoons of Mauritius.

On 19 August 2020, an IMO spokesperson said “because this fuel is so new, research has only just been initiated on its fate and behavior in the environment, particularly over a longer period. We know that some of the oil companies are financing research on this, and oil research centers e.g. CEDRE and SINTEF, have initiated work, but we don’t have any concrete information on this as yet, given the relative newness of these bunkers. In terms of the response related to the release of this fuel, it looks and behaves essentially the same as any other bunker fuel spill. It’s really the longer term fate and effects that are not yet known.” Bunkers are the fuel oil used by ships

Dark patches of oil were clearly visible swirling around the broken Wakashoa a day later as the two … [+]

AFP VIA GETTY IMAGES

Over 1 million gallons of a particular type of ship engine fuel (technical name Very Low Sulfur Fuel Oil or VLSFO) was being transported by the Wakashio, one of the biggest ships in the world when it ran into the coral reefs of Mauritius.

Source: forbes

PASAY CITY – Department of Transportation – Office for Transportation Security (DOTr – OTS), together with the Philippine Coast Guard (PCG) and Maritime Industry Authority (MARINA) hosted a week-long visit from delegates of the International Maritime Organization (IMO).

The visit, held from 24 to 28 February 2020, focused on the IMO Global Maritime Security Integrated Technical Cooperation Programme which consists of Security Needs Assessment, Development of National Maritime Security Strategy, Provision of Technical Experts, Maritime Table Top Exercises, and Training Courses.

In his Opening Remarks last 26 February 2020, OTS Administrator Undersecretary Raul L. Del Rosario vowed that extra efforts will be made to run abreast on terror tactics that have evolved through the years.

“We know for a fact that the maritime industry plays a crucial role in global trade and economy, and protecting such from lawless terror attacks is a challenging task that one cannot simply bear alone. That is why it is very critical that we are on the same page in implementing measures to secure our transport systems. Whatever will be accomplished in this undertaking, is accomplished collectively,” USec. Del Rosario expressed.

Atty. Charina Flor A. Cacho-Fernin, Officer-in-Charge of the OTS Maritime Transportation Security Division discussed the agency’s role in relation to the implementation of international standards and protocols espoused in the International Ship and Port Facility Security (ISPS) Code.

She likewise highlighted the policy-determining functions and oversight capability of the OTS, as well as the importance of having a strong inter-agency coordination in terms of maritime security domain, adhering to the provisions of Executive Order No. 197 and its Implementing Rules and Regulations.

During the discussion on the implementation of the ISPS Code, it was confirmed that its provisions were carried out effectively through the conduct of audits, assessments, inspections, training of maritime security personnel through accreditation of training schools, centers or institutions, and certification of security personnel to evaluate their knowledge and competencies.

Such validation of security effectiveness was bolstered after IMO’s visit at the Asian Terminals Inc. (ATI), an ISPS-compliant port facility located in Manila South Harbor.

The discussions also touched on national policies, rules and regulations governing the certification of personnel involved in the implementation of security measures, and accreditation of training institutions, centers, or schools which cater to the security training needs of transport operators and stakeholders.

To confirm the effectiveness of this core function, the IMO visited Magsaysay Learning Resources Inc., one of the OTS-accredited institutions, which adopts and implements the prescribed maritime security curriculum and Program of Instruction (POI).

IMO positively noted that the Philippines is well-situated on the international maritime policies and protocols, and that it fully implements the provisions of the ISPS Code, even promulgating a national transportation security program to cover non-SOLAS ships and port facilities.

For IMO representative, Alyekka Stella Aber, the Philippines has always been a good example in the efficient implementation of the ISPS Code, not only to its neighboring ASEAN countries, but to the rest of the IMO member states.

The OTS, along with other agencies under the DOTr, assured that Philippines, being a maritime and archipelagic nation, remains committed to international maritime standards, and proactively promotes a strong security culture.

The IMO representatives to the Philippines include Mr. Mourad Ghorbel, Technical Officer – Maritime Safety Division, Ms. Alyekka Stella Aber, and Atty. Josephine Uranza, IMO Regional Presence for East Asia.

Also present were representatives from PPA, PHIVIDEC Industrial Authority, Regional Ports Management Authority – Bangsamoro Autonomous Region in Muslim Mindanao, Subic Bay Metropolitan Authority, and Cebu Port Authority.

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Source: https://ots.gov.ph/

The maritime industry is bracing itself for the rapid approach of January 1, 2020 – the day on which the sulphur limit imposed under IMO 2020 comes into effect. But who is ready for IMO 2020; and who is not?There is a somewhat inconsistent approach to the implementation of IMO 2020 and varying degrees of readiness among port and flag states. If this is not adequately, and urgently addressed, this will result in confusion and delays when IMO 2020 comes into force.

The effect of IMO 2020

IMO 2020 is a term used to describe the implementation of the Regulations to Annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL). MARPOL is one of the most important international marine environmental conventions and IMO 2020 aims to improve air quality and to protect the environment by reducing sulphur oxide produced by ships.

With effect from January 1, 2020, ships will be required to use:

fuel oils with a sulphur content of 0.5 percent m/m or lower;
an approved equivalent means of compliance such as exhaust gas cleaning systems (EGCS) commonly referred to as “scrubbers”; or
Non-fuel oil alternatives such as switching to liquefied natural gas (LNG) as fuel.

It is anticipated that, at least initially, most ships will utilize new blends of fuel oil which meet the 0.5 percent limit on sulphur in fuel oil or compliant marine gas or diesel oil.

It is important to note that IMO 2020 will not affect designated emission control areas (ECAS) where there is already a stricter sulphur limit of 0.1 percent m/m in place, such as in the Baltic Sea, the North Sea, the North American ECA and the US Caribbean ECA as well as the 0.1 percent sulphur cap already in place in European Union ports.

Who will enforce IMO 2020?

Following the 74th session of the IMO’s Marine Environment Protection Committee (MPEC), the IMO released the 2019 Guidelines for Consistent Implementation of the 0.5 percent Sulphur Limit under MARPOL Annex VI (the 2019 Guidelines) which aim at ensuring a consistent implementation of IMO 2020 across port and flag states. The 2019 Guidelines provide helpful guidance to state parties on interpreting their obligations under, and implementing, IMO 2020.

Enforcement, compliance and monitoring of the IMO 2020 sulphur limit is the responsibility of the state parties that have ratified MARPOL and acceded to Annex VI and are therefore obliged to give effect to, and enforce, its provisions. This includes both flag states (in whose registries ships are flagged) and port states who are obliged to enforce IMO 2020 within their territorial waters.

Port states must enforce the provisions of MARPOL by monitoring vessels within their territorial waters, reporting non-compliance to the relevant flag state, ensuring that there is adequate low sulphur compliant fuel available within their jurisdiction and providing shore-based facilities for the receipt and removal of scrubber waste.

How will ships be monitored for compliance?

Under Annex VI and the 2019 Guidelines, port states should take appropriate measures to ensure compliance. Specifically, port states should conduct initial inspections based on documents including Bunker Delivery Notes (BDN), as well as the use of remote sensing and portable devices. If there are “clear grounds” to conduct a more detailed inspection, the port state may conduct sample analyses and other detailed inspections to verify compliance with the Regulations. What exactly constitutes “clear grounds” is not defined in Annex VI or the 2019 Guidelines.

Regarding the use of remote sensing and portable devices, the 2019 Guidelines indicate that the former can trigger inspections and the latter may be used during initial inspections but the results of both should be considered indicative only. They should not be regarded as evidence of non-compliance although they may be considered clear grounds for expanding the inspection to check for non-compliance.

The 2019 Guidelines expressly provide that all possible efforts should be made to avoid a ship being unduly delayed or detained as a result of the steps taken to implement IMO 2020. In particular, the analysis of fuel oil samples should not unduly delay the operation, movement or departure of a ship. However, delays may be inevitable in ports where there are limited or less efficient mechanisms for testing of fuel oil and particularly where ships are only in port for several hours in order to stem bunkers rather than working cargo.

Non-compliance by ships

When a port state identifies clear grounds of suspected non-compliance of a ship based on its initial inspections, then the port state may require samples of fuel oils to be analyzed. Where a sample is taken from a ship, a receipt should be provided to the ship and the ship should be advised of the outcome of such analysis.

If non-compliance with IMO 2020 is established by a port state, the port state may prevent the ship from sailing until the ship takes suitable measures to achieve compliance, which may include debunkering all non-compliant fuel oil. However, ship’s tanks are designed to receive fuel oil and not to pump it out, which renders debunkering very difficult and time-consuming.

In addition, the port state should report any non-compliance to the flag state. The port state should also advise the state in whose jurisdiction the bunker delivery note was issued in respect of non-compliant fuel oil.

When determining what sanction to impose on a non-compliant ship, a state party must take into account all relevant circumstances and the evidence presented, which may include not taking any steps against the non-compliant vessel. Flag and port state control authorities may take into account the ship’s implementation plan when determining compliance with the 0.5 percent sulphur limit requirement.

What if there is no compliant fuel oil available at a port?

Concerns have been raised that the shift to low sulphur fuel may result in a shortage of compliant fuel on or after January 1, 2020. For ships that have not been fitted with scrubbers, or are not equipped to use alternative fuel such as LNG, this may result in sudden non-compliance when calling at port states after the deadline.

The Regulations and the 2019 Guidelines require that where a ship, despite its best efforts, is unable to obtain compliant fuel, the Master or shipowner must present a record and evidence of actions taken to obtain compliant fuel oil and show that, despite best efforts to obtain compliant fuel oil, no such fuel oil was available. Best efforts to procure compliant fuel oil include, but are not limited to, investigating alternative sources of fuel oil prior to commencing the voyage. If, despite best efforts, it was not possible to procure compliant fuel oil, the Master or shipowner must immediately notify the port and flag state. This notification by the ship is commonly referred to as a Fuel Oil Non-Availability Report (FONAR).

The 2019 Guidelines have a standard reporting format for a FONAR but state parties may develop more detailed guidance for the consistent use and acceptance of these reports, including specifying what evidence should accompany a FONAR. In order to minimise disruption and to avoid delay, the Master or shipowner should submit a FONAR as soon as it is determined, or becomes aware, that it will not be able to procure and use compliant fuel oil. The submission of a FONAR does not render a ship compliant with the Regulations but rather is a factor that shall be taken into account by a port or flag state when determining what steps to take against a ship for non-compliance.

The IMO and the International Chamber of Shipping have confirmed that whilst safety or operational concerns regarding the quality of low sulphur fuels is a sufficient reason for shipowners to issue a FONAR, this does not give ships or shipowners blanket permission to use or carry non-compliant fuel after the deadline. The increased price of low sulphur fuel oil is also not a valid basis for non-compliance. Master and shipowners should retain bunker samples for use in the event that they may use sulphur quality as a basis for alleging the non-availability of compliant fuel oil.

State parties are obliged to take all reasonable steps to promote the availability of compliant fuel oil, to investigate reports of non-availability and to report non-availability of compliant fuel oils in its ports and terminals to the IMO. This process is important to ensure a consistent supply of compliant fuel as well as preventing incentives for ships to use ports where it is known that compliant fuel is not available on an ongoing basis. Critical to this process will be the sharing of information between states parties on reported compliant fuel oil supply issues.

The use of scrubbers

An alternative to the use of low sulphur fuel oil is the fitting of scrubbers to a ship. Scrubbers remove particulate matter, sulphur oxides and nitrogen oxides from the exhaust gases produced by a ship’s engines. Open-loop scrubbers use seawater to remove chemicals and particulates and the waste is then treated before being discharged into the sea. In closed-loop systems, the water is recycled back into the scrubber. Hybrid scrubbers are a combination of open and closed-loop systems.

The Regulations do not prescribe the type of scrubbers that may be used but some jurisdictions have rejected the use of scrubbers or specifically the use of open-loop scrubbers within their territorial waters. Where a ship is fitted with open-loop scrubbers and enters a port in a state where these are not permitted, the ship will be obliged to use compliant fuel oil. Where the ship is fitted with a hybrid loop system, the ship will need to switch over to a closed-loop system.

Jurisdictional approaches to IMO 2020

A number of countries have not ratified MARPOL Annex VI including Argentina, Bahrain, Colombia, Ecuador, Egypt, Hungary, Israel, Mexico, Oman, Pakistan, Qatar, Thailand and Venezuela.

Other countries that have ratified Annex VI have not yet adopted appropriate legislation to give effect to their obligations. South Africa has yet to pass legislation indicating how it intends to enforce IMO 2020. Whilst the South African Maritime Safety Authority previously issued a marine notice authorising the use of all types of scrubbers within South African territorial waters, it subsequently indicated that it would make the decision on whether to allow any types of scrubbers during September 2019. However, at the time of publication no such decision has been taken.

The Maritime and Port Authority of Singapore (MPA) has indicated that Singaporean and foreign-registered ships calling at Singapore will be selected for inspection based on a risk matrix that takes into account the compliance option of the ship and whether a FONAR has been submitted. Inspectors will be equipped with portable sulphur kits for onsite testing of in-use fuel and the MPA may send fuel oil samples to a laboratory for detailed fuel oil analysis. Singapore has banned the use of open-loop scrubbers and ships fitted with hybrid scrubbers will be required to switch to closed-loop mode whilst in Singaporean waters.

As a signatory to MARPOL and Annex VI, Indonesia originally undertook to enforce the Regulations in respect of all ships operating within Indonesian waters. It subsequently backtracked and indicated it would not enforce IMO 2020 sulphur limits in respect of domestic shipping and would only do so in respect of international shipping. As of August 2019, the Indonesian Ministry of Transportation has said that it will enforce IMO 2020 limits in respect of both Indonesian and foreign-flagged ships.

With effect from January 1, 2018, China has already implemented a 0.5 percent sulphur cap within its designated emission control areas, which have subsequently been expanded. Ships may use scrubbers or other alternative means to meet the emission control requirements. From January 1, 2020, oceangoing ships will be required to use low sulphur content fuel not exceeding 0.1 percent m/m when entering China’s inland water ECA and stricter sulphur limits will also be imposed on ships entering other Chinese ECAS over the next few years.

The United States has already implemented a 0.1 percent sulphur cap within its ECA and accordingly ships calling at US ports ought already to be familiar and accustomed to a significantly stricter sulphur limit than that imposed by IMO 2020.

Information regarding the implementation of IMO 2020 in other member states is not always readily available and will need to be clarified and publicised well before January 1, 2020 to ensure that ships calling at those ports can comply with the particular requirements imposed by each jurisdiction.

What still needs to be done?

State parties that have not yet adopted legislation to give effect to their IMO 2020 obligations need to do so as a matter of urgency. Flag and port states must ensure adequate publication of their specific requirements so that ships can ensure timely compliance. MARPOL Annex VI does not specify what penalties are to be imposed for non-compliance, but MARPOL does require that penalties must be sufficiently severe to discourage contravention. Accordingly, member states must determine what civil and possibly criminal penalties will be imposed on non-compliant ships.

Ships that have been fitted with open-loop scrubbers need to be aware of the risk that they may not be permitted to operate these within the territorial waters of certain port states. They will need to ensure that they will be able to procure compliant bunkers in those jurisdictions.

Crew members need to be properly trained and made aware of the importance of accurately recording information in the ship’s logs such as the date, time, and position of the ship when a fuel oil changeover occurs as well as the volume of low sulphur fuel oil in each tank.

Port states need to ensure that they have adequate compliant fuel oil or alternative fuels available from January 1, 2020. They need to ensure that they have adequate inspection and testing protocols in place and port facilities to receive scrubber waste residue.

Conclusion

Much work remains to be done to ensure a consistent approach to compliance with IMO 2020. Given that January 1, 2020 is only a few months away, all relevant parties, including port and flag states, bunker suppliers, shipowners, Masters, charterers and ship builders, need to prepare themselves urgently.

Source: nortonrosefulbright

Shipping companies in Asia and around the globe are steaming ahead with efforts to minimize their carbon footprint as the urgency to decarbonize intensifies after a fairly smooth transition to the International Maritime Organization’s low-sulfur mandate for marine fuels.

The IMO in April 2018 laid out its strategy to reduce the shipping industry’s total greenhouse gas emissions in 2050 by at least 50% from 2008 levels, and to reduce CO2 emissions per transport work by at least 40% by 2030.

Various non-government environmental organizations recently voiced support for the emission reductions at IMO’s virtual GHG talks in early July.

The NGOs in a joint statement said “good technical progress” made at the virtual event “revealed that a properly enforced goal-based operational efficiency measure would unlock net savings for the shipping industry, as well as reducing CO2 emissions, and … looks increasingly inevitable.”

Shell, Deloitte Netherlands and Deloitte UK collaborated in a report released July 7 showing 95% of shipping executives interviewed worldwide viewed decarbonization as important, or a top-three priority, and nearly 80% noted its importance had increased significantly over the past 18 months.

“While shipping leaders are rightly focused on the current challenges of the COVID-19 pandemic, our research shows that they still have their sights on the horizon and identify decarbonizing shipping as a top priority,” Grahaeme Henderson, vice president Shell Shipping & Maritime, said in a statement then.

Companies ramp up efforts

Shipowners are already making plans to intensify their GHG initiatives.

On July 7, Japan’s Kawasaki Kisen Kaisha, or K Line, revised its Environmental Vision 2050-Blue Seas for the Future, rearranging its targets into decarbonization with an “aim for zero environmental impact,” and setting new milestone goals.

K Line said it now targets improving CO2 emission efficiency for 2030 by 50% compared with 2008 levels, surpassing the IMO target of a 40% reduction.

Last year, NYK dry bulk carrier Frontier Sky conducted a trial use of biofuel, considered carbon-neutral, in Europe after the fuel was bunkered at the Port of Rotterdam in the Netherlands.

Taiwan’s Yang Ming Marine has already met its IMO 2030 target roughly over a decade early. In 2019, its fleet’s average carbon intensity – CO2 emissions per transport work—was down 51% compared with 2008 levels, falling from 99.4 g/TEU-km to 48.1 g/TEU-km, the company recently said.

Japanese steel firms JFE Steel Corp. and Nippon Steel Corp. recently formed a working group within Japan’s Carbon Capture & Reuse Study Group to advance initiatives for zero-emission ship fuels through the use of methanation technology. The steel firms intend to recycle carbon dioxide emitted from their manufacturing operations to produce synthetic methane.

Ports to play pivotal role

Ports and port authorities will play a strategic role in decarbonization, and some have already listed the environmental push as a priority in their maritime agenda.

Singapore, the world’s largest bunkering port, has launched a Maritime GreenFuture Fund to create ecosystems for trials and test-bedding of low-carbon technologies.

Supported by the Maritime and Port Authority of Singapore, the Singapore Maritime Foundation has also established an International Advisory Panel on Maritime Decarbonization to foster a strategy to achieve GHG emission cuts.

Singapore and ports in Japan, China and South Korea are also promoting LNG bunkering. LNG bunkering is a promising option as it can easily serve the maritime industry, Jan-Olaf Probst, business director container ships DNV GL, said in a webinar July 1.

LNG fueled shipping fleet

LNG as a marine fuel not only cuts sulfur emissions, but compared with existing heavy marine fuel oils emits 90% less nitrogen oxide. Through best practices and appropriate technologies it minimizes methane leakage, and realistically reduces GHG by 10%-20% with a potential for up to 25%, according to industry sources.

South Korea’s Busan Port Authority has agreed to form a LNG bunkering joint venture with other local partners including Korea Gas Corp., Posco International and oil refiner S-Oil Corp.

A Kogas official told Platts the company plans to sell 1.36 million mt of LNG to ships by 2030, with Won 1 trillion ($832 million) in revenue, through the bunkering joint venture, and reduce 8,315 mt of sulfur oxides and 2,557 mt of fine dust emissions by then.

Accelerating decarbonization

In the short term, the maritime industry should invest in initiatives that bring incremental energy-efficiency gains, industry sources said, adding this could include ordering more eco-friendly smart vessels, vessel modification and optimization projects for the existing fleet.

In the end, concerted coordinated industry efforts as well as continued research and development for energy efficiency improvements will accelerate the pace of GHG emission cuts as will increased pressure from customers to address climate change, sources said.
Source: Platts

The IMO’s hard-won 2018 agreement on shipping’s greenhouse gas reduction targets for 2030 and 2050 have now been superseded by more ambitious requirements set forth in last December’s European Green Deal. Once again, the European Commission has forced shipping’s hand, risking the creation of separate emissions regimes in different geographies.

Whilst many of those at shipping’s top table welcome the direction of travel, few are looking forward to the journey, not least because there will be no deep-sea low or zero-carbon fuel options available for many years.

“The coffee’s not coming from Starbucks,” declared Ms Şadan Kaptanoğlu, Managing Director of Turkey’s Kaptanoğlu Shipping and President of BIMCO at an online press conference recently. She was speaking about the importance and resilience of global supply chains which, despite major disruption in other transport sectors, have continued to function throughout the pandemic.

“Without shipping, without the global supply chain, we cannot survive,” Kaptanoğlu said, identifying recent disruptive developments, including trade wars, as potentially damaging. Shipowners had to be able to operate competitively, she added, citing a Turkish idiom which says that when things get tough, people break the rules.

As a truly international business, shipping needs a set of global rules and regulations to ensure fair competition. Kaptanoğlu made her comments at a press conference convened by the organisers of the postponed Hamburg shipping event, SMM. As the participants agreed, turning a global transport sector which is almost entirely reliant on the only widely available source of cheap fuel – oil – into a climate-friendly business is not a short-term process. Mid-century is little more than one generation of ships from now.

Critical role

Kaptanoğlu’s reference to coffee was intended to emphasise the fact that the vast majority of the world’s public, including most politicians, have no idea how their cars, food, fuel, medicines and microwaves reach shops and other outlets. They may know that ships have a role in the world’s supply chain, but they certainly have no comprehension of the extent of shipping’s critical role.

Nor do most people realise that although some cargoes are shipped by sea after short voyages from neighbouring countries, most shipments arrive in Europe following long hauls from faraway places in Asia, the Middle East and the US. Meanwhile, very few people outside of shipping have even heard of the 174-member International Maritime Organization (IMO) or its continuous work on issues including safety, ship efficiency and the sector’s environmental profile.

It is against this unfortunate backdrop that global shipping, under the auspices of the IMO, has embarked on its ambitious decarbonisation journey following a hard-won compromise agreed in 2018. By 2030, international shipping should have reduced its carbon emissions by 40% compared with 2008 levels, and by at least 50% by 2050, the IMO has declared. These ambitions stand until 2023 when the IMO will decide whether or not they need to be revised.

Considering that its members include major oil producers whose economies are oil-dependent, climate change deniers, and developing countries with more immediate concerns including regional conflicts, famine and broken economies, the 2018 compromise was itself something of a miracle.

No easy alternative

The IMO’s targets are unquestionably ambitious. Experts point out that almost all seagoing vessels are powered by hydrocarbons, mostly heavy residual fuels from the bottom of the barrel … quite literally. Today, there is no large-scale alternative. Any future option, moreover, together with a global distribution network, will take many years and billions of dollars to develop.

But pressure is mounting, particularly since Covid-19 has amply demonstrated the fragility of human existence. The sustainability of our planet and cutting greenhouse gas (GHG) emissions have leapt up the agenda. And transport – cargo shipping in particular – is highlighted with a red star.

Even before the virus struck, politicians in Europe were throwing their weight behind new climate initiatives. With good cause. Despite growing concern about global warming and the many initiatives to tackle GHGs. DNV GL, a classification society, says that emissions have continued to rise steadily. At a press briefing late in June, however, it suggested that the impact of Covid-19 could mean that 2019 turns out to be the year of peak emissions.

On December 12 last year, just as the first Covid-19 infections were developing in China, European Commission President Ursula von der Leyen announced the European Green Deal (EGD), an ambitious move to transform the high-emission, carbon-based economy of the 27-member European Union to a low-emission one. Through a series of ten key steps, the ex-German Defence Minister announced “Europe’s man-on-the-moon moment”, and a range of measures to transform every sector of the European economy. Including shipping.

Initial estimates suggest that the EGD could cost €1trn. Others believe it could be three times as much. No-one yet knows where the money will come from.

The EGD leaves the IMO’s 2030 and 2050 ambitions way behind. Instead of a 40% cut in GHG emissions by 2030 compared with 2008, the EGD’s target is a 50-55% cut compared with 1990. By the middle of the century, the von der Leyen plan envisages net-zero emissions across the entire bloc, compared with the IMO’s ambition of at least 50% for international shipping.

So, what is the feedback on von der Leyen’s EGD from shipping’s seasoned diplomats? First of all, there is uncertainty. “Whatever the EU decides to be applicable for ships calling at EU ports will be additional to IMO rules,” explained Lars Robert Pedersen, BIMCO’s Deputy General Secretary. “If such regional requirements are too stringent, some ships may not be able to call.”

Martin Dorsman of the European Community Shipowners’ Association (ECSA) believes that shipping should be regulated at an international level – for environmental affairs, by the IMO. He would like to see the EU playing a proactive and constructive role at IMO meetings, as well as providing financial support for R&D, creating the right regulatory framework for tests, and stimulating investment in bunker infrastructure for new fuels.

Dorsman is emphatic that a universal regulatory regime is essential across the world – ensuring no risk of conflicting regulations and no risk of compliance difficulties. “Placing additional burdens of EU shipowners in these very challenging times would be counterproductive,” he said.

BIMCO’s Pedersen referred to a proposal that an International Maritime Research Fund (IMRF) should be established, overseen by an independent board, to collect and disperse up to $5bn in funding for R&D into new marine fuels over a ten-year period. “The shipping industry does not yet have available sustainable options to decarbonise,” he pointed out. “That is why the industry has suggested setting up the IMRF. When the options are commercially available, their cost may call for carbon pricing to drive up their uptake. It makes no sense to discuss carbon pricing before the right options are available.”

Shipping economist and non-executive President of Clarkson Research Services, Martin Stopford, believes that after 50 years, globalisation has run its course. He thinks that shipping can meet at least the IMO targets by taking various steps such as reducing speed, raising efficiency in terms of performance and cargo volumes shipped, reducing the carriage of hydrocarbons as demand falls away, and focusing on short-sea and regional shipping as an alternative to more carbon-intensive transport modes such as road and rail.

As is already apparent in a range of application across Europe, new sources of power including hybrids incorporating electricity and fuel cells are already being used in short-sea trades. Coastal and short-sea shipping provides a “brilliant” setting in which to test new propulsion technologies, Stopford said. Certainly, the regulatory backdrop is far simpler – short-sea trades usually fall under the jurisdiction of individual coastal states, rather than the international regulatory framework agreed at the IMO.

Norway is in a fascinating position. On the one hand, it has built its supreme wealth on the development of oil and gas. On the other, its state energy company, Equinor, has the most ambitious emissions-cutting targets of any energy firm anywhere. CEO of the Norwegian Shipowners’ Association, Harald Solberg, takes a pragmatic view on decarbonisation. Many of his members are involved in energy-related transport.

“We’re not too worried about the gaps between the [emission reduction] targets,” he says. “Both initiatives clearly pull in the same direction. We still firmly believe a regulatory solution has to come at [an IMO] level, but we have fully endorsed the aims of the Green Deal and want to see the EU take a lead at the IMO on R&D.”

Solberg pointed out that the Association’s shipowners had already agreed an emissions strategy with the same targets as those set out in the EGD. “As a national association, we are eager to speed up pace as much as possible,” Solberg said. “To facilitate this, NSA members will, from 2030, only order vessels with zero-emissions technology. These are hairy goals, but we want to use the 2020s to make that technological leap.”

Source: motorship

The IMO has made its compendium of data structures available as a tool for software developers to create systems for exchanging data electronically.

The aim is to facilitate the streamlining of the many administrative procedures necessary when ships enter or leave port.

The IMO Compendium is a reference manual containing data sets and the structure and relationships between them that will enable IMO Member States to harmonize the information needed to fulfil the mandatory obligation (in place since April 2019 through the Facilitation of International Maritime Traffic (FAL) Convention) for the reporting formalities for ships, cargo and people on board international shipping.

In its Annex, the FAL Convention contains standards and recommended practices and rules for simplifying formalities, documentary requirements and procedures on ships’ arrival, stay and departure. Since April 2019, the FAL Convention makes it mandatory for ships and ports to exchange FAL data electronically and encourages the use of the single window concept in which all the agencies and authorities involved exchange data via a single point of contact.

Ideally, this helps make cross-border trade simpler and the logistics chain more efficient for the more than 10 billion tons of goods which are traded by sea annually across the globe.

The IMO is not the only organization dealing with electronic data exchange in maritime transport, but the World Customs Organization, the United Nations Economic Commission for Europe and the International Standards Organization have aligned their own data structures with the IMO Compendium to promote harmonization.

Source: maritime-executive

NEW YORK/LONDON – After strong profits in 2019, oil traders have been hit hard early in 2020, losing tens of millions of dollars on bets on gas oil price spreads due to an unexpected collapse in demand in January, sources familiar with the matter said.

The global oil industry expected this year would bring a sharp increase in marine gasoil demand due to new regulations from the International Maritime Organization (IMO) that limited the use of high-sulfur fuel oils beginning in January. Traders expected gasoil demand would spike as it met those regulations, so it could be substituted for higher-sulfur fuels.

Instead, gasoil and diesel demand dropped worldwide due to a warmer-than-expected winter in the Northern Hemisphere and a drop in consumption due to the global spread of the coronavirus.

ICE Gasoil, the European distillate benchmark, and U.S. benchmark heating oil futures last week both hit lows not seen since July 2017. Both are down about 25% this year.

Russell Hardy, chief executive of oil trading group Vitol, said in late February that he expected at least a 2.2 million-barrel per day drop in oil demand in the first quarter largely due to the coronavirus.

“Everyone was long diesel because of IMO,” one diesel trader said. “I think everyone lost and no one won.”

Money managers have stampeded out of positions betting on gains in gasoil. Those net long positions in ICE gasoil hit a more than seven-month high in early January and in a span of about six weeks dropped to their least bullish level in more than a year.

Most traders do not publish detailed results of their gains and losses on trading in individual products. However, eight market sources said numerous trading houses and oil majors have had losses on diesel due to wrong-way bets. The most active oil majors in trading are Total, BP and Shell, while the biggest oil traders are Vitol, Glencore, Trafigura, Gunvor and Mercuria.

Total did not respond to a request for comment. The others all declined comment.

Hedge fund Andurand Capital reportedly lost 8% in January on gasoil, according to the Financial Times.

Trading in U.S. gasoline refining margins has been choppy. The spread narrowed to its tightest level in four months in late January, only to spike to its widest gap since July a month later.

The spread of the coronavirus, particularly in Italy’s industrial heartland in the north, worsened the outlook for diesel. Diesel profit margins in Europe sagged to near a four-year low last week, below $7 a barrel.

“Expectations were that we would see a large share of the shipping industry shift to marine gasoil, which would be a bullish scenario for middle distillate cracks,” ING said in a note.

Another trader said most of the bullish positioning was concentrated in spreads – particularly the gasoil versus fuel oil contracts.

During the latest quarterly results, BP said 2019 was a record year for oil trading, while Shell said 2019 was its best year in the last decade for its marketing businesses with a strong performance from trading.

Glencore said its oil trading results were “excellent” and helped offset other headwinds. A source familiar with Trafigura said the firm had a record first quarter for its financial year that starts Oct. 1.

Other firms have not yet disclosed their results.

Source: energy.economictimes.indiatimes

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