Is the shipping industry ready for the 0.5% global sulphur emission cap by 2020? - Refiners’ perspective

IMO directives 2020 is constructed with an interest in protecting the environment from shipping sulphur pollution. However, this brings disruption to the players in the shipping industry, as they need to adhere to the regulation through their own means. This report focused on the readiness of the refiners and the considerations for them to sustain their competitiveness in the marine bunker industry. Comprehensive plans and lucrative investment decisions would then allow the refiners to be profitable in 2020. However, the refiners have encountered problems when preparing for the 2020 rules alignments, such as low fuel demand, tight time frame, high investment cost, and low profitability. Additionally, sustainability of the marine bunkers was scrutinized in regard to the economic and/or environmental impacts which will affect the long-term availability of the bunker. After which, this report investigated the anticipated readiness of the four oil majors who play paramount role in the marine bunker production industry, based on supply and demand analysis. Following that, the possible solutions listed by the IMO i.e. LNG, MGO, LSFO and HSFO were assessed individually on their availability by 2020, based on five criteria. The criteria used to access this report wholly are: time sufficiency, investment power, fuel profitability, anticipated supply availability to meet demand and fuel sustainability. The refiners can choose to tweak their refinery configurations or build new infrastructures to achieve the desired optimal fuel mix. Three recommendations are suggested to the refiners: to do internal analysis to reduce unnecessary wastage, to communicate with shipowners, and to be the first mover to act before 2020. However, three limitations restricted the content of this report: lack of access to full information, assumed stagnant crude price and uncertainty due to changes before 2020. Nevertheless, the conclusion of this report confirms the readiness of the refiners by 2020 to supply LNG, MGO and LSFO to the shipowners, except for HSFO. However, HSFO will only take up a small percentage of the global 2020 demand, thus all in all, refiners are ready to meet the 0.5% global sulphur emission cap by 2020.Bachelor of Science (Maritime Studies