Shipowner’s Choice: Low Sulphur Fuel Oil or Jail

Low sulphur fuel oil or LSFO could be the key for shipowners and captains arriving in Singapore to avoid a prison sentence. According to the Maritime and Port Authority of Singapore (MPA), burning overly sulphurous fuel the country’s territorial waters could result in a two-year jail term from the start of 2020.

While it has not been clarified by the MPA what exactly could incur such a penalty, it’s still considered a major deterrent to rule breakers. Combined with other punishments like fines that could amount up to $10,000, the maritime industry could be well on its way to avoiding non-compliance. However, while these sanctions may force shipowners to look into low sulphur oil for their ships, it doesn’t mean they’ll be able to find it.

LSFO Crisis

There are different options available to shipowners in order to comply with the IMO regulation of 0.5% sulphur limit in marine oil that’s coming into force on 1 January 2020. Using LNG or installing scrubbers on ships are gaining popularity among the industry operators, but they require substantial initial investments while switching to LSFO does not.

On the other hand, the availability of the low sulphur fuel oil might be a problem as not enough refineries can produce LSFO. The heightened demand before the upcoming regulation, may not be satisfied by refineries due to lack of capacity and time. Not to mention, the surplus of high-sulphur fuel might cause problems if not sold, increasing fuel prices and negatively affecting the economy.

What’s more, not enough ships are converted to use the low sulphur fuel oil that is currently on hand. The obstacle lies with the compatibility of LSFO with current ship engines. If not properly adapted this fuel may cause engine failure and leakages during operation. This might result in collisions and marine pollution.

Developments in LSFO

To combat the lack of LSFO availability, several steps have been taken recently. In China, state-run refineries have endeavoured to start production of low-sulphur fuel in advance of the implementation of the IMO rules. Not only that, the world’s largest oil refining, gas and petrochemical conglomerate Sinopec is campaigning for tax rebates and a quota system to help the raise the output of LSFOs, Reuters reports.

In Singapore, changes are being implemented as well, so the shipowners are not left to face the new sanctions in the Asian country empty-handed. ExxonMobil is set to upgrade its Singapore integrated manufacturing complex in order to ensure the production of higher value lube base stocks & distillates and increase the facility’s capacity. The plan is to boost the production of low-sulphur fuels with an extra 48,000 barrels per day.

Will these changes help lower the number of those punished with a prison sentence or maybe the new sanctions will have more bark than bite? Get the answers and make sure that your fleet is not vulnerable to strict rules in Singapore and beyond by learning the best strategies from maritime experts at the 4th International Green & Smart Shipping Summit in Rotterdam on 8-9 October. Find out more at www.gssummit.org.