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BP expects strong compliance for marine sulphur emissions caps

Reuters  |  NEW ORLEANS 

By Devika Krishna Kumar

(Reuters) - Oil Plc expects more than 90 percent of the world's shipping fleet will comply with new regulations slashing sulphur levels ships are allowed to burn starting 2020, a said on Tuesday.

Coming (IMO) rules will cut the amount of sulphur emissions that ships worldwide are allowed from 3.5 percent to 0.5 percent by 2020.

"Potential non-compliance is a significant issue that the market has been contending with," Jason Breslaw, who leads BP's distillate trading origination across the Americas, said at an industry conference in

Breslaw said expects only about 9 percent of the industry is likely to be non-compliant as the rule takes effect. The compliance level has significant implications for demand for high-sulphur fuel oil; BP's estimates fall well short of other estimates of about 30 percent non-compliance.

The IMO has said there would be no delays or exceptions to the coming rules, whether or not the industry takes the steps it needs to comply, and warned that all parties face consequences if they do not play their part.

Energy consultancy estimates about 30 percent non-compliance, said Alan Gelder, vice president of refining, and

"At the moment nobody is really doing anything ... with a number of the shippers playing chicken with the regulator, does the regulator blink? We don't know," Gelder told

One way ships can comply with coming standards is to retrofit vessels with costly scrubbers, which can reduce sulphur emissions even if ships continue to burn dirty fuel.

But there are significant concerns with this process as well, industry participants said.

The cost of installing scrubbers is about $3 million to $10 million, said Anil Rajguru, at Fluor Corp.

"Right now less than 500 ships have scrubbers. We're talking more like 50,000 and it could take more than a decade before scrubbers are fitted on (all) the vessels," Rajguru said.

(Reporting by Devika in New Orleans; Editing by David Gregorio)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, March 14 2018. 01:27 IST