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Interview: Kuwait Oil Tanker to use IMO 2020-compliant fuels; compatibility concerns linger

Highlights

Adequate availability of low sulfur bunker fuels still uncertain

Compatibility, stability of IMO 2020 compliant fuels still a concern

Singapore — The Kuwait Oil Tanker Company, or KOTC, will be opting for low sulfur bunker fuels to comply with the International Maritime Organization's global sulfur limit rule for marine fuels even though some concerns linger over the compatibility and availability of such fuels for the overall shipping industry, a senior company executive said.

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"We will walk in the direction of low sulfur fuels but there are challenges involved for the industry," Ali A. Shehab, Deputy CEO for fleet operations told S&P Global Platts on the sidelines of the Sea Asia 2019 conference in Singapore Wednesday.

The International Maritime Organization is set to cap sulfur content in marine fuels globally at 0.5% starting January 1, 2020, compared with 3.5% currently.

To comply with this rule, ships will have to either burn more expensive, cleaner fuels or use scrubbers with high sulfur fuel oil.

KOTC will opt for compliant fuel, "however, we know that there is a need to develop technology to ensure suitable fuels are available for use in sufficient quantities," he said.

There is uncertainty over availability, he added.

"KOTC favors full compliance with the new norms," Shehab added.

KOTC -- a major global oil tanker company and a subsidiary of Kuwait Petroleum Corp. -- is instrumental in moving millions of tons of oil cargoes across the world. It has close to a dozen VLCCs, 10 product tankers and two LPG carriers. It also has eight ships on orderbooks -- one VLCC, three VLGCs and four Medium Range clean tankers.

COMPATIBILITY WITH ENGINES

KOTC has been working with dual engine ships since 2004. While the company will be sourcing IMO 2020-compliant marine fuels for its fleet from its parent company, KPC, concerns remain for the industry at large.

"Whether KPC supplies low sulfur fuels from its own refineries or elsewhere, is their prerogative," he said.

Other shipowners and participants at the Sea Asia conference were also concerned over availability of IMO 2020-compliant marine fuels and compatibility of ship engines with these fuels.

If viscosity in the blended fuel is not at the appropriate level, it can solidify, stop flowing and jam the ship engines. Refiners are testing several blends of high sulfur fuel oil and gasoil on their ability to flow. However, a global standard for such blends is yet to materialize, sources with other shipowners said.

Many shipowners also provide fuel oil non-availability reports, or FONAR, when they are unable to obtain compliant fuels. These reports are used in the US Emission Control Area, or ECA.

Possibility of having FONAR and their format to enforce the upcoming norms is expected to be discussed at the IMO's Marine Environment Protection Committee meeting next month.

Compatibility and stability of such fuels will take some time to normalize, Shehab said. There will be a transition phase during which the ship owners may have to deal with operational problems, he added.

"Teething problems will have to be dealt with ... We hope there will not be any incidents that make ships [in general] redundant due to loss of engine power," Shehab said.

--Sameer C. Mohindru, sameer.mohindru@spglobal.com

--Edited by Haripriya Banerjee, haripriya.banerjee@spglobal.com