Singapore — Distillates will likely be the predominant marine fuel of choice for Schulte Group as the International Maritime Organization's global sulfur cap rule nears, Angus Campbell, corporate director of energy projects at Bernhard Schulte Shipmanagement, told S&P Global Platts.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
"For the existing fleet of the Schulte Group we are looking at all the options on a case-by-case basis," Campbell said in an interview o the sidelines of the Singapore Maritime Week 2018. "Most of the time the decision will be to go for 0.5%-sulfur compliant fuel. A lot of the ships are relatively small; fitting scrubber technology is not really viable in our view."
For the newbuilds, the company also considers LNG as a viable option to comply with the IMO global sulfur cap rule, Campbell said.
However, for the wider BSM managed fleet, if owners express an interest in looking at scrubber technology or 0.5% sulfur compliant fuel, BSM would provide guidance in whatever way they would want to go, Campbell said.
Schulte Group owns more than 100 vessels and manages about 620 vessels, according to the company website.
There is an expectation that the new regulation will be enforced effectively and everybody will have to comply, Campbell said.
This is significant because since the IMO's announcement in 2016 to implement this rule from 2020, compliance has been an area of critical concern due to the magnitude of the change that the regulation entails and the costs involved.
"There is also a huge degree of clarity now that it will be illegal to carry HSFO on a ship that isn't properly equipped with appropriate abatement systems," Campbell said. "So, I think things are now becoming much clearer and people are willing to work out what the choices are."
Amendments to MARPOL Annex VI to prohibit not just the use but also carriage of bunkers above 0.50% sulfur were agreed at the IMO's marine environment protection committee meeting recently, ensuring the proposal is on track. When they are formally adopted at MEPC 73 in October, this would mean a carriage ban would come into effect from March 1, 2020.
"So the scene is now set and everybody knows what to expect and each of them will look at their individual ships and come up with solutions that are appropriate for them," Campbell said.
UPTICK IN LNG BUNKERING
As far as new ships go, LNG is touted as a potential solution for compliance to the IMO 2020 rule, Campbell said.
LNG is a very good option for a number of reasons; it will be competitively priced, it is sustainable as well as widely available, he said.
LNG will also reduce the through life maintenance cost of a ship, Campbell said.
"You are burning a cleaner fuel, your machinery will last longer, also reducing the vessel's operating costs," Campbell said.
The recent greenhouse gas emissions cut by IMO will also advance the uptake of LNG as a marine fuel, Campbell said.
In April, a key committee of IMO agreed to an initial strategy to cut the shipping industry's total GHG emissions by at least 50% from 2008 levels by 2050.
As more LNG fueled ships are ordered, infrastructure availability will also increase, spurring its widespread adoption.
BSM, for its part, plans to expand the number of gas supply vessels in future as LNG bunkering is expected to accelerate, Campbell added.
In January 2017, a joint venture between BSM and Babcock International --Babcock Schulte Energy-- was formed. BSE has already ordered its first LNG bunker-supply ship, which will be stationed in the Baltic and will be delivered next year, Campbell said.
"While the JV was set up to develop meaningful scale in the sector, we will grow the numbers sensibly," Campbell said.
Overall, the company will continue to develop presence in this segment in not only Europe but also in main bunkering hubs in Asia, he said.
"We will build against contracts and we are tendering for some of those contracts now," Campbell said.
"People are recognizing that changes in our industry are inevitable, they have to look at the future to make the best decisions possible," he said.