A major shake-up for oil and shipping

REUTERS: Tougher rules on sulphur emissions from ships will come into effect next year in the biggest shake-up for the oil and shipping industries for decades.

From January 2020, United Nations shipping agency the International Maritime Organisation (IMO) will ban ships from using fuels with a sulphur content above 0.5 percent, compared with 3.5 percent now.

The regulations are aimed at improving human health by reducing air pollution.

Only ships fitted with sulphurcleaning devices known as scrubbers will be allowed to continue burning high-sulphur fuel. Ship owners can also opt for other sources of cleaner fuel such as liquefied natural gas (LNG).

Failure to comply with the global regulations will result in fines or vessels being detained and in some jurisdictions the risk of imprisonment, which could affect vital requirements such as insurance cover.

Enforcement will be policed by flag and port states rather than the IMO and industry officials are still unsure about whether there will be full compliance when it kicks in.

Refineries separately face significant costs to adapt to the new fuel specifications.

Will there be enough low sulphur fuel?

Oil majors including BP and Royal Dutch Shell have announced they are producing very low sulphur fuels that meet the 0.5 percent requirements.

While major fuel bunkering ports such as Singapore, Fujairah in the United Arab Emirates and Rotterdam in the Netherlands have compliantfuel supplies, analysts and shipping firms are still unclear what will happen at smaller ports given the need for ships to plan their sailing routes.

Are there any safety issues with the new fuel?

It remains unclear what impact there will be with mixing very low sulphur fuels of 0.5 percent together, which at this stage have not been fully tested on ship engines. One of the risks is that the level of sediment created could damage engines at sea. While guidance has been issued on avoiding mixing different fuel batches, the issue continues to raise worries especially after a major problems with bunker fuel contamination in 2018.

What about scrubbers?

There is still a question over whether jurisdictions and ports could restrict the use of certain types of scrubbers due to uncertainty over the effects of the waste water that gets pumped into the sea.

Earlier this year ten environmental groups called on the IMO to impose an immediate ban on the use of scrubbers.

Users of the devices argue that there is no conclusive scientific research showing that discharges from open loop scrubbers - which wash out the sulphur - cause environmental harm and their use was safe. Analysts say there is still the possibility of tighter restrictions, which would add to the costs of those investing in them.

The IMO has encouraged further study into the impact of scrubbers on the environment.