Logistics

Shippers assured of low-sulphur fuel supply, relaxed regulations

M Kalyanaraman November 5 | Updated on November 06, 2019 Published on November 06, 2019

The Indian shipping community, which is preparing for the global ban on carrying and burning of fuels with sulphur content higher than 0.5 per cent in ships, received two assurances on Tuesday in Chennai.

One is related to a more relaxed enforcement regime in the first few months of next year, owing to the uncertainty over the level of preparedness of the industry in dealing with the change, and the other from Indian oil companies that they are ready to supply the required low sulphur fuel.

With the mandate scheduled to kick in on January 1, 2020, Captain SIAK Azad, Deputy Nautical Advisor at the Mercantile Marine Department, said that the regulator’s priority in the first few months will be ease of doing business. “Trust and common sense will be applied and we won’t go just by the letter of the law,” he addressed the gathering of nearly 100 people at the regional seminar on ‘IMO Sulphur Cap 2020 – Implementation and its Impact in Indian Waters’, conducted in Chennai.

Technical compatibility

The sulphur cap has thrown the shipping world into heightened activity with oil companies and refiners across the world upgrading their infrastructure to supply low sulphur fuels in adequate quantities to ships to avoid disruptions in ship movement. There have, however, been fears over the technical compatibility of the new fuels with shipboard equipment. In the recent past, stringent mandates in the US regarding sulphur led to the use of blended fuels that damaged equipment onboard. Ships had to be stopped mid-seas for repairs near the Americas.

Some ships are lined up in shipyards to install exhaust gas cleaning systems, called scrubbers, which would help them continue to use higher sulphur fuel but would cost millions of dollars in capital expenditure. There are concerns over how effectively these devices would operate and what would be the impact of acidic corrosion on device systems and pipelines caused by the sulphurous washwater.

Anil Vasu, Chief Technical Service manager of Indian Oil Corporation Ltd, said that the total bunker fuel requirement in India is around 1.7 million tonnes per year, largely supplied by State-owned companies. Out of this, some 0.965 mmtpa is high sulphur furnace oil, while the rest is distillate fuel. “The IOC’s refinery in Koyali alone has built enough capacity in the last one year to supply 1.0 mmtpa,” he said. All the ports in the west coast have already stocked this fuel. Eastern ports would receive stocks in the coming weeks, he said.

Another IOC refinery in Haldia will soon be ready to roll out compliant fuel. IOC has had a market share of 60 per cent in ship bunker in India.

Vasu said that the IOC product will be a straight-run residual and not a blend with any distillate, and, therefore, friendly to shipboard engines and fuel-handling equipment. Regarding other properties like viscosity, density and pour point, he said the new, compliant fuel would be similar to the old fuel and is compatible with tried-and-tested ship machinery.

Amit Kute, HPCL’s senior manager for marine trade, said that HPCL’s new compliant fuel product is also a straight-run residual. Of the company’s two refineries, the one in Vizag can now produce 5,000-10,000 tonnes per month to begin with. Infrastructure will be upgraded soon to cater to the demand, he said.

IMO mandate

Some countries have sought to exempt coastal ships from the IMO mandate. Vikranth Rai, deputy director general of shipping, said that Indian coastal ships will not be exempted from the mandate, although the regulator will not insist on cleaning of storage tanks that are now carrying higher sulphur fuel.

He said nearly 80 per cent of the 950 coastal ships in India already use low sulphur fuel. Some 20 are under oil companies’ charter, which means they can readily get compliant fuel, he added.

Published on November 06, 2019
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