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environment

Environmental Regulation to shape

tanker market Special to Marine Log

O

ver the next five years, international env ironmental regulations will have a major impact on the tanker market, according to a recent report by marine transport advisors McQuilling Services, LLC. In its latest Tankers Industr y Note, Mc Q u i l l i n g S e r v i c e s p o i n t s t o t h e implementation of the Ballast Water Convention this year and the global 0.5% sulfur emissions cap in 2020 as two defining regulator y events for the mar ine transportation market. Beginning in 2020, the International Maritime Organization (IMO) will establish a global 0.5% sulfur cap in order to reduce the carbon footprint of maritime transportation. McQuilling Services says the result of the sulfur cap will alter trade flows of fuel oil and middle distillates in 2020 and beyond. A new bunker fuel blend containing

36 Marine Log // June 2017 Yearbook

fuel oil components and gasoil is expected to enter the market. Considering the current global refining complex, East of the Suez markets are likely to be self-sufficient and meet regional demand while Western

As of now, the view taken by owners seems to be a ‘wait and see’ approach markets with less complex refining systems (Europe, Latin America and FSU/Russia) will likely switch and become net importers of the new bunker fuel.

McQuilling projects that the Middle East will produce 2.81 million bbl/day of gasoil by 2020/21, which is 34% more than regional demand. It foresees the Middle East as being a large export center for gasoil, boosting tanker demand. “In fact, we are likely to see Middle East exports rise substantially to Europe, as well as potentially to more distant markets in the Americas. Assuming this new fuel will be classified as a clean product, we anticipate a material rise in ton-mile demand for product tankers, with a bias towards larger tankers (LR2) for expected long-haul transportation requirements.” McQuilling Services says that “while the implementation date of 2020 appears to be set in stone, we cannot completely rule out the possibility of an extension given the concern over the likelihood that global gasoil supply will not be enough to meet demand. As of now, the view taken by owners seems to be a ‘wait and see’ approach considering

Photo Credit Shutterstock/Nightman1965

IMO Global Sulfur Cap, Ballast Water Convention will alter trade flows, change fleet composition

Marine Log June 2017  
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