A cleaner North Sea? Ship fuel suppliers hedge bets

London: European ship fuel suppliers are hedging their bets ahead of tighter fuel quality rules from November amid uncertainty about demand for the cleaner grade and expectations that some ship operators will ignore the new rules.

European Commission regulations banning ships from burning dirtier fuel in the North Sea and the English Channel are aimed at reducing sulphur dioxide emissions that are 700 times higher than sulphur levels in diesel fuel for vehicles.

Sulphur dioxide is a major cause of acid rain and blamed for health problems such as lung disease.

But some say the August transition to the cleaner fuel, which will slash the maximum sulphur content by more than half to 1.5 per cent, will not happen overnight, even though the industry has had years to prepare for the switchover.

"Companies buying fuel for their ships will always try to optimise," said Frederic Bricout, managing director of fuel supplier Transcor International in Belgium. "In other words they will refill in other ports where they can still buy the high sulphur."

Transcor, which is setting up new storage facilities for the cleaner fuel in Antwerp, estimates that around half of the fuel it will provide to customers from November will be low sulphur.

Because ships could just buy enough clean fuel to get them beyond the North Sea, and then burn higher sulphur, cheaper grade fuel in unregulated waters, demand is uncertain.
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